Two of the most common terms associated with the real estate sector are renting and buying. Renting the property refers to availing the services of the property for a certain period of time, and paying monthly or annual charges. Whereas buying the property means permanently becoming owner of the property.
Whether one should opt for renting the apartment, or buying it depends on their own choice and circumstances. Renting or buying are major decisions that people take with a lot of consideration. This is mainly because it majorly impacts your lifestyle in multiple ways.
Renting- Is This a Better Option?
The major difference between renting and buying is that buying gives you the ownership of the property. Whereas renting does not make you the owner of the property. You will have to pay a fixed amount monthly for the space provided to you by the tenant.
Renting can be considered a safe and wise option if you do not have enough finances. In these testing times, where inflation rates are high and poverty is at peak, people often opt to rent the houses. This is mainly because renting the house does not require huge initial investments. You do not have to worry about gathering a lump sum amount to attain a proper healthy lifestyle.
Renting an apartment or a house is also considered a safe and easy way to attain a living space because you need not involve in lengthy legal procedures. You do not have to lease the apartments yourself. Mostly the tenants provide you with the leased apartments themselves.
While renting might seem an easy and quick way to upgrade your lifestyle, some of the adverse effects must also be taken into consideration.
While it is true that renting a place is pocket friendly, it must not be ignored that you are never in possession of the property yourself. The landlord might force you to move out of the house, if he gets higher offers from other people. This kind of uncertainty is pretty high in renting the house. It is not always easy to move from one place to another on such short notice. The risks involved in renting the house are always greater. This is one of the most prominent drawbacks of living in a rented space. Hence people therefore prefer buying smaller apartments over renting huge ones. Smaller houses in average locations can be purchased in relatively lower prices, and thus the worries and risks associated with renting can be avoided.
Moreover, rental prices might increase over the years. For instance, suddenly your landlord increases the monthly rent. You might not be able to afford that increase in rates, and thus you might be forced to move out. It is also important to understand that paying rents increases the overall investment made in a particular property. In the long run, rental payments will prove to be quite expensive as compared to buying or purchasing the apartment. To some people, purchasing the property seems extremely expensive. But the truth is that paying rents has become an expensive venture over the years.
Lastly, rented houses often require maintenance. Most of the time the party who has rented the house has to pay for this. Obviously it is not easy to afford such expenses!
Buying the Property – Advantages and Disadvantages
Like mentioned above, buying or leasing a property gives you complete ownership of the property. Thus, there are lesser risks associated with buying your own property. Purchasing the property is a huge one time investment. However, the benefits associated with this one time cost cannot be ignored. You do not have to pay the monthly charges any more. Moreover, it can be considered as your asset. This is mainly because property rates tend to increase over the years. One can experience great profits if he has to sell off the property under some situation.
The kind of plot or property you wish to buy depends on your financial conditions. Sometimes people prefer to buy the property through loans. In this process, the property can be purchased by paying a fixed amount of down payment and then monthly installments to the bank. It differs from rental payments in the sense that after fixed amount of time, the buyer will be the owner of the property. On the other hand, the person who has rented the property will not become the owner by just paying monthly charges.
Some of the drawbacks of purchasing the plots include uncertainty in the economic conditions and fluctuation in government policies. Selling the plots is not always an easy task. Sometimes the prices of properties go down. This mostly happens in times of inflation. This can also be experienced in these testing times, in midst of the pandemic, Covid 19.
Moreover, sometimes the government policies regarding properties change quite frequently. Taxes on transactions of properties are imposed, which hinders real estate investments. This can be another drawback of purchasing the property. You might not be able to easily sell off your property, when you are in need of finance. Thus, you might have to face some losses in case selling the property is the only choice left. Further, buying also means getting involved in various procedures. For instance, when you buy a plot, you will have to make sure it is leased properly, and is not built on illegal settlement. Leasing the property has separate rates. Thus, buying can prove to be an expensive venture.
Another important thing is that property prices will only increase if you choose an ideal location to reside. Investing or purchasing property in an ordinary place might not lead to good profits in the future. Worth and value might not increase as expected. Hence, location is an important thing to consider before purchasing any kind of property.
Whether a person buys or rents a house not only depends on his/her financial conditions, but also how he/she has envisioned their life. People who have the habit of switching from one place to another frequently, prefer renting the property. Whereas, people with long term plans of comfort and ease, carefully select the most ideal location and prefer purchasing the plots. Both options have advantages and disadvantages in their own capacity. Thus, renting or buying is a personal choice based on a variety of different factors, as discussed above.