In today’s world, everyone has time to find the best opportunity for their life. This may sometimes lead to temporary shifts of your house to some new place. In today’s scenario, we can see there are many companies that want their employees to keep switching their locations to provide more exposure when it comes to the market.
Now in this situation, the primary question that one needs to ask is whether you need to rent a house or buy one.
To answer this question we came up with this article, in this article, we will discuss the different advantages and disadvantages of buying or renting a house.
Let’s first, discuss the scenario of renting out a house
The renting system is basically when you are paying a fixed amount of premium to the landlord or house owner for living on their premises. This is an agreement between all owners of the house and the tenant. This agreement defines that the tenant needs to pay a fixed amount for living on the house owner’s property.
According to research, we can see that now private companies are shifting their employees more frequently to different locations and that is why people are preferring renting a house rather than buying one. We can also see that the maximum number of rented houses are occupied by adults less than 35 years of age.
Advantages of renting a house
We can see that the rental house number is very high all over the world, specifically in America but due to the covid-19 pandemic, this number has decreased as people work relocating to their parental houses.
Now let’s discuss the advantages of renting a house
- Lesser cost- By taking the house on rent you initially reduce the cost as you don’t have to pay for the property cost or any maintenance or repair bills when you are renting out a property. This way you don’t have to pay the lump sum amount for the property of the house, instead, you can pay a smaller amount as rent. When you are renting a property you can also save yourself from paying property taxes as it becomes a home owner’s responsibility to pay tax.
- Flexibility to Relocate- it becomes very easy to locate according to your new location where you are finding better opportunities as you don’t have to take care of any house as you can shift out anytime by simply giving prior information to the owner. It becomes very easy to relocate yourself from a rented house and find a new house on rent because you don’t have to worry anymore if you don’t own your any house.
- Lesser initial cost– initially if you want to buy your own house you need to either have a lot of money or you need to take a house loan which actually becomes a burden on your shoulder. Instead of buying, people prefer renting a house as it does not cost a lot of price from the beginning of their living in the house. You also do not have to pay any kind of processing fees and a down payment on the house that you want to buy.
- Access to amenities– You can access amenities without making any investments. In a new house you may have to spend a lot of money to get nice amenities whereas when you rent the flat you don’t have to pay for the amenities.
- Wider choice– when it comes to renting a house you get a wider range of choice of finding the best option according to your taste, preferences and location. You can also change your house without worrying a lot. You can also bargain with the owner for the rent of the house.
- No long-term commitment– You don’t need to give any long term commitments to anyone as it is a temporary agreement. You also have a choice to shift to another place if anything doesn’t go well and can move to somewhere else which is affordable and has better availability.
Disadvantages of renting a house
Despite having such pros there are few disadvantages that you may face in renting a house.
- Notice Period- You need to provide the notice period to the homeowner and this is the biggest disadvantage of renting a house. It depends upon the landlord when it comes to deciding the period of notice. It is the landlord’s wish if they want to give the house for rent for next month or next period or and if they don’t wish to rent the vacant house immediately. In this situation this becomes very difficult for the tenant.
- Rent increases- In a rental home, the landlord makes all the decisions. Your rent may go up at any time for any cause. You only have two options in these situations: pay the additional cost or give notice to leave. And none of these options are enjoyable because one would put more of a strain on your finances, and the other will need you to go through the trouble of moving.
- Lost Money- Rent payments made by you are a loss to you. Instead, it goes into the pockets of the homeowner. The rent you are paying does not provide you with anything long-lasting. At the end of the year, the amount of rent you pay adds up to be quite a bit.
- No Customization: This means that a rental home cannot be altered to your preferences. You must accept the landlord’s furnishing and furniture placement in the home. At most, you might be able to temporarily and at your own expense change the drapes or curtains. When you live in a leased home, there is also no feeling of permanence.
These are a few advantages and disadvantages of renting a house.
Buying a House
The next option of choosing a home is owning a home. It is a dream of every person to own a house where he can live with his family. There are many pros and cons of buying your own house, which you need to consider before buying your own house.
The advantages of owning a house
Owning a house brings the feeling of a dream coming true for many. And people with a decent level income only can afford owning the house. This brings many advantages like
- Sense of Permanence– this is a key argument in favour of purchasing a home as opposed to renting one. You have a strong feeling of permanence when you own a home. In many countries, buying a home is a significant life achievement for many people. After all, you would be working very hard to pay the mortgage. Your residence serves as your permanent address for all legal reasons as a result.
- Freedom to Select Your Own Decor: You have complete freedom to decorate your home and yard whatever you please. You don’t need anybody else’s permission to decorate your home with beautiful interior design. However, if you plan to change certain significant housing structures, some permits can be required.
- Investment in a Home: The Amount of your payment doesn’t go to waste. Truth be told, the money you have invested is made up of installments. That’s because real estate prices are consistently rising, notwithstanding brief declines brought on by problems with the national economy, as the one we saw during the Covid-19 outbreak.
- Possibility of Upgrade: You might simply upgrade to a better home if you decide to do so after a few years while still making money. Because you are the home’s owner, you are free to sell the property whenever market prices are greater. get a bigger, better one elsewhere for the same price.
- Retirement Home: You might not be able to afford a mortgage after you retire. However, you won’t have to worry about rent or any other connected costs if you own your own home. The same home might easily serve as both your primary residence and your largest investment. And you won’t have to stress about being without a home throughout your golden years.
Disadvantages of owning a house
Owning a home can also bring different costs to the owner. We are mentioning few disadvantages that will give you the view that you need to take care of such as:
- Taxes and Other Expenses– As a homeowner you need to pay different taxes, and also will be responsible for different expenses specially related to maintenance. This will also bring the cost of repairing as well.
- Opportunity cost– When you start living in the house you have, you need to bear the opportunity cost of leasing out the home and earning. Since you are the owner you have the right to give your house at lease to a tenant of your choice. The rent can be used in repayment of the loan that may have got for your house.
- Relocating becomes difficult– It will become very difficult for you to simply relocate if you want to shift somewhere else. As you have the responsibility of your house that can’t be ignored. You may need to wait for a longer period of time to get the correct value of your house.
- Long Term financial commitment– A house loan taken for a house is a long-run money commitment. And you’ve got to make sure that your loan dues are paid on time to avoid default so it doesn’t hurt your credit score. Owning a house and not paying the mortgage will cause foreclosures and lead to you changing into homeless.
- Large amount of upfront expenses– not everyone can buy their own house as that Income may restrict them from buying their own house. This is the major problem because there are many people who cannot afford paying monthly or other installment for their loan taken for their house. As this will increase there up front expenses.
There are few factors that you need to consider before buying your own house
- Requirement of the house– First you need to decide the requirement of the house as if you need a house in a specific locality, or need some specific ambience, or any specific infrastructure. Also need to decide about the structure of your house which includes the number of rooms, washroom, kitchen, health facilities etc. You need to make sure that these requirements are made by keeping your budget into your mind.
- Select location– you need to decide a perfect location which will be suitable for you and your family. You also have to make sure that it is a safe location or is inexpensive and is under your budget. You also try to keep in mind that your house location should not be far away from the city as it will increase your transportation cause as well as the cost of reaching basic necessities.
- House design– the next thing you need to consider is to decide the design of the house as it will become the visual presentation of your house as well as your design will decide the cost and the maintenance that will be required for building your house. If you keep your design very unique it will bring a lot of cost and become expensive.
- Cost of getting utilities– you also need to calculate the cost of getting the utilities such as electricity, water, gas, etc.
- Mortgage to build your house– you also need to calculate the amount of mortgage that will be required to build your house. You have to make sure that you are getting the amount that you will be able to pay in future without getting any extra burden on your shoulder.
These are the few pros and cons of buying or renting out a house which will help you decide to take a decision by making saw that you are not increasing your cost and getting best benefits out of it.