Rent or buy?—it’s an age-old dilemma pondered by many a potential new homeowner or long-distance relocator. Each has its pros and cons, which makes it difficult to determine which is truly “best”. Ultimately, the right choice, renting or buying a home, depends on your personal situation.
How to Know Whether to Rent or Buy
Many who’ve never owned a home before, as well as those new to the Los Angeles area, ask about the pros and cons of buying, and whether they outweigh those of renting. Honestly, it really depends on your personal situation. Here’s how to determine whether you should rent or buy a home.
How long do you plan to stay?
One of the biggest deciding factors in whether you should rent or buy is how long you plan to stay. If you only plan to be in the area for a few years, it might be better simply to rent. If you need to be able to pick up and move without much notice, renting is definitely going to present more flexibility. But if you want to settle for three years or more, then buying might actually be the more financially smart option.
In fact, according to a study by NerdWallet, if you plan to stay in your home for five years or more, it is actually more affordable to buy than to rent. The longer you plan to stay, the more you’ll actually save by buying a home vs. renting one. Plus, buying comes with the added advantage of building equity—when you move out, you pocket the proceeds.
How much are you able to spend up front?
One of the biggest downsides to buying a home is its upfront cost. While there are a lot of loan options available that enable many buyers to purchase homes at lower upfront costs, or even provide assistance with down payments, it’s still likely going to cost quite a bit more than renting.
Typically, buying a home involves a bit more planning and saving than renting. While renting can usually be accomplished with as little as a few hundred dollars up front, buying runs anywhere from several thousand to several tens of thousands of dollars.
How important is customization?
One of the biggest downsides to renting is the number of restrictions often placed on the home and property. When you rent, you are merely borrowing space from the property owner, and typically, you’re expected to return the home to its initial condition before vacating. This can be a big deterrent for occupants who want to paint or add other customizations.
When you own a home, you have a lot more control over what can and can’t be done. That might range from updating paint colors to fully renovating a room, layout, or even the exterior.
How important is stability?
Another downside to renting is instability. When you move into a rental property, you typically sign a one- or maybe two-year lease agreement. After the end of the lease terms, your landlord has the ability to adjust the rent or other lease terms as they see fit. This could potentially price you out of your home, forcing you to move again. When you buy with a fixed-rate loan, your monthly payment will not change for the duration of your loan.
Rental properties can also be sold or can change management. New owners or property managers can mean big changes to ways of doing business, which could in turn affect your living arrangements.
A Few More Pros to Buying
Renting and buying each have their pros. Renting provides flexibility, lower initial costs, and at times, lower overall costs. Buying offers stability, customizability, and potential for considerable equity growth.
There are a few more pros to buying, though! Homeowners enjoy a variety of tax breaks, most notably, deductions on property taxes and interest payments. Owning a home also provides an investment in a community, which can offer a sense of belonging and companionship.
Thinking About Making a Move in the LA Area?
Are you thinking about buying a home in the Los Angeles area? If you’re torn between renting and buying, we’d love to help talk you through the pros and cons of each. We at Brad Korb Real Estate Group have been buying and selling homes in the LA area for decades, so we’ve helped many a buyer make the right decision! Contact us today to learn more about what we can do for you.