Should I buy or rent a residential property investment? Chances are you’ve come across this question a number of times and chances are you’ve found it particularly hard to answer.
It’s no surprise that the question proves difficult. After all, we all have our reasons and we have unique circumstances and preferences. However, we should still dwell in the facts and spend adequate time weighing between the alternatives to better understand which of the two proves to be more beneficial.
To help us do that, we’ve compiled a list of benefits that go with each option. Here, take a look.
- You build equity as time passes by. – In other words, each payment towards the purchase of the property adds up to one’s assets. We love equity because it represents ownership.
- You end up owning the property. – Once full payment is completed, the title transfers to your name. It becomes your asset and therefore something you own.
- You can do whatever you want with it. – In terms of renovations, improvements or upgrades, there will be no mandates or rules to live by. This means full creative freedom. You can even sell it or lease it out too whenever you deem necessary. That constitutes to another benefit which is income.
- You enjoy tax deductions. – Some expense items may be considered tax deductible thus lowering an owner’s total income payable at the end of the year. Plus, other benefits like federal tax deductions and homestead exemption may be availed where applicable.
- You don’t have to spend huge upfront. – Buying is very costly and requires a significant sum. That’s not very appropriate and practical for others that is why renting becomes more favorable as it will require significantly less upfront.
- You spend less on repair and maintenance. – Depending on the lease contract, the costs and responsibilities involving asset upkeep shall be born mostly by the landlord.
- You don’t suffer from market fluctuations. – When something goes amiss in the real estate market and home prices drop, you don’t suffer a huge loss. Rather, there’s even a chance that rental prices lower to encourage more tenants and to signify the current market value of the house.
- You can move in and out easily. – When leasing a residential property investment, there’s no fear that a huge chunk of one’s cash is locked within the asset making it easier to move if the situation calls for it.
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