Why Rent when you can own a home, real estate
Guest Post by James Wexler Phoenix and Scottsdale REALTOR
I am a real estate broker/agent. I make my living helping people buy and sell Real Estate in the greater
The first rule of Real Estate 101 taught to new agents is to ask “Why Rent when you can own?”
Traditionally, and especially in the past 10 years, following this home buying advice has proven lucrative and accurate.
However, the last 2 years has proven that this is not a hard fast rule to follow for every potential home buyer.
I have read so-called experts claim that if home prices do not rise, then you are doing little more than renting from a bank.
Since, as we have seen recently, real estate prices do not always go up, you need to follow a better guideline in your decision making than answering the age-old question of “Why Rent when you can own? and “renting is throwing money away!”
Here are the questions to ask yourself if home buying is right for you
- Do you need the flexibility of renting? or can you afford to stay in your home for at least 5 years or longer?
- Can you afford a 20% down payment?
- Can you afford a monthly payment on a 30-year fixed mortgage?
- ask your CPA … Does the tax benefit of home ownership offset a potential decline in home value?
- Have you reduced other real estate debt before you add more on this home purchase?
- Does a fixed monthly mortgage payment for the next 15 years outweigh the likely inflation of rents during that same time (called an inflation hedge)
These are broad questions that can have many variations for each individual situation. However, it is a good foundation from which to start your home buying process.
You do not need the Real Estate boom to enjoy the many benefits of owning a home.
However, you do need to the answer the right questions above to decided whether or not real estate ownership is right for you and your family.
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Copyright © 2008 By James Wexler, All Rights Reserved. *Don’t Buy ! Rent ! *
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
7 Responses to “Why Rent when you can own a home, real estate”
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September 27th, 2008
I think the downpayment point is extremely important to emphasize. One of the factors in the mortgage crisis was that many people got homes without a downpayment, so I think from now on it is really important to stress that people need to have equity in the home. That can no longer be ignored.
October 1st, 2008
Wonderful blog! This is the perfect time to address this issue. I also agree with Emily, all of these factors need to be addressed when making the decision whether to rent or buy.
October 3rd, 2008
You raise some good points. I bought my flat 2 years ago having been told that ‘why rent when you can buy’ and now I feel trapped to some extent because I can’t sell it and I want to move. Renting at least gives you the freedom to move at the drop of a hat, so it’s important to decide if you are happy staying somewhere for 5 years as you say, before making the decision to buy.
October 5th, 2008
Rent is solution for newbie.
October 6th, 2008
Renting is a valid choice, but I would not make the blanket statement that renting is the solution for a newbie. Over the long term, renting a home is much more expensive than owning a home. If purchased a home today with a 30 year fixed mortgage, did not refinance it, maintained it, and went to sell it 10 years from now, in my opinion there is about a 99% chance that you would be way ahead of where you would be had you rented a similar home.
The blanket statement about newbies is hard to take, as everybody is a newbie until they do something.
October 8th, 2008
For Me, Renting gives you the best options of location, it might be cheaper to own a house….but DUH it’s located 100 miles away from your working area,
i once took the grand idea of “why rent when you can own” into consideration, but after traveling 10’s of miles just to get to work, it affected my ability to achieve and excel (it took me 3 hours to traveling time),
last but not least, the best advice that i can give is to work your way up the ladder first, Rent a comfortable place first so that you may increase your earnings, don’t get blured up in your mind of owning a house is good…. your cash flow get’s blocked even if a opportunity of business walks through you won’t have the financial backup to try it,
bottom line is, Slow and Steady Win’s the Race
Cheers Mate
October 19th, 2008
Buying my townhouse was probably the best thing Ive done so far. It was actually cheaper then renting because the townhouse we got into was bankowned. Now were building equity, and hopefully sell it in a few years if we get out of this real estate slump.