Ways in Deciding Whether to Buy or Rent a Home
From experience, people have realized that there are pros and cons in renting a home and in owning a home. One big disadvantage for example when you rent a unit is how close your neighbours are, to the point of hearing their shouts and footsteps.
For those who has the money, purchasing a home makes sense to them coupled with the fact that it adds stability to their wealth acquirement and the freedom to do what they want with their property. But eventually, owning a home may not be the best action, like if you are in the Pacific Northwest, because of the costs of maintaining the property like taxes, insurance, maintenance and so on that is often significantly greater than renting the house.
Therefore, on the assumption that you are to make a decision based on your financial condition whether to rent or buy your place, there are some ideas to help you stay objective in your decision.
One criteria for you to find out to help you decide whether to buy or rent is to check the price-to-rent ration or called P/R ratio. From this number out of the ratio computed will give you an idea on how the homes in that area are fairly valued. You can get the ratio number by first get two similar houses or condos, where one is for sale and the other is for rent, and divide the sale of the one to the yearly rental of the other, and the resulting number after you divide is your P/R ratio. One expert says that if you get a ratio of higher than 20, it is better to rent than to buy the unit in that particular area. The P/R ratio is not widely available, and so for the particular area you are interested to dwell, it is better to refer to the real estate agent of the area.
Your next pointer in gauging the cost of the housing in the place you are interested is to make a comparison with it to your family’s income. You will find that some housing may be overpriced in that particular area and you might not be comfortable living there given your income.
A certain magazine has a rent versus buy calculator that can help you in your decision on what is best for you. Lastly, it should be your financial realization when you plan to own or rent a property for your home and not through the persuasion of others. Depending on where you want your family to settle or where your work will take you and your family, you can already start to compare the housing costs in that area against the possible income you will get if you settle there.