There are advantages and disadvantages to both buying and renting a home or property. When it comes to renting, most often it means that people have access to more dispensable money. This tends to be beneficial in the short-term. However, buying a home or property often provides a distinct sense of safety, and it is considered beneficial as a long-term investment.
Buying a property
- In the long-term, being the owner of a property offers safety, possible expansion of personal wealth, and equity.
- The value of a property appreciates as the time passes and most of the time, you’ll end up getting profit when you decide to sell.
- Seeing as you are the owner of a property, you are not subject to the whims of another individual such as a landlord.
- You have ultimate creative control over the property. As such, you can renovate as you please whether that includes decor, extending parts of the home, or landscaping.
- You still have the choice to rent out your property so that you have more disposable income.
- You have a large financial responsibility to pay the mortgage and maintain the house effectively.
- It’s important to remember that there are additional costs to owning a home such as insurance, taxes, maintenance, as well as rates.
- Depending on when a homeowner decides to sell a home, they may have to deal with not making a profit. This could be because of a location losing its appeal, a recession, or excessive interest rates.
- Unlike someone who rents a property, a homeowner cannot simply move to another location. This can generally only occur after the sale of the property has been finalized – and this isn’t always a quick process. Someone who renets, however, generally only has to give notice that they’ll be moving, and this period is generally only 30 days.
Renting a property
- Renting a home provides you with a great deal of flexibility which is perfect for people who change job locations frequently or have to deal with any other uncertainty regarding where they want to live.
- Even if you could never afford to buy a property in an upscale or alluring area, you could perhaps be able to rent there.
- If you rent a property, it’s pretty easy to move out and relocate to either another property or even the city, state, or country. However, if you’re a homeowner then you have the worry of either having to find another tenant, or having to sell the property.
- There is no insurance to consider on the property, rather only on the contents of the property which belong to you.
- Seeing as rent is most often less than monthly mortgage payments, you should have more money left over at the end of the month to invest somewhere else, or spend as you please.
- A tenant does have to abide by the rules decided upon in the lease agreement. This may limit your actions relating to renovations on the property.
- You aren’t allowed to change anything about the property without first getting permission from the homeowner.
- Generally, you’ll have to work through a rental agent rather than directly contacting the owner of the property. As you might imagine, this third-party might mean that it takes a bit longer to settle any queries.
- The money that you put into renting doesn’t provide any forming of wealth nor a return on investment. In essence, the rent money pays off the mortgage of the homeowner.
- You don’t know if you’ll be able to extend your lease year over year.
The real estate industry has the potential to be extremely profitable and rewarding. Deciding to start a Real Estate Investment business could prove to be a great one – especially as you can do it from the comfort of your own home.
In this case, forming an LLC is a good place to start. You have the option of going into wholesaling, buying and flipping homes, or buying and renting properties – and an LLC offers protection of your assets, and it’s easy to start and maintain. LLC registration is fairly easy, and with prices ranging from $40 – $500, it’s not expensive either.