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. On the other hand, owning a home may prove to be not the best action also for some because of the maintenance, taxes, insurance and others that would cost more than renting, like in some places in the Pacific Northwest.
So, given that you are in the financial crossroads of whether to buy or rent your house, there are some suggestions that will make your decision as objective as possible.
First way to tell what is better, to rent or to buy, is to find out the P/R ratio or called price-to-rent ratio. The number that you will get from this ratio will give you more or less an idea whether the homes in your interested area are fairly priced. The computation of this ratio is first you look for two similar units, where one is for sale and one is for rent, and divide the sale of the for sale unit to the yearly rent of the unit for rental, and the resulting number after your division is the P/R ratio. According to experts, the higher the P/R ratio of 20 means it is better to rent than to buy the property in that area. There is no available P/R ratio always in your interested area, and so it is best to contact a real estate agent to consult the matter.
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. If you find out that the housing in that area is overpriced against your income, then you have the option to think twice in purchasing the property.
There is also a rent versus calculator that can help you decide what to do and this information you can get from magazine source. In the end, planning to own a home should be grounded on the reality of your financial capability and not on what others would choose for you. Others would look at their earnings in the particular area where they plan to work and settle against the housing costs of the area, and the information will help them decide whether to rent or buy for now.