Should you buy or rent?

Pros of buying

Stability

When you buy a home, there is certainty involved. There is no risk you’ll be displaced by a landlord, you can decorate and renovate however and whenever you like, and you can live in it for as long as you like. When you rent, you have little say over how long you are allowed to live there, and the landlord can decide this for you at any time.

Property investment is safe

Investing in property is one of the safest ways to invest your money, if done correctly. Buying a house that is likely to increase in value over time is highly beneficial in the long run, and can result in a significant profit.

Privacy and freedom

Renting very often comes with periodic inspections. Owning and living in your own home allows you to have more privacy than if you were renting a home. You are also free to use the house however you like, including owning pets. If you own a pet, it might be more difficult to find a rental property that allows for pets. When you own the house, you can have as many cats and dogs as you like.

Cons of buying

Risk of declining value

If you buy a house, eventually, you will own that house, but there is always the risk that it won’t be worth what you originally spent on it when you want to sell. Ideally, buying a home will result in eventually selling the home for a profit, and using that profit to move into a better house or better location.

It is a long-term investment

When buying a home, you need to think of it as a long-term investment. Spending money on a mortgage for years can become tedious and may not feel worth it. It is important to remember how you will be benefited in the long run, and try not to let it affect you in the short-term.

You’ll be paying interest

Unless you have millions of dollars under your belt, it is likely you will need a loan to purchase a property. Loans come with interest, which can sometimes add up to a large sum of money. Interest can fluctuate throughout the life of your mortgage, and you might end up paying more interest than you originally thought.

Pros of renting

More savings

The money you would have spent on a house deposit, you still have access to, and you can spend it however you like. This means more money for things like travelling, studying, and other entertainment.

More freedom

Want to leave the country tomorrow? When you’re renting, you can. Renting gives you that freedom to do what you want when you want, without having to worry about your ongoing debt. You can move houses as often as you like, something that would suit those moving around for a work a lot.

Allows you to invest in more

If you have invested all your money into your home, this is your sole investment. It is unlikely you will have money left over for other investment, especially if you are a first home buyer. If you choose to rent, you will be able to use your savings across a range of investments, spreading the risk associated with investing.

Cons of renting

No forced savings

When you buy a house, the money you put into it is like forced savings. You have to pay your mortgage payment every month, and eventually you could sell the house and get all that money back. When renting, you don’t get the money you spend on rent back, ever.

Less ability to personalise your home

When you are renting, you don’t have to option to renovate, paint, or change things about the home. You usually have to leave the home how it is, which can sometimes feel outdated, as landlords aren’t likely to keep the home modern and fresh since they aren’t living in it.

Rent payments could increase

When you are paying off a mortgage, the repayments remain the same for the entirety of the loan. Rent can increase at any time, and you need to be prepared for this. Just because you find a great place for $100 a week, doesn’t mean it will remain $100 a week forever.

This blog post is the intellectual property of Peter Taliangis of Professionals Fremantle and is being used on this site solely as a representation of my work.