Owning instead of Renting
It’s not easy to jump in to the housing market as a first time home buyer. Often, people decide to test the waters and rent a place and sometimes become fixated in this situation. There are many uncertainties that follow the decision to own a home such as financial worries, the unease of additional expenses that accompany owning and maintaining a home and the long term commitment of a mortgage. But, taking a few steps back and looking at the overall picture, you may start to see why it is more worthwhile to own rather than rent.
The first thing to consider is that in general owning a home is a positive asset. If hard times come, you can always sell your home. The second thing to consider is that not only is housing an asset, but it is also generally an appreciating asset which means it increases in value the longer you hold it. So, if you decided to sell it out of financial hardship or for pure profit, you would actually make money on it. Appreciating assets are highly overlooked as our society is bombarded with the lust over many depreciating assets such as fancy cars. As tempting as it is to buy a sporty convertible instead of using that money for a down payment on a starter home, the moment you drive that vehicle off the lot, you have lost at least 20% of what you paid for it. Not the most financially wise option to choose.
So, now that we understand that housing is an appreciating asset, you should be able to start to see that if you chose to rent a home, you are not only giving away 100% of money you pay for rent, you are losing out on the potential profits of this appreciating asset as well. The person you are renting from is profiting from you monthly rental fee as well as the appreciating value of the home you rent – because of this appreciating value, your rent costs will likely continue to rise as well. Ideally, you would like to be pocketing money as the renter, not forking over money as the rentee.
