Making a Choice on Whether to Rent or Buy a Home
There are pros and cons between renting a home and owning one as experienced by many homeowners. 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.
Owning a home is a common sense and smart financial decision for some because it gives them a sense of stability and freedom of the place they owned. 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.
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.
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. 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. 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. From the figures you have found out, this will give you some sort of idea if the houses in that particular area is overpriced, and this will make you think twice whether to buy or rent.
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. 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.