“Should I rent or buy a home?” is a question prospective home buyers should always ask themselves before they dive deeper into the buying process. Depending on several factors, some people are better off renting for the meantime while others are in a better position to purchase a home.
Here are four aspects to consider as you deliberate between buying and renting a home in Las Vegas.
The duration of your stay
The first thing to take note off is your intended length of stay. Buying a home is a costly endeavor that can earn you returns on your investment in the future. Meanwhile, renting a home may be more practical for others.
- Buy a house if: You intend to live in the house for at least five years and perhaps even more. This will give the property ample time to appreciate. Moreover, you will be able to spread out the costs you incurred in buying the house and, eventually, reduce your debt.
Three years is not enough time for a house to appreciate. It can also hurt your finances as you may also need to pay capital gain taxes.
- Rent a house if: You foresee yourself moving to another community or state in the near future. If your profession requires you to travel frequently, renting a house gives you flexibility. You won’t be burdened by home maintenance and other responsibilities.
House prices and the current state of the local market
Market indicators and the overall economic climate play a role in the rise and fall of house prices. There will be times when it is much better to purchase a home than to rent.
- Buy a house if: The market is stable. Even better if it is showing signs of significant and continuous growth. For instance, a $250,000 home bought in a market with an annual three percent price appreciation can be worth over $330,000 in 10 years. The same cannot be said when you purchase a house in a market with only a percent of annual price increase.
- Rent a house if: Market trends indicate that the local real estate is suffering from continuous declines. In such a climate, a house as an investment can be risky. It can cost you a fortune, with the property’s value barely appreciating (or not at all) every year.
Renting a home would be a much safer bet until market conditions have stabilized and are showing signs of growth. If you want to invest, consider purchasing stocks and bonds for the mean time.
The responsibilities of a homeowner
Some people liken the responsibilities of a homeowner to having a full-time job. It will require a lot of your time and attention, as well as finances.
- Buy a house if: You are mentally, emotionally, and financially ready to be a homeowner. House management will require patience and nifty budgeting skills. You will also have to be diligent in making sure issues and repairs are addressed in a timely manner. After all, the house is yours and yours to look after.
- Rent a house if: You are not ready to become a homeowner. It could be that your financial capabilities are not enough to keep up with the monthly expenses of owning a home. It could also be that most of your attention is needed somewhere else. Perhaps, at this time, renting is simply the better option.
Your main goals and motivations
Personal reasons, short- and long-term goals, and other wants and needs also play a big role in determining whether you should buy or rent a home.
- Buy a house if: You need it. It’s aligned with your short-term and/or long-term goals. It could be that you are starting a family or you need stability. Maybe you are ready to settle down and establish some roots. Perhaps this will be your starter house or your retirement home, or a property you’ll pass down to your kids.
- Rent a house if: Your primary motivation behind buying a home is for investment purposes. As mentioned earlier, when the timing and current market conditions are not aligned, a house can make for poor choice in investment. Home ownership can be extremely rewarding when done right, and if you’ve yet to grasp the risks of investing in a home, perhaps the better path would be to invest in stocks, bonds, and mutual funds.