Making a Choice on Whether to Rent or Buy a Home
Homeowners have experienced and can fairly say that there are pros and cons between renting and owning a home. An example of a big con in renting say an apartment is the closeness of your neighbour that you can actually hear their voices or 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. However, the maintenance costs in owning the property will prove to be significantly greater than renting the house because of the costs like taxes, insurance, maintenance, and others related to the ownership of the property, like if you are in the Pacific Northwest.
In the event that you are to make a financial decision whether to buy or rent your home, there are some ways to help you make an objective 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. This number that you figured out from the P/R ratio will give you a rough idea of the pricing placed on the homes in the area you are interested. 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. The P/R ratio is not …Read More →