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 widely available, and so for the particular area you are interested to dwell, it is better to refer to the real estate agent of the area.
Another means to tell the cost of housing in the area you are planning to settle is to compare it to the income of your family. If you find out that the housing in that area is overpriced against your income, then you have the option to think twice in purchasing the property.
You can also get information from other magazine source that has rent versus buy calculator that can help you decide which is best. 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. For those who are still starting with a family, you can consider the work where you will be assigned versus the level of housing costs in that area, and this will be your initial facts to make a decision of settling in that area.