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The Pros and Cons of Renting and Buying Property
- By Elizabeth McLachlan
- Published 01/2/2010
- Real Estate
- Unrated
Elizabeth McLachlan
Elizabeth works for SAHometraders, South Africa's leading online property portal, advertising property for sale and to rent in all areas of South Africa including Jeffrey's Bay property, Paarl property and Kleinmond property.
View all articles by Elizabeth McLachlan
This age-old question has caused much debate and even if renting or buying makes a lot of sense in certain circumstances; every person comes to a point in his or her life when they have to decide between renting or to buying. Here is a list of pros and cons for you to consider before you make that all-important decision.
The pros and cons of buying property:
Pros:
· As the owner you can change the layout and décor of the property. This means that you can renovate and improve the property over a long period of time and thus improving the property’s worth.
· Property helps you build equity. This means that you the day you decide that you want to move or upgrade you will have something to sell, while when you are renting you are certainly not building equity.
· In an emergency, a property can help you get a second loan. Owning property makes you credit worthy and banks won’t think twice to lend money to you again.
· Property is a long-term asset that offers stability and security.
· Property holds inheritance value.
Cons:
· Homeowners are responsible for paying rates, levies and taxes. Depending on where you live and what your property is worth, this can come to a substantial amount every month.
· The growth of your investment is dependant on the economy. When the economy is suffering you property’s value sometimes decreases. If you then have to make an
urgent sale, you might have to settle for less than you paid.
· Property is a long-term commitment. Once you’ve signed on the dotted line, you can expect to have to make a monthly down payment for the rest of you life.
· As the owner of the property, you are responsible for all maintenance. Property needs a lot of attention if you want it to hold its value. This means saving up money for paint jobs, repairs etc.
· Buying property can be risky, as you might make a bad investment decision.
The pros and cons of renting property:
Pros:
· As a tenant you are not responsible for maintenance.
· Tenants don’t have the financial responsibility of paying taxes, levies and rates.
· There are no concerns over interest rate hikes.
· Tenants only have to insure the content of their property not the property itself.
· Renting offers a lot of flexibility as you can give a few months’ notice and not have to worry about finding a buyer.
Cons:
· You have to budget for rental escalations.
· You need permission to change the layout and décor of the property.
· You have to obey by the rules of you landlord.
· You are not creating equity while you rent.
· You are dependant on the landlords to fix any maintenance problems.
Owning property is the single biggest investment that any person can make, however the time to buy should be considered carefully. Whether you decide to rent or buy, remember that both choices comes with their own risks and rewards.
The pros and cons of buying property:
Pros:
· As the owner you can change the layout and décor of the property. This means that you can renovate and improve the property over a long period of time and thus improving the property’s worth.
· Property helps you build equity. This means that you the day you decide that you want to move or upgrade you will have something to sell, while when you are renting you are certainly not building equity.
· In an emergency, a property can help you get a second loan. Owning property makes you credit worthy and banks won’t think twice to lend money to you again.
· Property is a long-term asset that offers stability and security.
· Property holds inheritance value.
Cons:
· Homeowners are responsible for paying rates, levies and taxes. Depending on where you live and what your property is worth, this can come to a substantial amount every month.
· The growth of your investment is dependant on the economy. When the economy is suffering you property’s value sometimes decreases. If you then have to make an
· Property is a long-term commitment. Once you’ve signed on the dotted line, you can expect to have to make a monthly down payment for the rest of you life.
· As the owner of the property, you are responsible for all maintenance. Property needs a lot of attention if you want it to hold its value. This means saving up money for paint jobs, repairs etc.
· Buying property can be risky, as you might make a bad investment decision.
The pros and cons of renting property:
Pros:
· As a tenant you are not responsible for maintenance.
· Tenants don’t have the financial responsibility of paying taxes, levies and rates.
· There are no concerns over interest rate hikes.
· Tenants only have to insure the content of their property not the property itself.
· Renting offers a lot of flexibility as you can give a few months’ notice and not have to worry about finding a buyer.
Cons:
· You have to budget for rental escalations.
· You need permission to change the layout and décor of the property.
· You have to obey by the rules of you landlord.
· You are not creating equity while you rent.
· You are dependant on the landlords to fix any maintenance problems.
Owning property is the single biggest investment that any person can make, however the time to buy should be considered carefully. Whether you decide to rent or buy, remember that both choices comes with their own risks and rewards.