Making a Choice on Whether to Rent or Buy a Home
From experience, people have realized that there are pros and cons in renting a home and in owning a home. 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. But eventually, owning a home may not be the best action, like if you are in the Pacific Northwest, because of the costs of maintaining the property like taxes, insurance, maintenance and so on that is often significantly greater than renting the house.
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. You can get the ratio number by first get two similar houses or condos, where one is for sale and the other is for rent, and divide the sale of the one to the yearly rental of the other, and the resulting number after you divide is your P/R ratio. An expert said that if the computed ratio would result to higher than 20, then it is advisable to rent the property rather than buy it. If there is no available ratio data in your interested area, it is good to consult a real estate agent in that place.
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. 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. 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.