Home ownership is the American dream, and most financial professionals agree that buying a home is a smart money move. Real estate is a good solid investment that, if done right, will increase in value and provide your family a home for many years to come. You may have heard someone say, “Why would you rent a house or an apartment? You’re just throwing money away when you could be building equity in your own home or condo!” So, is renting a bad money move? Is there a right time to rent?
As great as home ownership can be, if it’s not done right it can be more of a blessing than a curse. There are several scenarios when renting may be the better option.
If you’re not financially healthy, it’s the right time to rent. If you’re deeply in debt and have very little savings, buying a home would likely bring more money stress your way. We tend to underestimate the additional costs of being a homeowner versus a renter. When you’re renting, your landlord pays for the taxes, maintenance, and emergency breakdowns. If you’re a homeowner, that’s all on you. If you don’t have a savings account to take care of fixing or replacing appliances and other upkeep, home ownership is going to stress you out to the max!
If you’re in transition, it’s the right time to rent. If your life is in transition, purchasing real estate may not be the right move for you at this time. If you just got divorced, your spouse recently passed away, your kids have left for college, or you’re in between jobs renting an apartment, house, or condo may be the best solution for now. The problem with buying and selling a home is that the process usually takes time and money. If a newly widowed woman buys a smaller house, then decides a year later to move to another state to be closer to her grandchildren, she’s going to have to deal with the expense and stress of selling a house on top of moving. Renting for a year while she processes her grief and figures out her future plans would save her money and effort.
If you like to wander, it’s the right time to rent. Owning a home ties you to a specific location. While many people love this fact, there are others who feel stifled by this. If you love to travel and would rather spend your time and money exploring the world, home ownership may not be the right choice for you. If you own a home and spend extensive time travelling for work or pleasure, you’ll end up paying someone to ensure your property is cared for while you’re gone. Renting a place may be a much better option for those happily afflicted with wanderlust.
If relocation is in your future, it’s the right time to rent. If you or your spouse is in the military or has a career in which relocation is a reality, buying a home could be a financial disaster for your family. Real estate is a good investment in a long run, but buying then selling a few years later could leave you upside down or in a break even situation. If you’re moving out of state, showing and selling the home while trying to settle into a new military base or new office culture is more stress than anyone needs! Of course, you could turn that house into an income-producing investment and let Real Property Management Midwest handle the tenants and send you a monthly check.
There is a right time to rent and a right time to buy a home; it all depends on your individual financial and family situation.
Christine Luken is the Financial Lifeguard. She helps people who feel like they are drowning financially – or just treading water – get to a safe place and catch their breath. Then she teaches them how to “swim”. She coaches individuals, families, and entrepreneurs to get control of their monthly spending, pay down debt, and save for the future. You can find Christine’s blogs, podcasts, and videos on her Financial Lifeguard website.