Real estate agents reveal 5 situations where renting is better than buying a house.

We all know the saying, ‘rent money is dead money.’ That it’s better to buy a house and pay it off, rather than contribute to your landlord’s mortgage. But is this a blanket ‘rule’ that applies to everyone? No, it’s not.

Date:

20-May-2020

Category:

Lifestyle

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Author:

Amanda Smith

Real estate agents reveal 5 situations where renting is better than buying a house.

We all know the saying, ‘rent money is dead money.’ That it’s better to buy a house and pay it off, rather than contribute to your landlord’s mortgage. But is this a blanket ‘rule’ that applies to everyone? No, it’s not.

Yes, we’re real estate agents in the Adelaide Hills who own homes. This doesn’t mean that buying property is automatically the better choice.

Hey there, millennials, this resource will probably resonate with you. If you’re wondering is it better to rent or buy, go pour yourself a glass of wine (Adelaide Hills, of course). You’re about to find out.

If your family keeps asking when you’ll buy a house, bookmark this reference.

Reason #1: It’s less expensive

Let’s preface this by saying, budgets are subjective. What you might think is expensive, someone else will assume it’s ‘too cheap.’ According to the ABC, Adelaide first-home buyer couples require 4.2 years to save the $90,665 on a medium-priced property. That’s around $21,500 per year. Is this number alarming?

There are costs beyond the initial deposit including maintenance, repairs, and fees. These add-ons are just part of the package of home ownership and can’t be avoided. In any discussion about the rent vs. buy comparison, it’s important to explore the characteristics of the suburb. Maybe the price of renting far outweighs the mortgage repayments.

Mount Barker, for example, has a median house price of $430,000 and the weekly rent is $380. Let’s say you buy that $430,000 house with a $75,000 deposit, your monthly mortgage would be $1,835 (only $660 more than renting). Yes, it’s cheaper but you’ve got to ask yourself what’s more important: spending less or being a homeowner.

Reason #2: You can move easily

Do you find that you outgrow houses every few years? Whether it’s because your family is growing or you simply like to upgrade your space, renting is the more transient option. Sure, you can always sell a house or choose to rent it to tenants, but it’s not as easy.

There are other motivations that cause people to move, such as financial reasons or local developments that change the face of a suburb. Renting offers flexibility, less restrictions, and the option to coordinate a big move once a lease ends (with are as short as 12 months).

Reason #3: It’s just not the right time to buy 

We can think of a million reasons why it’s just not the right time to justify the costs of buying a house. Maybe you’re starting a business, planning to move abroad, have just got out of a relationship or you’re saying for a wedding. If you’re working towards something big in your life, it’s probably not the best time to sign a 30-year loan. You’ll know when the time’s right. If renting works for you, that’s great.

Reason #4: Renting is simpler

Renting offers less headaches. If there’s an issue with the house, you call the property manager. There are other people, responsible for making sure the house is safe everything is functioning as it should. For couples, family or friends who share a mortgage, it can be difficult if issues arise, as it’s not as easy to walk away (and lose equity). Legal documents are necessary and it’s critical to lay out who does what. As a renter, you don’t have to think about any of this. Win!

Reason #5: Selling a house can be hard (and time-consuming) 

Houses can sit on the market for weeks, sometimes months. There are many variables that dictate how quickly a property gets snapped up. If there’s economic woes, the wrong season or the people applying aren’t willing to pay what you want for it, it can slow down the process.

This can become a burden, especially if you’re packing up to move elsewhere in the Adelaide Hills. It’s not possible to sync the end of your lease with the next house, like you can with renting.

Ask yourself: If I do decide to buy a home, now or in the future, will I be able to weather it staying on the market for months? It’s also important to take the time to research the data around house sales in the Adelaide Hills suburb you want to live in. It can help you make more of an informed decision. 

So, what is it? Renting or buying?

Sometimes it’s better to rent, than buy a home. And only you can make that decision. Follow what feels right and remember, just because you’re renting now, it doesn’t mean you can’t work towards home ownership.

Until then, enjoy the flexibility and convenience of being a good renter. Wear that badge with pride! Being a prompt rent payer could be noted by banks later on, when they’re deciding if you can handle mortgage payments.

Renting, good!

Love renting, but want to move to a different house or suburb in the Adelaide Hills? Did you read this, thinking, maybe I will talk to a real estate agent to explore my options? First National Nitschke works across houses and land sales, rental properties and property investment. We care about finding you the best home, whatever way it works for you.

Give us a call on 8391 5004 or fill in this contact form and we’ll get back to you within 24 hours.

A home is what you make it, after all.