Most adults go through a series of predictable life stages, which include the eventual desire to be a home owner. Some people take the plunge sooner than others, but that decision is typically set in motion by changing circumstances, such as financial readiness, additions to the family, or career advancement.
Owning your own home certainly has a different "feel" to it than being a renter. Not only do you tend to feel more established and successful, but home ownership gives you more control over your environment. When you no longer have to answer to a landlord, you don't have to concern yourself with unannounced visits, inspections, restrictions, rent increases, or even lease terminations.
Renting an apartment, condo, or duplex may make the most sense when you're getting your first taste of independence as a recent college graduate or a young newlywed couple. However, as maturity settles in, buying a house becomes the next logical step. In addition to the investment value of real estate, most people also gravitate toward the idea of more privacy, more control over their lives, and the sense of accomplishment that comes from owning your own home.
Parenthood brings changes. Once children come into your life, your whole perspective undergoes a seismic shift! New priorities come to the forefront, such as relocating to a better school district, living closer to relatives or a recommended child care facility, and having a spacious yard where your kids can play. Owning property with a private, grassy space for a sandbox, a swing set, or backyard birthday parties are also among the reasons home ownership appeals to young parents.
Gardening becomes an option. With few exceptions, the joy of backyard gardening is a pastime that's only available to home owners. Whether your interest lies in growing your own vegetables, herbs, or wildflowers, cultivating a garden can be a very satisfying aspect of home ownership. While there is definitely more work involved in landscaping, maintaining property, and keeping your lawn looking manicured, the pride of ownership that comes from beautifying your own yard makes it all worthwhile!
Building equity: While deluxe townhouse rentals and luxury apartments may offer some temporary appeal, there comes a time in life when you want your monthly payments to begin feathering your own nest, rather than helping your landlord retire comfortably! Although your rented living space may provide you with immediate comfort, ample storage, and a place to entertain friends, it's your landlord, not you, who's receiving the tax advantages and investment value of the property you're living in.
Even though apartment living or townhouse renting may have suited your purposes up until now, you can't help but wonder whether it's time for a change -- specifically, a change that can strengthen your financial security and provide you with a resource you can leverage and enjoy for years to come.
There can come a time when renting no longer makes good sense. If you've been renting for several years, it could be tough to identify when that time has arrived. You could get comfortable knowing that you don't have to concern yourself with paying for maintenance or repairs at your property.
Low to no home maintenance costs might notbe enough to make renting make sense
However, even if you have a good landlord, if you rent long enough, you could end up spending more money on a property that you may never own than you would spend if you bought a house. If you're on the fence about whether you should keep renting or do something new and buy your own property, here are four signs that you may want to consider. Spot these four signs in your current rental arrangement and it might be time to stop renting:
- Landlord raises rent each year - Should a landlord raise your rent a few dollars a year, it might make sense to stay at a rental property for a few years, if you're truly not ready to buy. However, if a landlord raises your rent by $50 or more a month, it might be good to start looking for a house to own.
- Tenants are vacating at rapid speed - When other tenants start vacating a rental property, it could be a sign that rents have skyrocketed. It could also be a sign that there are issues with landlord behavior, un-kept promises and late repairs.
- Construction is increasing - Homeowners can band together to speak out against expanding construction work like new malls, casinos and hotels going up in the area. Apartment renters may not have this same leverage. Expanding construction can attract noise, traffic and behaviors that you may not want.
- Property decline - Bad landlords can let rental properties decline. Age is another reason why rental properties decline. While living in declining rental properties, you might be forced to deal with ongoing leaks, pests, holes in walls and sagging floor tiles, just to name a few of the annoyances that you might be left to deal with.
Renting may not make good long term financial sense
Renting can protect you from expensive home repairs, the types of home repairs that could cost you the money that you had budgeted for a new car, home upgrade or college education. That can happen whether you rent short or long term.
However, long term renting can also find you spending $100 or more a month on a rental property, a home that you might never own outright, than you would spend on a mortgage and home maintenance and repairs. As a long term renter, years could pass before you notice what's happening.
By the time you realize what you're doing, you might have invested thousands of dollars in a temporary home. That's why it's important to spot the signs that renting may no longer make good financial sense early.
You'll have to move away from comfort for awhile as you relinquish the idea of renting. But, just as you grew accustomed to renting, you could start feeling comfortable owning a property. You might also start to accept that owning property allows you to build equity. It's this type of equity that you can keep in your family. Property is also the type of equity that can position you for other loans like auto and business loans.