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Why Should You Buy a Home Instead of Renting One?
Manage episode 169814316 series 1227310
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In our current market, you’re much better off buying a home instead of renting one. Today I want to tell you why.
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Why should you buy a home instead of renting one? There are three good reasons I want to share with you today.
The first reason is that the cost of renting is on the rise. According to studies, rent increases have far outpaced inflation in recent years. Vacancy rates are low, and the growth in renter households is high. This means that landlords have greater pricing power to set their rents.
The second is the high cost of not owning a home. The average rate of a home price appreciation over the past 20 years has been about 3% per year. Let’s say that you invested $10,000 into a home at a purchase price of about $200,000 and over a period of a five-year hold, that property increased 3%. That means your net increase in appreciation (or equity, if you will) is about $40,000. If you subtract the first $10,000 for your down payment, your total equity growth equates to $30,000. That amount far outpaces anything you could’ve done while paying someone else’s mortgage by being a renter.
The third and final reason is that there are many tax benefits to owning a home. In many cases, mortgage interest rates and property taxes are deductible every year. Let’s say you pay $1,200 a month in mortgage interest and property taxes and you’re in a 25% tax bracket. This means you’ll save about $300 a month by owning a home versus renting one.
If you have any further questions about this topic, please don’t hesitate to give me a call. I look forward to speaking with you soon!
The first reason is that the cost of renting is on the rise. According to studies, rent increases have far outpaced inflation in recent years. Vacancy rates are low, and the growth in renter households is high. This means that landlords have greater pricing power to set their rents.
The second is the high cost of not owning a home. The average rate of a home price appreciation over the past 20 years has been about 3% per year. Let’s say that you invested $10,000 into a home at a purchase price of about $200,000 and over a period of a five-year hold, that property increased 3%. That means your net increase in appreciation (or equity, if you will) is about $40,000. If you subtract the first $10,000 for your down payment, your total equity growth equates to $30,000. That amount far outpaces anything you could’ve done while paying someone else’s mortgage by being a renter.
Renting amounts to paying someone else’s mortgage.
If you have any further questions about this topic, please don’t hesitate to give me a call. I look forward to speaking with you soon!
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