Everyone dreams of living the good life and being comfortable and this dream is
the dream of having all your basic needs and also having things that communicate
value for example having a dream job a dream car or even a dream home there's a
sense of accomplishment that comes when you achieve all these things and part of
that is owning your own home before you decide that you want to become a
homeowner there are some things you need to consider while it is true that buying
your own home is a great accomplishment it does not mean it's the best option
sometimes renting may be the best option and in this video i will share with you
five reasons you should rent instead of own and if you're new to the channel
then hit the subscribe button below for more life changing content
reason number one you can avoid agent fees the first expense you have to
consider when determining whether or not you want to become a homeowner are agent
fees in some countries buying a home will include the cost of your buying
agent services typically these costs are a percentage of the home's value which
is tacked onto the purchase price of the home however this expense is not always
beared by the buyer in fact when i bought my home i paid absolutely nothing
in terms of realty fees but it comes with a catch you see once you buy you
will almost certainly end up selling the house at some point and then you'll be
on the hook for the selling agent's commissions when you decide to sell your
home you will need a real estate agent that will advertise your property and
look for buyers for you this commission fee can sometimes be as high as six
percent this may look like a small amount but it definitely takes a toll on
your total proceeds for example if you were selling your 500 000 home you would
be handing over 30 000 to your agent which could be a significant portion of
the down payment for your next property renting a property is usually simpler a
simple search online can list all the properties available for rent in a
certain location and most times you get to talk with the landlord who is also
the owner of the home this removes the agent fee that you would have to pay if
you were to buy instead for this reason it is better to rent a home instead and
cut out these extra fees reason number two renting avoids debt
the second reason that renting is preferable over owning is that renting
allows you to avoid taking on hundreds of thousands of dollars worth of debt
you see most people cannot buy a home outright in cash which means that they
need to borrow funds from the bank as a matter of fact the amount of mortgage
loans that is owed annually is in the trillions of dollars worldwide but you
can avoid adding to this figure if you decide to rent instead the price of
buying a new home is usually too high so most people consider the option of
buying on a mortgage loan this is how it works you pay a certain percentage of
the total cost of the property upfront and then use a loan to pay up the
remaining part this sounds like a fair deal but is it really one the average
price of most new homes is five hundred thousand dollars let us assume that you
get a mortgage that allows you to pay just ten percent up front which would
require a down payment fifty thousand dollars this is a small amount compared
to the actual price but the average person will need several years to be
able to save up to this amount buying a home in this case means that you'll have
to withdraw all of your savings the easiest way to avoid debt is to avoid
buying a home now if you have the money for a down payment and want to build
equity then that's fine but just know that you will be in debt for the
foreseeable future and for some people that financial stress is something they
would rather avoid reason number three less financial
one of the reasons why most people are not able to buy a home is that they
can't afford one buying a home will cost you a lot of money and you may be
considering the option to lower your financial responsibility renting a home
means that you can save on numerous costs which ultimately allow you to keep
more of your hard-earned money on hand one of the common misconceptions about
renting versus zoning is that it is always cheaper to buy than to rent in
the long run this is not always true as it can be more expensive for you to buy
in the long run compared to when you rent so if you want to reduce your
financial responsibility you have to compare the two options and choose the
one that works best for you there are several factors that will determine
whether buying a home will be cheaper in the long run than renting for example
the location of the home you want to buy will determine whether its value will
increase over time or not in fact in this video you are going to see some
instances where renting will help you spend less than if you were to own as a
homeowner you have to constantly do maintenance and repairs on your home
this is a large expense that can be avoided if you rent if something goes
wrong your landlord will be in charge of doing the maintenance and the repairs
that are necessary for instance if your roof is leaking you can easily call the
landlord to come fix it this is not the case when you buy a home you have to do
all the repairs by yourself with your own money
sadly some repairs will be expensive and again this will eat away at your ability
to save and invest don't get confused when people tell you
that renting is throwing away money the truth is that your money is not lost
when you pay rent as you are gaining utility from that space in the form of
shelter and comfort in fact there are hidden fees that you
have to pay if you buy a home so the true price is more than what you
actually paid initially you have to pay property taxes and insurance which are
just a few items you avoid as a tenant so before you make a decision that
buying a home is more financially prosperous than renting you must factor
in all the costs reason number four more flexibility
renting instead of buying gives you more flexibility you are not restricted to a
particular place and can easily move if your life situation were to change
homeowners however do not have this same level of flexibility once you plant
yourself in your home you've already incurred a ton of one-time costs and
would have to incur more if you wanted to sell it's for this reason that as a
rule of thumb if you were not going to live in an area for more than 5 years
the best advice is that you should not consider owning a home but rather
renting but what would force you to move in the first place you may be wondering
well you may be offered a new job opportunity in a different city or
perhaps you have a love interest that lives abroad when you rent a home it is
easy to move but when you own a home it becomes difficult a homeowner would have
to put their house on the market wait for an appropriate offer and then sell
whereas a renter could give his or her notice and leave
sometimes finding an interested buyer is a challenge and you may end up selling
it for a lesser price than the current market value just to break even another
thing that makes renting the best option if you want flexibility is because you
can stay wherever you want you can easily have access to urban areas with
high social and infrastructural development it will be expensive to buy
a new home in such places but affordable if you're going to pay rent renting also
gives you access to some basic amenities that would otherwise be too expensive
for you to set up in your own home these things include having access to a
swimming pool or fitness center in your rented home and if for any reason you
decide to move to another location you can do that with ease
reason number five the opportunity cost of a down payment
the final reason it is better to rent than own comes down to a cost that most
people overlook simply put opportunity cost is the cost
of an alternative for gone and when you put down tens of thousands of dollars on
a home as a down payment renovate your house or pay your property tax bill that
money could have been used elsewhere for example if you buy a home that's priced
at four hundred thousand dollars with a twenty percent down payment then you
would have given the seller 80 000 of your hard earned cash this money will
sit as equity in your home and as a property rises in value this initial 80
000 investment will increase let's say that homes in your
neighborhood are appreciating at four percent a year after ten years your
initial investment would have risen by almost forty thousand dollars to just
less than a hundred and twenty thousand dollars that sounds pretty good right
well what if that large sum of money was invested instead while you rent it if
you were able to achieve the stock market historical return of seven
percent then that same eighty thousand dollars would be worth almost a hundred
sixty thousand dollars or nearly double so what is the opportunity cost in this
case well it's the difference between the home appreciation and the market
appreciation or in this example 40 000 not to mention this doesn't even
consider other expenses like property taxes and home insurance that could have
been invested too if you decided to rent rather than buy
now if you ask me i would rather have earned that extra 40 000 but this is
just the tip of the iceberg when it comes to opportunity cost you see to
save up that eighty thousand dollar down payment you would have likely had to
have saved for numerous years assuming you saved thirteen hundred
dollars a month for five years to amass that down payment which you left as cash
in your bank you would have given up a massive investment opportunity you see
investing thirteen hundred dollars a month for five years at seven percent
would have left you with over ninety three thousand dollars rather than the
eighty thousand dollars you would have if you were to earn and save during that
time but the final opportunity cost that just about everyone overlooks is your
time your time is valuable and when you own a home versus renting you tend to
have a lot of responsibilities for instance as a homeowner you need to take
care of the property attend to appliance issues and do regular inspections of the
home however as a tenant you are basically absolved of all these
responsibilities your living quarters become a very hands-off responsibility
and all you need to focus on is paying rent on time and keeping it clean with
all this freed up time you can work more or enjoy your free time rather than
doing boring homeownership chores that will take time that you will never get
back therefore while owning a home is all the
rage there is a strong argument that renting may just be the way to go hey it
looks like youtube thinks this next video is the one that will change your
financial life forever give it a watch and let's see if they're right