renting vs. buying - octane boosterdisadvantages of renting •limited control and freedom –...
TRANSCRIPT
Renting vs. Buying
Pros and Cons
Costs
Renting: Pros and Cons
• Renting: paying money to live in a
dwelling owned by someone else
• Landlord – owner
• Tenants – renters
Advantages of Renting
• Predictable housing costs –
• Monthly rent is consistent
• Do not need to worry about repair/maintenance bills
• Limited maintenance –
• Yard work, snow removal, painting, and repairs are generally the responsibility of the landlord
• Mobility –
• Ability to move frequently (month-to-month, 6 month, 12 months leases)
Disadvantages of Renting
• Limited control and freedom –
• Little to no control about how building is maintained
• Need permission to make décor changes (painting, wallpaper, etc.)
• May limit or prohibit pets
• Lack of permanence –
• Have the ability to move in and out frequently – neighbors feel like strangers
• Financial –
• Money spent on rent does not go towards an investment
• Rent may increase after the initial lease terms end
Buying: Pros and Cons
Advantages of Home Ownership
• Feeling of belonging –
• Stable location with sense of community
• Independence –
• May have to comply with SOME regulations
• Free to adapt their homes to meet their needs
• Remodeling and redecorating is their personal choice
• Investment value –
• Money is not “lost” – exchanging forms of wealth (real estate vs. cash)
• Home values OFTEN rise
Advantages of Home Ownership
• Good credit record –
• Can help owners build good credit (but CAN negatively impact credit score if regular
payments are not made)
• Tax advantages –
• Income tax savings (interest is tax-deductible – can be deducted from income when filling out
taxes)
• Property tax is also deductible
Disadvantages of Home Ownership
• Unexpected expenses –
• Examples: water heater replacement, roof leaks, broken appliances, etc.
• Time spend on maintenance
• Examples: snow removal, lawn care, painting
• Limited mobility –
• Long-term investment – can be costly to sell a home shortly after purchasing (usually want to
live in owned home for 1 year minimum)
A Closer Look at Costs
• Renters Costs
• Buyers Costs
Renter’s Initial Costs
• Application Fee
• Credit Check Fee
• Security Deposit
• Pet Deposit (if pets in home)
• Advance of Rent (occasionally)
• Moving Costs
• Movers, truck, boxes, etc.
Renter’s Continual Costs
• Rent
• Renter’s Insurance
• Utilities
• Parking
Buyer’s Initial Costs
• Earnest Money (deposit paid to show interest/seriousness of purchase)
• Application Fee
• Credit Check Fee
• Inspection Fees
• Down Payment (5-25% of house cost)
• Closing Costs Moving Costs
• Movers, truck, boxes, etc
Buyer’s Continual Costs
• Mortgage Payment (15-30 years)
• Property Taxes
• Homeowner’s Insurance
• Utilities
• Maintenance
Selecting Rental Housing (pg. 150-157)
Tenant Rights and Responsibilities (pg. 158-159)
Understanding Financing (pg. 170-172)
Deciding What to Look For (pg. 173-176)
The Home Buying Process (pg. 178-185)
YOUR TURN!