When it comes to buying or renting a property there are many factors to be taken into consideration.
Being a homeowner means a lot more than what the Oxford definition implies. Since the birth of this nation, homeownership has always been associated with the American dream. This concept, the first time came from a writer named - James Truslow in his book called “Epic of America” in 1931, in which he described this American dream that we still follow today.
Owning a home for most of us is part of the American dream because it allows us to actually own a piece of AMERICA. It is also something that we can physically see, touch and feel.
When you own a property, you have that feeling of accomplishment, that you have earned something here. In a way, it is a big reward for your hard work, because not everyone can have this.
According to the Census Bureau Data, in 2020 they estimated 82.8 million owner-occupied households in the United States.
Homeowner's number increased by approximately 2.1 Million compared to 2019. In 2020 we saw the 7th largest percentage increase in homeownership since 1965.
Covid-19 did not stop people from owning a home and accomplishing their American Dream. Many more are still taking advantage of the low-interest rates available and becoming first-time homebuyers. Florida became one of the hottest places for new homeowners. Miami is the new hub for the tech and cryptocurrency world which attracts a lot of the new generation into the real estate market.
When people ask me when to buy a property? My answer is always "Yesterday". The sooner you buy it the better. Build up that equity, refinance and buy more.
Miami is just starting to grow and this is just the beginning, while rental properties are skyrocketing to the moon. Some of the prices listed for rent are unreal this year compared to what we had last year in Miami, plus the availability and conditions. The rental market doesn't seem to calm down. Tenants don't want to leave their expired leases and they keep extending the existing ones. That is one of the reasons why we have a shortage of rentals as well. But, despite Miami's hot market, you will have to eventually decide between renting or buying right now in Miami.
Buying a property is one of the most serious steps in someone's life, and if you plan on purchasing you should understand whether you are ready or not. Generally speaking, buying is a lot better than renting especially when you take into consideration the following:
1. You need a stable income and know that you won't change your employment anytime soon.
2. You want to know how long do you intend to stay in the same place? You have to account for at least 3 to 4 years without moving.
3. You have to have saved and easily afford the down-payment, closing costs, and other expenses that come along with the ownership title. (make sure you have a good realtor explaining to you all of these ahead of time, so you won't be surprised when the bills pile up).
4. You don't expect any primordial life event that could potentially make you move, downsize or upsize your property. (sometimes life happens, and we cannot really account for those ahead of time, like a divorce, for example, a marriage, a new child, etc).
Once you have established and met all those key points from above, let's move on to the
Advantages and disadvantages of owning a property vs renting one:
- The equity benefit when owning a property
This has great value to you especially when you owned your property for a while now, the property went up in price and you built up some equity while paying for your mortgage all this time. The equity is the difference between what your home is worth right now versus the value you still owe. Depending on the lenders and their criteria your equity creates an opportunity for you to use it as collateral for a new loan in case you need one for the future (the loan is usually a refinance or a home equity line of credit).
Being a homeowner is a massive advantage thus far. If you decide to use the equity or not you inevitably will have the occasion to sell your property for a higher value in the future.
- Rental Income
As a homeowner, you can have one or 2 rooms in the house rented all year round and make passive income while you are still living in the house. As a tenant, you don't have this option to even think of, unless you have a contract with the landlord that allows you to sublease at the property.
- Tax Benefits to the homeowner and return on long-term investment.
As a homeowner, one of the expenses that you will have to account for is yearly taxes. There are ways you could deduct rental income, your mortgage interest, and property tax payments from your taxable income. Later on, when you decide to sell the property in the future you could also take advantage of deducting the capital gains as well as long as you keep your residence for 2 out of the last 5 years. (Always consult with a tax advisor so you get accurate information in your case).
If you rent you won't have to pay any taxes but, you lose all the funds every month and you have nothing to look at in return after a long run of paying someone else's mortgage.
- A mortgage payment can be lower than renting
In Miami right now, a lot of renters are turning into first-time homebuyers because for them is convenient to pay their own mortgage instead of paying someone else's.
Most of the time the mortgage payment will be about the same as a rental, sometimes lower. But wouldn't you rather pay a mortgage and have something that is yours rather than waste the same funds every month and have nothing?
- Closing costs, Down-payment, homeowner's insurance, and HOA fees - these can become a vast stopper to you if do take into consideration. As a homeowner there are other costs involved with the ownership other than closing costs and downpayment, you should account for all of them. If you rent you don't have to worry about anything else other than your monthly rent.
- The ability to make any changes you want in the property.
This is the best part of homeownership, that you can modify and transform your new home into your perfect sanctuary. You can paint it any color, change the layout, the rooms, or anything you like in accordance with the allowed permits of course. If you decide to rent you cannot make any changes to the property without the landlord's consent. Just like my bird that cannot fly.
- Maintenance and repairs
As a homeowner, you are the one taking care of all the repairs necessary as if you were to be renting these expenses would be left to the landlord.
- No evictions
If you are a homeowner you won't worry about any evictions unless you stop paying for your mortgage, then obviously you will foresee foreclosure which will result in the same thing. If you rent, you are always at risk of being evicted.
- Live in the same city/neighborhood/house for a longer period of time
This can be a benefit or a burden, depending on your situation. If you are the type of person that gets bored easily and needs to move out all the time, maybe homeownership is not for you. Or perhaps you can still own a property and rent it for others. create some passive income for yourself. There are always ways to look at things from a different perspective.
The best part of renting is the freedom of living in many places all the time, having the option to explore, travel, and overall, more flexibility
Whatever you decide to do in the future make sure it is in your best interest, and if you find it hard to decide and need guidance feel free to reach out. I am always ready to connect with you.
Watch the full video below.
#homeowner #homeownership #renting #rentingvsbuying #buyorrent #miami #miamihomeowner #homeownership #firsttimehomebuyer
Census Source HERE
Angela Andronache
Luxury Real Estate Advisor
Info@AngelaAndronache.com
Disclaimer:
Angela Andronache is not liable for any action or decision that was taken as a result of the current information on this site.
The materials on this site comprise Angela Andronache's views, they do not constitute legal or other professional advice. You should consult for legal or other advice.
Angela Andronache is not responsible for the content of any linked sites or any link in a linked site. Angela Andronache is not responsible for any transmission received from any linked site. The links are provided to assist visitors to the Information Angela Andrnonache endorses or has approved the linked site.
Angela Andronache does not have any obligation or responsibility for your investments or actions.