The high expenses of investing in real estate is the reason why so many people are afraid to make bold moves when it comes to buying property. Making a mistake can really hurt your finances both in the short and long term.
To help avoid making mistakes you need to arm yourself with as much knowledge as you can. Here are some of the more important considerations and tips for those who want to buy or invest in real estate.
Most people either rent or own the property that they live in. Whether you are living in an apartment in the city or a townhouse in the suburbs, you either own the property yourself or you have the right to possess and occupy the same.
Renting is best if you are just starting out
Renting is the best option for those who are thinking about moving out on their own for the first time. Buying your own place right away can be overwhelming. First of all, you have no real experience when it comes to managing your own home which means you are bound to make mistakes. Suppose you own a lot of valuable items. In that case, look at housing insurance for renters and ask your agent what coverage you need when shopping for a renter’s policy if you own a lot of expensive items.
Renting a place is a learning experience that can help you a lot to figure out what it means to have your own place. The cost of making mistakes is easier to manage when you are just renting the place you are staying at.
Why renting now is better than before in today’s housing market
The housing bubble that burst back in 2008 caused a shockwave that devastated the housing market. It was a time when the prices of homes were so cheap that many actually recommended that buying a home was a wiser investment that renting a place.
Today’s market is different. The cost of buying and maintaining a home has outpaced renting a home. Most agree that the trend is likely to continue so it really is better to just rent a place than to buy one, both in terms of upfront and long term costs.
The market is being aggressive with rent prices
If you are looking for a place to rent, then great! Ever since businesses like Airbnb started leveraging the Internet as infrastructure to facilitate renting property, real estate owners have been very aggressive in their prices to get a bigger slice of the market.
Some have even begun to rent out their properties and operate their business at a loss. This phenomenon is called negative gearing. Basically, property owners rent out their property, operate at a loss, and benefit from that loss by using it as an income tax deduction.
Flexibility in employment
One of the best advantages of not owning your own place is that frees up your finances to allow you to make big moves in case you get an excellent job offer. Putting a lot of your finances into something as expensive as a house can chain you to a certain geography. This limits your ability to develop your career and is likely to hurt you in the long run if you make a purchase when you have just started out.
There are so many reasons today why renting a place is a better idea than buying. So if you are thinking about getting your own place, look at rental units in your area and put some money back in your pocket.