Better To Buy Or Rent Housing Now
Q: Gerald, do you think it is better to buy or rent a home right now? Erica, West Orange, NJ
A: Generalized investment advice is not very useful. The correct answer to your question depends on your personal financial situation, your goals and your life plans. For some people, the correct answer right now is to buy, for others it is to rent. Over a long period of time, owning a primary residence is more beneficial financially than renting because of leveraged appreciation and tax advantages among other factors. However, owning real estate does limit your mobility to some extent and makes you financially responsible for home repairs and capital improvements rather than your landlord which is the case when you rent. When you buy a home with a standard 30 year fixed rate mortgage, you are making a 30 year financial commitment. If you think you may move in the near future from the location where you are living now, it probably does not make sense to buy a home right now–you have more flexibility when you rent and you can enter a month-to-month rental agreement as a tenant which will give you even more flexibility than signing a one year rental lease. You can also have it both ways by renting your primary residence while also buying a rental property–this would give you more flexibility with respect to where you live while also allowing you to benefit from leveraged appreciation and tax benefits of owning real estate. Thanks for your question, Erica.
For more real estate tips and information visit my blog at geraldlucas.com.