Should I Buy or Rent?

Should I Buy or Rent? … The correct answer is that it depends.

Unfortunately, most rent versus buy analyses use a one size fits all approach to this critical decision when the correct course of action requires you to delve deeper into your individual circumstances.  Generalized advice has limited usefulness here because you are not an average, you are an individual with your own unique set of wants, needs and lifestyle requirements.

The actual benefits of buying versus renting depend a great deal on whether you’re buying a rental property or a property for you to live in.  If you have enough money to cover operating costs and can find a reliable property manager or don’t mind maintaining the property yourself, it’s always a good time to buy rental property at the right price, provided that the numbers make sense and you can attract stable, paying tenants.

The calculation for buying a place to live in is a little different.  Unless you get a roommate, rent out your garage or driveway or buy a house or building with multiple apartments, your primary residence probably won’t generate income like a rental property–it’s likely to just generate expenses.  Over time, property ownership pays off largely because of the many tax advantages property owners receive in the US.  However, if you’re not planning to stay in a house very long, the tax advantages you receive may not offset the costs associated with maintaining a home particularly when you take into account the 2 sets of closing costs you’d also have to pay for if you bought a home to live in and then sold it again in a short period of time.

The takeaway here is that you shouldn’t make a rent versus buy decision based on where you think the general real estate market is, you should decide based on the individual property you are buying and your specific set of needs, plans and circumstances.