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Rent vs Buy
Rent vs Buy - an info-graphic brought to you by Lightyear

Rent vs Buy

Are you weighing the options of renting vs buying a home? This infographic will explain some of the pros and cons of each option and will help you make you decision.

 

PAYMENTS

Home for Rent:

Payments are approximately $1,500.00 per month.

 

Home for Sale (considering a purchase price of $250,000.00):

Payments are approximately $1,286.00 per month (estimated), a portion of which could be tax deductible (Please verify that with your accountant)

 

INITIAL INVESTMENT OUT OF POCKET

Home for Rent:

A small initial payment of $3,500.00 down (the first and last months’ rent plus a $500.00 cleaning deposit, which is usually a refundable amount.)

Home for Sale (considering a purchase price of $250,000.00):

Down payment of 20 percent or $50,000, if the purchase price is $250,000.00.  But perhaps you should think of it this way, that’s $50,000.00 closer to paying off your loan. In many cases, less than a 20 percent down payment is required.  Sometimes it can be as little as zero down, but don’t count on qualifying for that program.  You should check with a qualified lender to make sure what you qualify for as far as a new home goes.

 

VARIABLE VS FIXED

Home for Rent:

Rent can be increased at the end of a lease.  You have the option to move if the rent is increased.

Home for Sale (considering a purchase price of $250,000.00):

A homeowners monthly payments stay the same through-out the loan (should a fixed rate mortgage have been selected).  Home values can go up or down, but the payments should stay fixed.

 

CUSTOMIZATION

Home for Rent:

Renters are typically not allowed to do any major renovations, and ultimately if you did decide to complete a renovation, you would just be improving someone else’s property.

Home for Sale (considering a purchase price of $250,000.00):

Home-owners can improve and remodel their properties to increase value and make it their own.

U.S. home owners on average spent $28,030 to remodel their kitchens over the last five years. Upgrading the front and garage doors, adding a wood deck or installing siding are all improvements which provide the greatest return on investment.

 

MAINTENANCE

Home for Rent:

Renters typically are not responsible for maintenance, however, they have to notify the landlord when something is broken.  Sometimes renters may have to wait a long time before something gets taken care of.

Home for Sale (considering a purchase price of $250,000.00):

Home-owners have to cover the cost of any repairs or replacements.

A $250,000.00 home should have around $2,500.00 set aside for annual maintenance.  Simply put, a homeowner will typically need to invest around 1% of a home’s value in annual maintenance for a home to keep its value.

A few examples of the average cost for home repairs and maintenance:

  • Exterior Paint                                     $300.00
  • Air Conditioner Repairs                     $400.00
  • Water Heater Repairs                        $600.00
  • Lawn Replacement                             $700.00
  • Sewer / Water Main Repair               $2,500.00
  • Foundation Repair                            $5,000.00
  • Roof Replacement                             $12,000.00

 

FLEXIBILITY VS STABILITY

Home for Rent:

A landlord can decide on short notice to stop renting to a tenant at the end of a lease. Renters are at the mercy of the landlord.

Home for Sale (considering a purchase price of $250,000.00):

Home-owners know they have a place they can come home to.  If a home-owner needs to move it can be hard to sell a home quickly without getting less than the asking price.

 

FOR RENT OR FOR SALE – THE BOTTOM LINE

Home for Rent:

                                Every time you pay your rent you get to live in someone else’s property for another month.

Home for Sale (considering a purchase price of $250,000.00):

Every time you make a mortgage payment, you own a little bit more of your home and are building your own equity as opposed to your landlords.

 

 

CONCLUSION

Many people are often intimidated when it comes to buying a home.  The reality is that with interest rates where they are currently at, there is a very high likelihood that it will be LESS EXPENSIVE on a monthly basis, and you will end up building LONG TERM EQUITY.  Most home-owners agree that their investment in their home is one of the BEST INVESTMENTS that they have ever made.

 


Comments

04/15/2016 7:42am

In some point of every individual life comes a time to decide about owning or renting out their place. The most popular question that arises is "Do I have to rent, or Buy?" and in most cases, the answer is "Depending on the housing status, and the market circumstances". The year 2008 was among the most memorable year in the US. more Information about real estate get on villaconciergebali.com.

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    matt Milar

    Licensed B-100 Contractor
    Licensed Real Estate Agent
    Matt Milar has been a licensed Realtor since 2000.  He has actively been building new homes since 2003.

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