Are you on the fence about whether or not to buy a property? Maybe you’re considering renting an apartment but are not sure if it’s the right decision? Well, whatever the case, read the pros and cons of both situations below to make a better decision:
Pros of Owning an Apartment:
- Possible Income: Thanks to home-sharing apps like Airbnb, you can rent out any extra room inside your apartment and make some side income. You can use it to pay some part of your mortgage payments as well.
- Value Appraisal Over Time: Unlike a rental apartment, your own property increases in value with time, depending on the neighborhood. You can further boost the value with home improvements and eventually sell it off for a lot more than what you paid.
- Security: You get a sense of security that you have a roof over your head, and it will stay that way even if you’re struggling financially (unless you have some outstanding mortgage payments).
- Freedom to Make Changes: Your own apartment grants you freedom to make improvements, paint the walls, take down walls, and remodel the space to your liking. This type of liberty doesn’t usually come with rented apartments.
- Home Equity Loan: Depending on how much home equity you have (if you’ve taken a mortgage), you can take a loan against a specific percentage of your home equity to use however you like.
Cons of Owning an Apartment:
- Costs: You’ll be paying a considerable amount monthly, including mortgage payments, maintenance costs, and repairs.
- Long-Term Commitment: Buying an apartment on a mortgage means committing to paying a hefty sum of money every month for a very long time.
- Potential Loss: Although this doesn’t happen often, sometimes a property’s value goes down with time instead of increasing. If this happens with you, you can potentially lose thousands of dollars.
Pros of Renting an Apartment:
- Easy to Relocate: Unlike your own apartment, you are not stuck in the same neighborhood if you don’t like it. You can quickly relocate to a different area whenever you want – no need to sell the property and buy one again.
- No Hefty Costs: Granted, you’ll be paying the rent every month, but you will not be paying many other costs like mortgage payments, maintenance and repair costs, pest control, pool cleaning, property taxes, and so on.
- No Investment Required: You don’t need hundreds of thousands of dollars to get a roof on your head when renting apartments. A few thousand dollars as advance payment will immediately set you up with your new, ready-to-move home.
- Not Bounded with Mortgage: If you are paying mortgage monthly but then lose your job, you may not be able to make full payments, resulting in fines and penalties. This is not the case with a rented apartment; you can just move to a smaller apartment with lower rent until you get back on your feet.
- Lenient Credit Requirements: Renting an apartment doesn’t come with stringent background checks and credit history audits. A decent credit score can get you almost any apartment you want.
Cons of Renting an Apartment:
- Rent Increase: With time, the rent of a property increases, which is not the case with fixed mortgage payments when buying a home.
- No Equity Building: Even though you are making monthly rental payments, you are not gaining any equity in the apartment like you do with a mortgage.
Wrapping it Up:
Buying a property makes more sense in the long run, but only if you have a stable income and can afford to make a down payment. Otherwise, renting an apartment is much more convenient.
If you decide to go the rental route, you will have to get renters insurance to protect yourself and your possessions in case something goes wrong. At Paradiso Insurance, we’ve got you covered with an affordable renters insurance policy.