There can be many downsides to both renting and buying, depending on what side of the coin you are on, but if you’re leaning towards purchasing a home it can have added benefits for your bank account that renting does not. While renting can certainly alleviate many of the costs that go along with property ownership, here’s why purchasing a home can have positive monetary affects in the long run.
First let’s start with the fact it costs more to rent. In fact according to a recent Trulia article, it costs over 50% more to rent in Charleston than buy: Trulia article . While this assumed a 20% down payment, there are a number of mortgage options that allow a homeowner to purchase for less than 4% down. Mortgage rates are still low (although creeping upward) so this is an excellent time to purchase even if home prices have risen in many areas.
The Good Impacts of Inflation
While inflation is often seen as a dirty word, a real estate purchase can see the positive side of inflation with how your home purchase investment will grow over the years. Putting money into rent will mean that money is gone and out the window once you’ve paid for the month, but investing into a property will come back to you in future gains that are made in the real estate market. While buying a home will be more expensive in the short term, it can also provide you with greater financial flexibility and equity in the future.
Renovations Will Increase Home Value
While changing up the bathroom or the paint on the wall in your apartment isn’t going to add any extra lining to your wallet when you move out, making upgrades to a home that you own will have the very opposite effect! Renovations can certainly be unpopular while they’re taking place, but no matter how small or large, they can mean an easier sell and a higher profit when the home finally goes on the market. We have a number of deals in the Charleston areas that are “fixer uppers” but the investment pays off significantly.
The Opportunity For Rental Property
An apartment you rent won’t offer opportunity for investment if you’re away from your home for an extended period of time, but a home you own may serve as an ideal investment property at some point in the future. With the success of Airbnb and unique modern housing needs that may only require a home rental for a short period of time, being able to use your house as a rental property can be a significant boon for earning money you would have otherwise been without. I recently spoke with a young man who averages almost $15,000/month on a property in Charleston through Airbnb! It may also make sense to purchase a duplex and live in one unit while renting out the other to cover all or a good portion of the mortgage.
Buying a home can require a lot of number crunching in the beginning that rent does not, but it can also provide significant financial benefits down the road that might not exist without such a purchase. If you’re considering purchasing a home in the near future, contact me – your local real estate professional for more information at Shawn.Phillips@kw.com or 843-471-7315. You may also start looking for your dream home at Shawn-Phillips.kw.com .
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