Everybody faces the decision whether to buy property or rent. There are many considerations in making this determination and equally as many questions to ask.
Length of residence. Do you plan to make this a permanent residence? Or, is this a temporary stay? Perhaps, you have no idea how long you’ll be in the area.
Savings for down payment. Most banks require at least a twenty percent down payment to even be considered for a mortgage. Therefore, if you wish to purchase a house that costs $250,000, you will need a minimum of $50,000 liquid assets to think about making the purchase.
Distance from work and/or school. Certainly if one doesn’t mind driving, maybe it is worth it to live an hour away. Once again, is the cost of operating the vehicle or taking public transportation worth it compared to what money you may save by living further away?
School for your children. By going online, you should be able to learn the quality of education provided by the school in the area in which you are thinking about living. Where are elementary, middle and high schools located? What are the proximities of the schools to the residence? Would your child walk to school, ride a bus or have to be dropped off and picked up? Is there before and after school day care?
Renters’ upfront money. The majority of landlords require a first and last month’s rent and some also want an escrow to be held equal to the amount of one month’s rent. You’ll need to get all the monetary specifics prior to considering rental.
Taxes. Research of property taxes for the past decade would help you guess what the increasing rates may be over the future decade or two. While taxes may be collected in escrow by the bank, they are necessary to calculate into your finances.
Trash pick-up, water, cable and Internet. Who is responsible for paying for these items? If you would be, inquire what your monthly costs for each would be.
Pets, children, visitors, parking and laundry facilities. In searching for the right rental, you will want to ask at least about some of these specifics. If you have pets, what are the rules and regulations? Having children may restrict you to a family area, but you’ll want to know what facilities are available for children to play and what safety precautions are in place to protect them. Can visitors stay overnight and for what length of time? Are laundry facilities provided? If so, are they in the same building in which you would reside?
Responsibilities. Who is responsible for upkeep of yard, mowing, shoveling, etc.? What is procedure for getting any repairs made and how long is the wait?
Investment opportunity. “Lost opportunity costs are tracked for the initial purchase costs and for the yearly costs. The former will give you an idea of how much you could have made if you had invested the down payment instead of buying your home.”
Once all of your questions have been answered to your satisfaction, the next step is to list them and weigh what they are worth to you and your family. List all of the costs of renting and next to that all the costs of purchasing (be sure to include closing costs, which your realtor or lawyer will be able to help you determine.)
Another list would be the benefits of renting versus the benefits of owning. For example, if renting, you may not have any yard work; if owning, you can fix up the place any way you choose.
The third list would be reasons not to rent or purchase. For example, to rent, you may have noisy neighbors; to purchase means you spend more time on yard and house upkeep than on recreation.
Now you should have a fairly accurate picture of life in either situation. The decision is now yours.