Americans hate that somebody is minting money off of them, leading to many misconceptions about real estate. Most people would gladly pay for fine dining and consider it money well-spent, but the same group might think renting is a waste of money.
There was a time when real estate was touted as the best investment of our lives. The real estate lobby and even the government continuously share incentives to buy homes.
You must have seen homeowners talk about the financial relief owning a house brought to their lives. Today, however, the world has shifted from real estate investments, and many millennials opt to rent apartments.
Do you think you are wasting money by paying rent? Some would argue otherwise so we review the pros and cons to see which option is best for you.
Reasons to Rent a House or Apartment
You may not be able to cook a 5-course, high-quality cuisine at home or experience fine dining in your living room, but you can go to a 5-star restaurant. It’s expensive but certainly value for money. You don’t own the restaurant. Simply pay for the meal and services.
Similarly, spending on your accommodation is part of maintaining your lifestyle. Renting allows you to pay for the product (house or apartment) and services.
You don’t need to worry about home maintenance or paperwork, and you still enjoy having a roof over your head. It’s a building block of the real estate economy, allowing people to live in locations where they cannot afford a house.
People living paycheck-to-paycheck lives can still afford modern housing in cities and localities of their preference. This is very important since private employees might want to move closer to their workplace and need the flexibility to shift apartments with their evolving needs.
Reasons to Buy a House
If you consider taking out a mortgage and owning a house, there’s nothing wrong with that. What matters is the purpose behind buying your own house.
If you want to settle down or build equity over a long period, it’s a good option but it’s not the only option and has its own downsides. The value of real estate plunges, and it’s not the most lucrative investment plan.
The return on investment for the property is less than 5%. This is significantly less ROI than other forms of investment, such as forex trading. Your mortgage payment might be less than the rent you pay in the area, but you will have to cover phantom expenses.
Property tax, maintenance charges, and even trash pick-up service charges make up a large sum you’d need to afford. For all of you paying rent, it’s certainly money well spent if it serves your need, and there is no need to feel as if you are wasting money.
