This piece is the tenth in a series of “Ask an Alum” columns that will be periodically published online through a partnership between Elon University’s Young Alumni Council and The Pendulum.
Should I rent or buy? That’s a question we hear a lot.
The answer? It depends on you.
Inherently, we’re all at different stages, income levels, need and desires. So it’s important to consider your age, investment outlook, stress level and, of course, situation. Will you be in the same area for several years? Will you want to be? How much of a down payment can you afford? What is the market like in your area? Can you fix a leaky sink?
These are just some questions to consider before making a decision.
Online tools such as Trulia’s Rent vs. Buy Calculator are a good place to start. You can easily adjust the settings unique to your financial situation, metro area and mortgage rate to get a real time analysis, which helps to solve the question for you on a financial level.
So what is the answer? It depends. Generally:
Short Run — Rent Long Run — Buy
From a financial standpoint, what we see is there is a cost benefit five years and beyond for buying over renting. The easiest way to compare is by total average monthly costs. People commonly make the mistake of comparing just the monthly mortgage payment vs. monthly rental cost. Don’t.
It comes down to the difference in up-front cost. Buyers usually have to make a Down Payment (Industry Average is about 20 percent), pay Closing Costs, utilities, taxes and pay for any ongoing maintenance. While renters typically just pay a security deposit (refundable if you’re not a slob), first month’s rent, utilities and a pet deposit for Sparky (should you have a furry friend).
As a realtor, I believe it would be great if everyone were always looking to buy, buy, buy, but the last thing I want to do is set my clients up for failure. It reflects poorly on me and puts my clients in troubled financial situations. I never want either.
No matter where you are, it’s important to find the right realtor to help you assess and answer your questions. The best ones can be hard to find. If you’re ever struggling to find answers or connect with the right realtor, don’t hesitate to call our team. We are always glad to refer you to our select friends nationwide.
Gentry Todd is an ’08 Elon graduate with a BA in Economics. He works for a boutique real estate agency in Charleston, S.C. (Healthy Realty). Gentry may be reached by email (gentry@healthy-realty.com) or mobile (843-730-4454).