Renting versus Buying a Home - Essay Example

Outline This paper will show that buying a home is better than renting. It will be pointed out that buying has various advantages such as allowing the owner to modify and customize it to suit his or her needs. The issue of poor management by landlords whereby they take a lot of time before rectifying simple problems will also be discussed as a reason why people should consider buying, so as to do it themselves as at when it is needed. Renting will also be discussed as a possible way of solving short term housing problems as well as an option for people with temporary and insecure jobs. Introduction Housing is one of the major basic necessities that human beings require for the purposes of protection against harsh environmental conditions such as cold, wind, hot weather among others as well as provision of security and privacy. Primarily, there are two main ways through which a person can acquire this important facility i.e. either buying or renting. Buying may be termed as the permanent acquisition of a house after paying for its full value after which one is facilitated with full documentation while renting entails temporary acquisition whereby one becomes a tenant after which he or she would be required to pay a certain amount of money as rent, regularly, to the landlord (Hanson, 2010). This paper will discuss the two options critically and conclude that buying a home is better than renting. Buying versus Renting a Home Before a person can go ahead to acquire a home, it is highly important for him to weigh the merits and demerits of the method he is intending to use i.e. either buying or renting, in order to avoid regretting later. For example, different persons have different tastes and preferences when it comes to colors or structural designs. This means that once a person acquires a house, he would want to modify the already existing designs to suit his tastes. Buying a house thereby becomes the best option as you thereby become the rightful owner, enabling you to do whatever you want with it, whether to repaint, change the doors, modify the roofing among other activities. In fact, you can go ahead to build other permanent structures on the compound such as parking lot, without necessarily having to request for approval from any other party. Renting a house denies you this opportunity as the decision to conduct such modifications is the prerogative of the landlord (Hanson, 2010). In fact, most landlords expect you as a tenant to maintain the existing standards of the house and if any repairs are needed, you have to contact them so that they can carry them out, a process which may end up inconveniencing you. Say for example there is leakage of water from the roof and the rain continues to fall, waiting for someone to rectify the problem at his or her own pleasure may turn out to be discomforting. Buying a home is recommendable as the current markets indicate that it facilitates capital appreciation (Brown, 2006). This means that a person may buy a house at a cost price of $ 200 000 but after a certain period of time for example 10 years, the price of the house may go up to $250000 or more depending on the market conditions. This implies that those who opt to rent, instead of buying, lose the opportunity of doing viable business as their landlords are the only ones who benefit from the appreciation. However, some may be argue that it is not always that capital appreciation is realized as sometimes it does depreciate. In such but rare circumstances, the tenant is not affected but all in all, having an entrepreneurship mind is considered to be a strength, which everyone must possess in order to succeed in the contemporary world. This means that one should not fear taking a risk just because he or she is not sure about the future. Human beings are sometimes faced with difficult financial challenges, which necessitate borrowing money from financial institutions such as banks. These challenges are for example high medical bills, the need to expand businesses or acquisition of more assets such as a motor vehicle among others. However, these institutions require such customers to have assets, which can be used to secure those loans in addition to showing that they are capable of paying up the loans. A home is an asset and therefore, it can be used for the same purpose thereby facilitating the owner with the set requirements (Hanson, 2010). On the contrary, renting a house denies the person this advantage, which is a gateway to economic success. It may be argued that buying a home is an expensive affair as it requires one to make a considerably high amount of deposit as opposed to renting, which in most cases only requires one to make a deposit equivalent to a 3 months rent. However, it should be noted that even though this is true, buying is far much cheaper in the long run (Brown, 2006). For example, one may be required to undergo opportunity cost between buying a house for $200000, payable in 20 months, or rent an apartment for $1000 a month. If he buys the house then, he would be required to pay $10000 monthly installments, which is 10 times more than the rent. However, after paying up for 20 months, the buyer will have owned the house completely whereas the tenant would go on to pay the $1000 and if he does so for more than 16 years, then, he would have paid more than the one who opted to buy. On the other hand, renting a house is advantageous especially if a person is under temporary or contractual mode of employment. It may be unwise for such a person to go ahead and take a mortgage knowing very well that he has no job security to enable him complete paying the installments, which could be spread over a period of 10 years. For example, you could be earning a salary of $120000 for now meaning that you are capable of paying $4000 monthly installments. Unfortunately, your company decides to layoff some employees especially due to these uncertain times when there are numerous economic problems facing even the world’s major superpowers. What would happen to you under such circumstances is that you would lose the house to foreclosure (Irwin, 2008). Such a person would be in a better position to retain his house or apartment if he or she has been renting as he would be capable of spending his savings or compensation while looking for a new job. In addition, buying a house becomes an unnecessary burden for people whose jobs require constant shifting and relocation (Irwin, 2008). This is due to the fact that it would appear to be a tedious process to start looking for buyers, and in the end, you may find that those offering to buy may take advantage of your intent to make a quick sale and end up buying at a cheaper price than the cost price. Renting becomes viable in that you only have to collect your belongings, relocate to another place and rent another home. However, this can be countered by the fact that one does not necessarily have to sell the house in order for him to move. He can take the option of renting or leaving it in the care of a close friend or relative so that if he ever decides to move back to the same place, he would not have to spend time looking for accommodation. Conclusion Buying a home is far much better than renting one. This is due to the fact that it allows you the chance to modify it so as to suit your tastes and preferences. It also enables you to benefit from capital appreciation in addition to acting as a tool for securing emergency loans. Buying a house also is cheaper in the long run as opposed to renting, which appears to be cheaper in the present but much more expensive in the long run. However, renting has its advantages as it facilitates mobility and offers a solution to those with temporary jobs. References Brown, R. (2006) Home Buying for Dummies, 3rd edition, Wiley Hanson, D. (2010) Buying vs. renting a Home, Wiley Irwin, R. (2008) Tips and Traps When Buying a Home, McGraw-Hill Pestalozzi, T. (2002) Life Skills 101: A Practical Guide to Leaving Home and Living on Your Own, Stone Wood Publications Read More