Advantages and Disadvantages of Owning versus Renting a House - Essay Example

Advantages and disadvantages of owning versus renting a house Many people have different tastes and preferences and find it hard to choose as whether to rent or own a house. However, statistics show that many are include owning a house than rent. Owning a house fulfills one’s dreams but to some it is a nightmare. In order to buy a house, a lot of finance is required to do so and therefore, prior to purchase, one must weigh all the advantages and disadvantages that come because of having one. In addition, before purchasing a house many questions ought to be put into consideration. For instance, is there necessity in buying a home, will the purchasing of that home make financial sense, among others? The advantages and disadvantages discussed in this article will enable one come up with viable decision as whether to purchase a house or rent. Let us begin with the advantages of owning a home. When one owns a home, that person is building equity. One must understand that the value of a house does not increase with time. On the contrary, its value decreases with time. However, when one owns a home they can contribute to their investment portfolio. As one clear a mortgage, he, or she builds up equity while the home value remains constant (Williams, 23). Authorities that are responsible with collecting tax have established tax relief to those who have taken mortgage. The purpose of this reduction is to aid in offsetting ones loan. In addition to that as one chooses to pay fixed-mortgage, payment in interest and the initial principal remains constant as long as the loan is outstanding. Even though payment of taxes and insurance may vary with time, one may be able to use the house as an investment. Moreover, when one purchases a house and leaves it, it is not wasted since the same house can be rented to generate income. This is also one of the best alternatives one can use to repay mortgage. It is therefore advisable to choose a house that is attractable and that is rentable, that is if one might think of renting it in the near future. Another important benefit of owning a home is that it enables one settle and lives with the community. Purchasing a home is a long-term investment. Once one has a home, he or she is committed to live with the surrounding people for a long time. As a result, one gets to understand the neighbors well and may get the opportunity to be involved in communal economical activities or even become a volunteer in a program that benefit the community for instance assisting in building of a school or public latrines among others. When one owns a home, he or she has full control to decorate it the way it pleases him or her. One can change the environment to suit their tastes, desires and preferences (Michlle, 12). In addition, owing a home enables one maintain and safeguard their private life. No one can check and investigate what homeowners do. Living in a house one owns one does not live under the fear of increment in rental charges. One can easily predict how much they will pay at the end of the month for this is determined by the amount of money one is repaying in order to settle mortgage. Therefore, even if rental charges increase, mortgage payment will remain constant. Moreover, in an extended family where family believe in inheritance and have many children, owing a house if the best option. It is expensive to rent houses for all the children one has. In addition, owning a house has the advantage of space; one can buy a house with space that suits his or her purpose. For instance, car packing space and playing ground. Those who own house are believed to have better management skill as compared to tenants. This is because; the house is itself a responsibility. One therefore has to ensure that it is well maintained. In case the house is to be used for both living rental purposes, one has to learn how to manage the tenants and keep accounts of rent earned hence developing special acquired life skills. Some facilities serve better in one’s home than when the same facilities are in a rental house shared by everyone. A good example is the swimming pool. Maintaining a swimming pool in rental houses is hard since there can never accountability when it is spoilt or when it need cleaning. Everything that has advantage will also have some short comes, therefore some of the demerits of owing a house is that the homeowner has to spend so much in maintaining the house. In case of any renovation that needs to be done, the homeowner will have to incur the cost. In addition, funds, which one may invest or put in other project, have to be set aside in order to meet unexpected expenditures for instance breakages and other contract services that a homeowner cannot perform. Sometimes, because of occupational mobility or outbreak of a pandemic, one may opt to relocate, it becomes hard to sell the house for the amount it cost to construct it. This may be because the taste and preference of the house are not interesting to others but only to the homeowner. This is to say that, homes are not extreme liquid assets and will take time to sell them. Moreover, tax authorities may decide to tax properties. By taxing homes, these homes lose value. In addition, they become expensive to maintain. The original purpose of buying a house is to spend less on rent and therefore it makes less financial sense avoid paying rent and end up paying property tax. Another disadvantage of owning a home is that its value depreciates with time. The present value of the house ten years to come will not be equivalent to the current value. As a result, if the homeowner had a plan of selling the house, he or she would have to incur a loss. The initial cost of purchasing a house is high and many may not be in a position to afford it. The down payment for purchasing a house may exhaust one’s saving completely that one cannot invest in any other project. In some instances, some people purchase a house but are unable to live in them. This is because; one spends up all the money in purchasing a house and lacks finances to buy simple house equipment’s. For people who have purchase houses not necessarily to live in but for rental purposes, these houses are paid insurance for. In most cases, the insurance deductions are included when the house owner is clearing his or her mortgage. On the other hand, when one purchases a land and realizes it has fraud case on the court it becomes a waste of money following up with the court in order to retain the land. In addition, some land purchased is under government investment. For example, one may purchase and land and after sometimes, the government declares that all those who lives within that region evacuate may be because it wants to set up a road network or a pipeline. This is a loss to the homeowners. As much as they may be relocated, the place of relocation may not be good as the one abandoned. Owning a home ties the homeowner with the community. It therefore becomes hard for someone who would like to leave and relocate in other areas owing to occupational mobility or due to other circumstances. The end result of this is that one may not advance either economically or socially as he or she wishes. When one analyses the level of payment between mortgage and rental payment. It is clear that mortgage payments are higher that rental payments even though they are fixed. One of the greatest dangers that lie with owners who take mortgage to purchase a house is that, in case the homeowner default in paying the loan, the house is taken by the bank. The house is either sold or rented until the bank recovers all their money. Moreover, there is no profit that one makes in selling a house. This is attributed to some economic factors like recession and time value of money or simply because the house is located in a place that is unfavorable, that is the area is too remote among other reasons. A homeowner is less mobile as compared to a tenant who has options of renting on short-term basis. A tenant can vacate the moment his rental terms and conditions are met. For a homeowner to move from one place to another it is highly dependent on selling the current home of residence and this may take a long period of time. Also for investor who built up houses for rental, purpose does not make any profit if there are no tenants. On the other hand bad tenants can damage the property and all this liability is shifted to the owner. In addition, people who live in their own houses tend to maintain a status quo; they do not develop much in life. When one builds a house, that person must live there for so long. As a result, this person will simply interact with people is used to. In long run, one will have less knowledge pertaining to some life teachings. As to conclusion, before purchasing a home, one ought to put into consideration the pros. These factors should be weighed and compared with the resources one has at hand. Advantages and Disadvantages of Renting a Home After having considered the pros and cons of owing a house, it is also important to have a look at the merits and demerits of renting a house. Tenants, on their first time looking for a rental house, they are required to pay initial payment and deposit. This is much lower compared to the high amount of down payment a house buyer will incur not including some other charges like cost involved in surveying a land for construction (Gordon, 4). As to conclusion, there is a great variance for money one pays while renting to that incurred when purchasing a home. For people who have the dream of buying a home in the future, renting a house is the best way to start. Renting enable one to survey land and weigh all parameters involved in purchasing of land. In addition, it is flexible for one who has rented a home to move from one house to another without much strain. Moreover, since the deposit and the initial amount of rent that one pays for renting is not equivalent to the down payment one makes when purchasing a house. This money can be used to invest on investments with superior returns. For them whose work changes without notice, renting is the best option since one can relocate with ease. Some of the rental house nowadays mandates their tenants to pay rent in bank institutions. This is very important, as one is able to build a good credit worth that may qualify this person when he or she wants a mortgage loan. Moreover, when one lives in a rental house there is no or less maintenance cost. The burden of maintains cost is shifted to land lords. Discussed in the subsequent paragraphs and sentences are some of the disadvantages of renting a home. The amount of rent is set by the property owner and the tenant has no control over this. From time to time, the property owner may also revise this rent to meet their interests. In all these instances, the tenant falls a victim. The tenant has no control over fluctuations in rent. In most cases, it feels good for one to decorate their houses to suit their taste and preference. However, as a tenant this is not possible, one cannot decorated public rental house. In case one is found, he or she is heavily fined by the property owner. Sometimes property owner may want to renovate their houses, in such instances, the tenants are given some period of time to vacate. In addition, sometimes property owner may come up with rules that directly or indirectly affect the tenants. Some of them include, not allowing loud music and keeping of pets. The tenant has less contribution to what the property owner decides. Since the manager of the property has full control of everything, in case he or she fails to promptly repair and upkeep the house, the tenants might end up living in unpleasant and horrible. In most rental house there is less privacy of one’s information. By the virtue of living as a community, one cannot avoid being snooped upon. On the other hand, and sometimes, there is usual misunderstanding that comes up especially when a tenant has not cleared the rent as supposed to. This may lead to anger and hatred especially when it recurs and when the property owner is very strict on the same. Rental also does not provide benefits from taxes and equities to the tenant. Forasmuch as the tenant is paying rent thus assisting the property owner pay property tax, the tenant has no obligation to any tax deduction on his or her tax returns. On the other hand, by paying rent, the property owner is earning equity on the house yet the tenant is not gaining anything. Moreover, living in rental houses makes it hard to use shared resources for instance lavatories. Public lavatories belonging to rental houses, especially those found in apartment of where people of low social class live, are never maintained well. The lavatories can easily spread diseases such as dysentery. In rental houses, there is less security especially during the nights. Thieves exploit the advantage of living within people in a given rental house and learn how the other tenant operate, what they have in their homes the times in which these tenants go to work and when they come from work. Coupled with this knowledge, they plan on how they can steal. Moreover, many rental houses are poorly designed and structured. In times of calamities for instance fire outbreak, it becomes hard for rescuing team to access the areas and put out the fire. In addition, in case of such an event caused by one person, the whole rental premise suffers loss. As to conclusion, the decision of whether to buy a home of rent a home relies heavily on an individual. Ones ought to put so many factors into consideration for instance, the amount money one has, what one likes. Age is also a fundamental factor that is, ageing population should press on to have their own homes rather that renting. Therefore, purchasing a home is a long-term investment. Once one has a home, he or she is committed to live with the surrounding people for a long time. As a result, one gets to understand the neighbors well and may get the opportunity to be involved in communal economical activities or even become a volunteer in a program that benefit the community for instance assisting in building of a school or public latrines among others. Work cited Gordon, Peter. Rental houses and the living conditions. Nairobi: Longhorn, 2009. Print. Michlle, Kan, and Daniel Ochieng Olago. Owning houses: The elite way. Burlington: Elsevier Science, 2013. Print. Williams, E. Elly, and Chris M. Miller. Real estate investment: The investor way. Santa Barbara, CA: ABC-CLIO, 2000. Print. Read More