Renting an Apartment Is a Better Option than Buying a House - Essay Example

Renting an Apartment Is a Better Option than Buying a House The world has become very fast paced and there are many important decisions that a person has to take with regard to his living and other important financial issues. Financial situations need to be dealt with care owing to the losses that can result due to a wrong decision. At the same time, a correct stand on a financial matter can serve to improve the living standards of a person and put him in a good economic state for extended periods of time. Thus correct economic decisions are very essential in the long run and can prove to be beneficial. One such economic decision relates to the choice with regard to renting an apartment or purchasing a house. This choice is an extremely important decision that needs to be taken with care as both renting an apartment and buying a house have their own positive points as well as drawbacks. There are supporters of both these decisions with a few people considering renting as a better option whereas the other group believes that buying is a much wiser decision. Thus, it can be said that renting and buying have their own benefits and drawbacks and a decision needs to be based according to personal needs and the option which serves as a more profitable settlement for the person. Renting is basically a process in which a person rents a house or an apartment for living but does not have any ownership rights over the house. He has an obligation towards the landlord of a paying a fixed amount to him every month according to the joint decision taken by them. Renting can be considered to be a good option for people who choose to shift every now and then. This is because a person can easily leave a rented house and move to another city rather than having the burden of actually going through the process of selling his house after a few months. Thus it is argued that renting is the best option for people who do not wish to stay in one place for more than a period of two years (Rockwell Publishing Co. 2006, Law 2003). According to Thomas Z. Lys who is professor of accounting at Kellogg School of Management at Northwestern University, "If you believe you'll be moving in the next four or five years, I'd rent." The New York Times carried out a survey in this regard and provided for the fact that owing to the rise in the prices of buying a house, renting is a very suitable option considering the economic factors. The analysis identified very important facts that renting an apartment was a better and reasonable option if considered from the financial point of view. This is because the price that a person pays as down payment followed by the installments for buying a house is very high and it does not bring with it much financial benefit as compared to the rent. Owing to this, the newspaper identified that many people actually chose to sell their houses and live on rent (Leonhardt 2005). Renting of a house has other benefits as well which includes the fact that there is no financial risk associated. This is because even if the value of the property decreases, there will be no loss for the tenant as the property is not owned by him. It is also easier to leave a rented house owing to the fact that the process of selling a house is lengthy and time consuming and it may be associated with financial setbacks. Another very important benefit of rent is the fact that the tenant is not liable to fix any problems in the structure of the apartment where he is living. It is rather the duty of the landlord to repair all these problems. But there are many disadvantages of renting an apartment as well. This includes the fact that the money that the person pays is not an investment but it is rather a liability that is to be paid every month. The person can also be asked to leave the house by the landlord even if the tenant does not wish to. Hence, there is decreased level of security. Also, the tenant cannot make any changes in the house as per his wish and hence the house cannot be furnished according to a person’s own wish (Rockwell Publishing Co. 2006, Law 2003). Buying a house is the second option and according to Thomas Z. Lys, if a person wills to stay in one place for an extended period of time then buying a house is a better option even in the economic conditions that prevail right now (Leonhardt 2005). Buying is a process whereby a person pays the complete payment for the purchase and then enjoys complete ownership or he buys a house on mortgage and this is also accompanied with the complete provision of rights for his property. A buyer can opt for mortgage but he needs to be aware of the fact that the tax reductions that he receives are not actually a major benefit though it can provide for small amount of relief. Buying a house provides a very strong security for the owner. This is because all the money that a person pays on monthly basis for the lease are actually being paid for his own property and it is a long term benefit for him owing to the fact that if he wills to sell this property, he will receive his money again. Also the value of property rises at a good rate which provides an additional benefit for the person (Bray et al 2007; Law 2003). The money that a person gives in the form of a lease can be termed as an investment unlike rent which a person can never receive back. The money goes for a person’s own property. Another added benefit is the fact that despite of the reason that the house is on lease, a person can still live in it. That is a person avails the benefits of his investment and does not have to wait until he pays the full amount. Thus it provides for owning a house accompanied by the utilization of the monthly payments. Also even if the loan for the house is for 30 years, a person will eventually end up owing it and will have a free choice to either sell it or stay in it. He then no longer has to pay for the lease which can prove to be helpful as rent needs to be paid irrespective of any time scale. Buying a house provides a complete security and there is no restriction on what changes a person wants to bring to his house. He enjoys complete freedom of choice and can design everything in the house as per his will. There is also no insecurity as no one can ask the owner to leave his own house (Bray et al 2007; Law 2003). Thus, it can be considered that buying a house is a better option. This is because of the fact that a person acquires ownership rights over his property and the monthly lease that he pays is a form of investment and does not go wasted. It also provides complete freedom for the owner unlike the tenant who stays on rent. This is because the people who stay on rent cannot make changes according to their will and they have a psychological setback as they are well aware of the fact that they are not actually living in a house of their own and they can be asked to move from there on the directives of the landlord. The owner of a house has peace of mind as he is sure of the fact that the place where he lives belongs to him and there can be no external intrusion in it. Also a person will one day own the house whereas the person who pays rent will not be able to. References Top of Form Bray, I. M., Schroeder, A., & Stewart, M. (2007). Nolo's essential guide to buying your first home. Berkeley, CA: Nolo. Top of Form Law, B. K. (2003). Real estate; everyone can afford it!: A practical guide that every investor and homebuyer must read. Lincoln, NE: IUniverse. Bottom of Form Bottom of Form Leonhardt, David.(2005, September 25). “Is It Better to Buy or Rent?” The New York Times. Retrieved from: http://www.nytimes.com/2005/09/25/realestate/25cov.html?_r=1 Top of Form Rockwell Publishing Co. (2006). Real estate principles. Bellevue, WA: Rockwell Pub. Co. Bottom of Form Read More