Rent vs. Buy

The most frequently asked question I receive is "Is it a good time to buy?" The second most common question I hear, which ties into the first one is "Is it better to rent or buy now?"

The answer to this question has two parts that should be considered; social and economic. To answer the social part one needs to ask themselves do you plan to move in the next several years because of work or family? If yes then would you sell or rent your home when you move?

Taking a look at the economic part of the answer one needs to know is it less expensive to own or to rent. If it is more expensive to own is pride of ownership worth the additional cost?

There are many costs and responsibilities with homeownership but there are also some tax deductions. A simple rule of thumb I use is to divide the cost of the home by what the monthly rent would be. If the number is less than 200 then it is better to buy and if the number is over 200 then it makes financial sense to rent. For example, a house sells for $500,000 but one can rent the house for $3000 a month ($500,000 / $3000 = 167) so it makes more sense to buy in this scenario.

Trulia.com has created a nice national map that evaluates the Rent vs. Buy question, click here.

If you still have questions don't hesitate to contact me.