Rent vs. Own- Are You Ready?

The question plaguing every tenant who wants a home of their own is whether they should continue to rent or is it the right time to buy?
The combination of good prices and low mortgage rates make it considerably cheaper to own than rent in most markets. Assuming a person is qualified with a down payment and won't be moving for several years, there may not be a better time to buy a home.
In the example below, the total house payment is $1,281.01 compared to $1,500 to rent the same home. Before you consider any of the financial benefits attached to home ownership, it's cheaper to own than to rent.
The net cost of housing falls to $764 or just more than half the house payment when you consider the principal reduction due to normal amortization, a modest appreciation and the tax savings along with a reasonable maintenance expense that a tenant would not have to pay.
One of the biggest benefits is the growing equity. As the value goes up, the unpaid balance goes down. A favorable leverage causes their low down payment to grow to $40,609 in a short seven years based on a modest 1% appreciation.

There's an expression often heard in real estate circles: "Whether you rent or buy, you pay for the house you occupy." You're either buying it for yourself or you're helping the landlord buy it.
Check out a Rent vs. Own to see how your numbers will compare to this example or call us to do it for you.

Prevent Burglars

Home is a place you should feel safe and secure. Sometimes, we take it for granted and unfortunately, we do need to remain vigilant about things we do that could compromise our well-being. Here are a few tips you might want to consider.

1. Everyone loves an inviting home including burglars. Make sure it looks occupied and is difficult to break in.
   • Always lock outside doors and windows even if you're gone only a short time.
   • Leave lights on when you leave. Consider timers to automatically control the lights.
   • Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
   • Suspend your mail and newspaper delivery when you're out of town or get a neighbor to pick it up for you.
2. Posting that you're out of town or away from home on social networks is like advertising your home is unprotected.
3. Equally dangerous could be allowing certain social network sites to track your location.
4. Don't leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
5. Trim the shrubs from around your home; don’t give criminals a place to hide.

Single-Family Homes

Single-family homes used for rental property have distinct advantages over other types of investments.
An investor can borrow 75-80% at fixed interest rates on appreciating assets with definite tax advantages and reasonable control. The financing alone is attractive compared to some investments that require 50% cash and have floating rates at prime plus for one or two years.
Home prices have adjusted 30-40% around the country, mortgage rates are incredibly low and rents have risen in the past two years due to more demand and shorter supply. Indicators like these point to a strong and sustained rental market.
Consider you bought a $125,000 home for cash that would rent for $1,250 per month. With $15,000 income and allowing for property taxes, insurance and maintenance, it is still reasonable to expect $10,000 net income. You'd have an 8% return on investment without considering tax savings or future appreciation compared with 5-year CDs paying less than 1.5% and a 10-year Treasury yield at 1.65%.
The reasonable control has a lot of appeal to many investors who find the volatility of the stock market unacceptable and don't want the risk associated with some of the alternative investments. Please contact us if you'd like to know more about available opportunities.