While the housing market is favoring buyers, more and more renters are ready to pay a down payment. However, purchasing a home in this market may not be the smartest option for all potential buyers.

Although there are may tax benefits to owning a home, some may over look expenses of homeownership. Home Owner’s Association dues and home repair costs can add up quickly. Monthly expenses like water, trash and sewer services will also have to be added into the family budget.

The use of a mortgage calculator will help a potential buyer decide if the market is in their advantage, or if it would be better to wait a little longer.

Riding It Out

Homeownership is an investment and all investments assume some risk. Renting is a good option if your situation is not suited for risk taking right now.

Look at your career status and evaluate your long term potential for living in the area. Profits are difficult to come by if the housing market is weak and you do not stay in your home for at least five years.

If you choose to rent for a while longer, don’t despair while you sit on the sidelines. Instead focus on paying off debts and amassing a large down payment. Having a good credit score and money saved in your bank account will position you when you are ready to start.

Testing the Waters: Rent It and Then Own It

The rent-to-own option may be the ticket for potential buyers looking to get in the game, but have bad credit or cash flow problems holding them back.

However, be judicious when looking at different opportunities, since there are many rent-to-own scams. If you enter into an arrangement with a seller be sure to get everything in writing and reviewed by a real estate attorney. In most situations, the buyer will pay a rental fee in addition to a fee that eventually becomes your down payment. After several years, the buyer can purchase the home for a previously agreed-upon amount. Be cautious about the fees before you enter into an agreement or you may end up losing a lot of money in the end.

Additionally, you won’t be able to claim tax benefits of home ownership, while you’re renting, even though you’ll be making higher payments.

Should you buy or rent? A lot has to do with your financial status and place of purchase. Years ago, I sold a home for a young couple who owed almost as much as the sales price on their house. They needed to take money from savings to pay the closing costs and sales commission. You can bet that they wished they had rented for the couple years they lived there.

Thus, the decision of renting or buying can only be taken once you have decided how long you will be staying in the area. Buying and later selling a home will usually cost about 10% or more of the value of the home. These costs mean that if the home only went up in value 10% or so in the year or two you lived there, you won’t be gaining anything (equity gain from principal pay-down is very little in the first years). Usually, renting is the best option for people that are always on the move.

What about towns with faster rates of appreciation? Have you done some serious homework? If not, to assume appreciation will be more than the rate of inflation is just gambling. Although the house is in a good neighborhood, they sold it for exactly the amount they paid for a couple of years back. You can’t count on fast appreciation just because it has been that way recently.

To Buy Or Rent – Cost Comparison

Looking at buying versus renting, you have to take into account that in many places it cost much more to buy. In Tucson, Arizona, for example, a small home can cost $200,000. The mortgage payment, taxes, insurance and maintenance will add up to about $1,600 per month, but you can rent the same size home for about $800.

This shows you what? Many real estate fanatics will say you’re at least buying something for your money, and renting is throwing your money away. Of course in this example more than $1,000 of your payment will be going towards interest alone, and that’s not buying you anything.

Suppose you can afford the $1600 per month, but instead you rent for $800 and put the other $800 into a decent safe investment that makes you 5%? In three years you’ll have over $30,000 in this account. If the home appreciated at 6% per year (it has been more like 25% per year recently, but that can’t continue, and assuming so is not planning, but gambling), it would be worth $231,000. The costs of initially buying it and then selling it would be around $13,800 (2% buying and 6% selling), leaving you with a gain of about 19,000 once we include your principal pay-down.

This meaning it would have been best to have leased the house instead of buying it. Definitely, these are not the only factors to ponder. Compare the total costs of owning versus renting, and then make safe assumptions about the rate of appreciation for homes.

In most cases, it is best to buy than rent, if you don’t intend to move for quite some time. In the last example, buying becomes a better bet after about four or five years. Besides owning your own property, you can get a mortagage which allows you to always pay the same amount, as opposed to renting.

To sum up, look at the time you’ll be there, the comparison of total monthly costs, whether rents are going up fast, and whether you have good reason to believe home prices will be going up fast. Then look also at all the personal factors. Do you want to be responsible for the maintenance, yard work and unpredictability of ownership problems?

To buy or to rent? In the end, you have to work this one out by yourself.

If you are looking to buy home in Okanagan and looking for a real estate agent Okanagan let me know.

This article was supported by Kent Swig, the team at Toronto condo for sale

Renting basement apartments in cities like London proves to be a cheap accommodation suggestion. These basement apartments are basements that have been made usable by its landlords and property owners with the help of a basement refinishing project.

With an increasing number of basement apartments in cities and towns, there are many laws you have to know about basement apartments before renting one.The age of the building is the first thing you have to consider as old buildings may not have been constructed to code, and may be unsafe for you and your family.

An important point to consider about the basement apartment is its head height.Somewhere between seven to nine feet is the ideal head height for the basement apartment.These apartment have sufficient space to access pipes and to stand without any obstructions even if there are drop or rigid board ceilings in the apartment.

Most states require that the basement apartment have egress windows.With these windows, you have an additional emergency exit to use to get out of  the building in case of floods and fires.

A grown man should comfortably climb out of the window, and it should also lead to a paved area or yard.These windows are not only a safety feature, but also let natural light into the basement.

The apartment should also have a full basement moisture control system to avoid leaks, mouldy and musty conditions while controlling the moisture of the space.Once leaks are under control, there is no chance of any mould or odour irritating you in the apartment.The studs, insulation and the walls of the apartment are protected with these systems being located behind the walls.

Nothing should stop you from renting basement apartments that meet these conditions. Just don’t forget to thoroughly read and understand the contract, as you would with any apartment.

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