9 Reasons Why Renting Is Better Than Buying

When we were kids, our lifelong goal was probably something to do with money falling from the sky. But as we grown into adults and face the reality of the world, home ownership is probably a more realistic goal. While both owning and renting a home has it’s benefits, renting is more advantageous when the economy is not performing. Here are 9 winning reasons why renting can be a better decision over owning a home.

1. Maintenance fees and repair costs. When you are just a tenant, you will not have to worry about getting fixed and maintaining everything in good working order. This is usually the responsibility of the landlord unless you are crazy enough to assume the responsibility. So when the water heater is not working or the ceiling is leaking, your sole responsibility is to inform your landlord about it. They will then have to fix it within a reasonable time as stipulated in your tenancy agreement. Maintenance fees and repair costs can run up to the thousands if the problem is serious enough.

2. Freedom to choose your location. You might want to live in a place like Orchard Road. But how in the world are you going to find a seller that will sell at a bargain price? This is why it will be much more easier to rent than to buy in a place like this even if you have cash to burn. Instead of paying through your nose to buy a property in high demand areas, you can rent it and enjoy all the facilities and amenities. And when you feel like your are getting bored with the place, you can always relocate to another apartment without being tied down to it.

I can afford this if I just rent

3. Property tax. The property tax on the property is the owner’s burden not yours. The higher the market value of the property, the more tax you can expect to pay. You can find out more about property tax on IRAS.

4. No monster down payment to worry about. It goes without saying that you will need a huge chunk of cash ready in hand to buy a property. That is not all. A lot of buyers fail to add stamp duties and renovation works among others to the cash they require. Thinking about saving on renovations? If you are going to buy a million dollar property and just give it a $20,000 renovation, maybe you should question yourself why buy such a pricey property in the first place. The most you will have to commit upfront when renting is 3 months worth of rental.

5. Opposite effect of market movements. While home owners are inevitably hoping for the real estate market to continually rise, renters will benefit from market declines. So you do not have to endure sleepless nights fearing an impending market crash. You will in fact hoping for one to use it for negotiating to a lower rental.

6. Ease of upsizing and downsizing. As a tenant, you can easily upsize or downsize to a new apartment when the tenancy ends without a lot of hassle. In an effort to keep you, landlords may even decrease the asking rent. When you own a house, you have to think about the costs involved with buying and selling. It is a lot of work and time commitment. You have to find a capable agent, find credible buyers and sellers, meet up with bankers for mortgages, formalize deals with conveyancing lawyers, clear up your existing house, etc. It a pretty long list of chores.

7. Fixed rental. As soon as you sign up with a tenancy agreement, you will only have to pay a fixed rental for the term of the tenancy without having to worry about any fluctuations. Home owners have to worry about volatile interest rates and fluctuating property taxes. And there’s the occasional major repairs to worry about that can cost a bomb. These are items that you do not have to worry about.

8. No fear of too much debts. A loan for your home is quite possibly the single most significant financial commitment in your lifetime. Once you get in, you are committed to about 20 to 30 years worth of monthly mortgage payments. This can put a damper on your lifestyle. If you are not ready to make such a financial commitment, it will be wise to rent until you are emotionally and mentally ready to assume full responsibility on a house. You might have outstanding car loans or personal loans that are currently taking up a huge chunk of your income. So it could be a good idea to buy that house after your other financial commitments expire.

9. Lastly, you do not have to worry about a lost opportunity for not investing in properties. With how property prices are rising like Jack’s beanstalk, many investors are single-minded as it being the only form of investment to make their money work harder. If you choose to rent and forgo the “opportunity”, you can focus on all the other types of investments that are available. Prices in Singapore are defying gravity and remains a puzzle to everyone. Maybe it is time to seek out alternative investments.

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