10 Timing Conditions Favorable To Rent Or Buy

The answer to whether or not to rent or buy can be elementary to an investment seminar junkie. Yet not everyone is at a stage in life where investing is a priority.

Timing very much plays the most critical factor when making a decision to rent or buy a home.

The correct answer this never-ending paradox really depends on what is your personal situation now.

Different individuals are at different stages in life. And we don’t necessarily go through similar stages too.

So it is imperative that there is no “correct” decision to rent or buy a home as people cannot be generalized to such a degree.

If you are considering to rent or buy, there is every chance that you’ve already know the answer to the riddle already!

You are just looking for reasons to justify the decision you have already made in your mind.

Anyway, if you are still unsure which choice to make, here are some conditions that would make either one more logical in view of your current financial situation and life goals.

Favorable to rent

1) Bad credit

Credit scoring is one of the wet blankets that often brings your financial decisions to an anti-climax.

Without going into FICO scores or nursing credit histories, it is easier to just say that if you have a horrific credit record, you would have a huge challenge on your hands to obtain a mortgage from a lender.

Unless you are cash rich or have a sugar daddy, buying your own home wouldn’t even be an available option until you sort out your own credit.

Therefore don’t even waste time pondering buying a house.

2) Little to no savings

It goes without saying that buying real estate is a BIG financial commitment.

Some people make it a habit to save a percentage of their monthly wages, while others are more than happy to live month-by-month spending as much as they earn.

There’s nothing wrong with either. Different people make different lifestyle choices in life.

Some people dump their entire life savings into buying that dream home. But if you have little to no savings, you might not even be able to afford the down payment on a house.

If you somehow manages to find avenues of 100% financing, consider that if you can’t even afford a down payment, do you really think that you can afford the house at all?

3) Unstable job

The labor market is not what it was decades ago.

No longer do corporations feel responsible for the income stability of their workers. In fact, this lack of commitment can be observed in the current world economy where companies favor contract staff and temps over full-time employees.

Staff on short term employment enables the company to weasel out of hiring staff on a full-time basis. Thereby, bypassing liabilities, employing benefits and long term financial commitments. That’s without mentioning retrenchment benefits.

If you are holding a job which you feel is not secure in the medium to long term, it wise to hold off buying a house unless you get some job stability and security.

4) Relocation tendencies

A lot of people would find it a chore to relocate even once.

Yet others find that relocating often makes life all the interesting. So much so that certain people actually make it a point to find job positions that requires them to relocate often.

If you currently have such a job, it make total sense to refrain from buying as you might find a new ideal location for your home as soon as you relocate again.

It would be a different matter if you are investing…

5) Family problems

Every family will have conflicts and problems.

Outsiders will never be able to grasp why certain issues occur when they appear illogical. Yet members within a family would know exactly why certain issues that seem like nonsense to outsiders DO make perfect sense.

If a pair of brothers for example are going for each other’s throats, binding them together as owners of the same house can create even more problems.

Then there is also the prickly issue of impending divorce.

If separation or divorce if on the horizon, you would be mad to purchase a house now… unless you are a billionaire of course…

Favorable to buy

1) Ample savings

It’s not to say that if you have an overflowing personal account that you should look into buying property.

It’s just that if you have the funds available, and not investing them, and currently renting, you should seriously evaluate whether owning your own home will be the smarter thing to do for both you and your family.

If your savings are sitting on 0.15% of interest gains a year, you might be well better off putting it into a house.

That’s without bringing into the picture of how leverage can compound your gains. And how you can keep inflation at bay too.

2) Good credit

Businesses and people often make the joke about how banks love them when they don’t need money but avoid them like the plague when they need to borrow.

This one of the Catch 22s of the lending world.

When you are flushed with money, your personal credit is often glowing. But when you are in some deep shit, your credit would take a beating.

The irony is that you can never tell what can happen in the short and long term future.

In terms of credit scores, you could very well be a model borrower today but become a devil a week later.

In view of this financial phenomena, if you have good credit, it is an ideal time to evaluate buying a house.

3) Market knowledge

In the knowledge economy that dominates developed worlds, knowledge can give you an edge in almost everything.

Knowledge is not just information. It is making sound judgment calls on the stories behind that information.

In booming housing markets for example, it would financially payoff to own rather than to rent.

Because from the point of view of a landlord, increasing rental will only bulk up his bottom line while tenants will see their expenses rise.

And then there is the property value appreciation that an owner will enjoy. This increased equity will be very handy when a time come to access it.

So if you determined that the market will not just be rising, but rise fast, buying a house could be a good move before you get priced out of purchasing.

4) Stable career

If having an unstable job translate to being a bad time to buy a house, then surely having a stable one would enhance the decision to buy one.

Again, having a stable job does not mean that one should start looking to buy a house by default. It just makes the conditions to consider buying one more favorable.

Anyway if you can see stability over the long term, buying a house shouldn’t be a tough decision to make.

5) Love the location

Having been both a renter and owner, I would say that the biggest reason that nudged me from renter to buyer is that I really loved the location, neighborhood, and area in general.

There are many aspects of a place that make it a great location.

If you find an ideal location for your needs and preferences, it would be easy to make a purchase decision.

Places that meet most of your criteria of a home don’t come very often.

And if you do lose out financially on such a purchase, it would be much easier to forgive yourself as you love the house instead of loathe it.

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