Is Buying Really Better than Renting?
Okay, I’m going to play devil’s advocate here for a minute and tell you 3 of the biggest instances when renting might just be better for you than buying a home. Ready? Here goes!
1. When you cannot afford to buy a home - If you can only afford a home by paying the minimum on an interest only Adjustable Rate Mortgage or any other weird hybrid, you cannot afford the home. That’s a good time to rent.
2. When you intend living in the house for less than 2 years and the market is unsteady - If the real estate market seems shaky and you know you would only live in the home (or in the area) for less than 2 years, it’s probably a bad idea. Even the IRS gives you a tax break on capital gains on personal residences only if you live there for 2 out of the last 5 years. My recommended time for living in a home is usually 5 - 7 years, but 2 years is the absolute limit, especially in a volatile market.
3. When the purchase is purely speculative and you can’t afford to hold on to it for at least 7 years if things go wrong - We saw this with the flippers in Sacramento who could not afford to hold on to their homes when the market went south just as they were finishing up their flips.
Well, there you go. I’m sure there are other instances when renting might just be the better option. See? And you thought I couldn’t see the other side!
