Renting Versus Buying A Home
By Raynor James, Fri Dec 9th

Renters are often in a quandary as to whether it makes sense tocontinue renting or buy a home. Buying a home makes more sense,particularly when taking a long-term view. Yes, even in thecurrent hot real estate market.

Renting - Advantages

Renting can have a few advantages depending on the part of thecountry you live in. The primary advantage is your monthly rentpayment may be less than an equivalent mortgage. A secondaryadvantage is the fact that maintenance and improvements to theproperty are the responsibility



of the landlord. Still, theseadvantages pale in comparison to the disadvantages of renting.

Renting - Disadvantages

The disadvantages of renting are significant. If you have anyopportunity to purchase a home or condominium, it almost alwaysmakes sense to do so.

The biggest disadvantage of renting is the loss of value. Assumeyou rent a residence for $1,000 a month and you live in theresidence for two years. You will have paid a total of $24,000in rent, a pure expenditure. The $24,000 is simply gone and youwill have nothing to show for it other than the time you spentin the home. Compare this to what your landlord has gained.

Rent payments are closely aligned with a landlord's mortgagepayment. Using the above example, lets assume your $1,000 rentexactly equals the mortgage payment. For two years, you haveindirectly paid the landlord's mortgage, helping them buildequity in the house by paying down the loan. In addition, thelandlord has benefited from the appreciation of the property.

By appreciation, I simply mean the amount of increase in thevalue of the house. If the rental appreciated $20,000 in twoyears, the landlord has received a windfall. They may have seena gain of $24,000 in appreciation and payments lowering themortgage. As a renter, you have made this all possible. Thelandlord no doubt would like to thank you.

Now, what would have happened if you had purchased a similarhome with similar financial figures? You would have seen anincrease in YOUR wealth of $24,000, not the landlord's wealth.If you renting, these figures should make your teeth grind.

If you are renting, you should be out shopping for your ownproperty. After all, isn't it time to make your money work foryou, not a landlord?

About the author:Raynor James is with http://www.fsboamerica.org - providing FSBOhomes For Sale By Owner. Visit our "sell my home" page athttp://www.fsboamerica.org/seller.cfm to list and sell your homefor free for one month. Visithttp://www.fsboamerica.org/buyer.cfm to see homes for sale byowner.

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