What a market we live in! It’s so hot right now, I bet you are sitting back wondering if you are missing something. Is it better to rent or to buy a house in Reno? Let’s take a deeper dive into this question.
First, take a look at my previous article First Time Home Buyer Tips! Now that you have read that, let’s put a checklist together to see if you can actually afford to buy.
Keep in mind, IT’S NOT A BAD THING TO RENT. A lot of folks seem to think renting is the worst imaginable investment when quite frankly, it isn’t.
Should You Buy a House?
Seems so obvious but it isn’t. You need to take an objective look at your financial situation before you go into the biggest debt of your life.
Do you have student loan debt?
Really important questions to ask yourself. Your monthly mortgage payment should be only 25% of your total monthly income and if you are paying down student loans, you may want to rethink buying a home.
The amount you approve for is determined by your debt to income ratio and credit score of course. When you have a lot of credit card debt and or student loans, you may want to rethink purchasing a home because it is a better investment to invest in yourself at this stage in life.
Pros to Homeownership
I do want to clarify something, I love owning my home. I feel so much satisfaction in the sense I OWN a small part of this planet.
- No one can tell you no if you want to paint or rehab a bathroom. Paint that wall green for all I care!
- Tax benefits are awesome! You can write off your interest on the mortgage and use it as the asset it was meant to be.
- Benefits of appreciation. If you buy a home for $350,000, that same home could be worth $400,000 within 10 years.
- Privacy! No one is going to drop by (besides maybe your mother). You don’t need to worry about the neighbors living next to you and hearing all their dirty secrets!
The feeling of achieving the American Dream is real. I can tell you when we bought our home, I had this overwhelming feeling of gratitude that I was able to pull it off. I still have that satisfaction when I am on the back patio smoking my favorite cigar.
Cons to Homeownership
I’m sure you’re excited to get out there and house hunt with your favorite realtor, but remember, there is a downside to owning a home as well.
- No one is coming to help fix that leaky pipe. When you rent, the landlord is usually responsible for maintenance. The buck stops with you i’m afraid.
- It’s really expensive. Coming up with 20% down to avoid PMI insurance is tough and in today’s market, almost impossible.
- It’s more difficult to travel for long periods of time. You can’t just break a lease and travel to Italy for 6 months when you own a home. You have to plan the trips and make sure you can actually go!
If you can afford the payments per month and have the down payment, go buy that home! Enjoy your slice of heaven and feel the freedom it gives you.
There are several benefits to renting if you are a young person who is just not sure whether you should buy or rent a house.
Benefits to Renting
- That leaky pipe is the landlord’s problem! Please, make sure you tell your landlord before the problem gets worse but at least you can sleep easy knowing you aren’t dipping into the savings account.
- It allows you to pay down your other loans. I would recommend what Dave Ramsey says in his article, instead of going into more debt, pay down your existing debt first. It will help in the long run.
- You can travel with ease! You can move whenever you want and don’t need to worry about selling a home just so you can move. Whether your move is your job or personal, renting allows you to move quickly.
Cons To Renting
- You are at the mercy of the market when it comes to rent increases. Landlords can adjust your rent if the market goes up or down and based on the term of your lease.
- You are paying someone else’s mortgage. This is kinda a double edge sword because on one hand it’s okay to do this if you can’t afford to buy, but you have zero equity.
- Rules. You have to follow landlord rules when it come to pets, painting, decor (sometimes), and anything else they deem worthy to put into a lease agreement.
These cons really aren’t terrible if you are paying down debt and working to save money. You have to be honest with yourself when it comes to going into the biggest debt of your life!
Is It Better To Rent or To Buy
So, is it better to rent or to buy a home in Reno/Sparks? Go through your mental checklist in your head of all the things I mentioned above and see if it financially makes sense.
If the answer is yes, buy the home and live in your slice of this planet! If it’s no, keep renting and pay down your existing debt. I promise, there will be more properties in the future.
I’d love to get your opinion on your house hunting endeavors or opinion on our current market! Leave a comment below and get the conversation going.