Investing in a property is always a tough decision. Should you buy it? Should you rent it? Is it wise to invest so much money in a house that you don’t stay in? Is it foolish to rent a place when it is basically paying someone else’s mortgage? What should you do? How should you go about it?
If that seemed like a lot of questions, then you know the struggle. If you are rummaging through the list of new homes for sale every now and then, you know you know the struggle of finding luxury homes. It is such a daunting task to look for a home you can call yours – a home that meets your luxury standard of living.
Even if a property catches your eye – something that perfectly complements your taste and lifestyle – how do you decide if you want to invest a huge chunk of money in it? Should you just buy it, considering that luxury townhomes are hard to come by? Most often than not, they are off the market even before you know it.
On the other hand, what if you rent it only for a couple of months and see if it works well? After all, frequent traveling, impromptu business trips, and holiday destinations are always seeking you out, beckoning you to move around the world.
If you’re looking for answers, we are here to help. Here’s what you need to know about renting versus buying your next property.
Renting Versus Buying Your Next Property – Which Route Should You Choose?
Buying a property is a one-time investment – one that is going to affect your lifestyle, finances, future plans, and the whole scenario in which you are planning to invest. Your bank statements, latest transactions, and credit points are a few things that will be checked before you can invest.
On the other hand, if you are opting for luxury rentals, you are paying a handsome amount every month. However, there is more to it. Let’s decide which route to choose by weighing the pros and cons of both.
Buying a Luxury Home
The first thing that you need to take care of is buying a home where your family can live peacefully. This piece of property should be up to par – something that you won’t regret investing in.
When you decide to invest in a luxury home, you own the place. You have the authority to make a few changes here and there or whip up something entirely new. You are the sole owner who gets to decide everything around the house. Owning a property gives you a certain control that renting can never do. Moreover, it is a way to build your wealth and move on to bigger and better things in life. For future investments, you can utilize your home equity and get an even better, more luxurious piece of property.
Let’s dig deeper into the pros of buying a luxury home.
Pros of Buying a House
1. A Way to Build Your Wealth
You might think that owning a home is all about putting your money into it. However, there is more to it. It is a way to multiply the big bucks you have invested in your luxury home. This way, if you ever come across a list of new homes for sale and decide to move on, you can sell your current home based on your home equity and build your wealth in a way a renter can never do.
2. No Sudden Increment in Your Mortgage Payment
In the event of not being able to pay the entire amount upfront, you can settle for a mortgage payment. This way, you can get the house without spending a fortune upfront. Instead, you can reach a settlement, where you have to pay the decided amount in the time both parties have agreed upon.
Once you have settled the mortgage payment, you are liable to pay only that amount for a certain period. You can negotiate the terms for the home you are buying, decide on an amount, the tenure of payments, and shake hands on the agreement.
Once it is settled, no one can increase the monthly payments. Especially in this market, where mortgage rates are as low as the rent, it is a golden opportunity for you to get yourself a luxury home, without the additional worry of spending heaps of money on your mortgage (well, more than you’re already paying).
When you plan on buying a luxury home, you are at liberty to do whatever you want with the place. There is no added pressure on you. Change the entire setting, change the color of the walls and add a splash of hues of your choice, get rid of the furniture and replace it with something chic and modern that complements your personality, build a garage, place a pergola in your backyard and turn the place around. Make all the changes and go out on the limb without anyone’s approval.
On the other hand, you can keep everything as it is. Adopt a minimalistic approach and make only a few tweaks here and there. It is all in your hands. You are the only boss of the place, with no one barking orders or breathing down your neck. Buying a home gives you certain freedom over your everyday matters.
Cons of Buying a House
Now that we have discussed the pros of buying a house, let’s see the downside of investing in one.
1. Less Flexibility
If you are someone who loves exploring new fields and whose heart is always ready to answer when new adventures are calling, buying a home to settle down in might not be the best idea for a frequent flyer. If you are planning to own a luxury home, your ambitious travel plans may take a back seat until more disposable income is freed up. Home ownership is time consuming, demanding and can be financially draining as there is always something to catch up on. Therefore, if you are not planning to settle down or rent out your luxury townhome, you should think twice before investing in a property.
2. Competitive Market
The real estate market is competitive these days. It can be a while before you get a good offer. This is because new homes for sale are extremely expensive, the owners of which are getting more money than the asking prices. In this competitive market, it might be a bit difficult to choose from luxury townhomes.
3. Managing Expenses
There are evident risks involved in owning a house. You might think that the price of your house is going to touch the sky within a couple of years. However, this might not happen. Your home’s value might not increase at all, or if it does, it might only increase a little bit.
Moreover, you need to manage all the expenses all by yourself. Whether it is the renovation costs, insurance costs, property taxes, or any other related homeowner’s fees – you will be responsible to pay for everything.
In addition to that, if you fail to submit your mortgage payment on time, the chances of building a good credit score will go down the drain.
Renting a Luxury Home
Renting a luxury home can be a bit expensive; however, it might be worth it if it suits your lifestyle! You can easily get to live a luxurious life, residing in a home that complements your lifestyle, without having to give up on your freedom to travel around the world. Whether you are a workaholic, attending various conferences around in a different city every week, or an ardent traveler, the best choice for you is to opt for luxury rentals.
Let’s explore the pros of renting a luxury townhome.
Pros of renting a luxury Home
1. Freedom to Move
If you choose to go for luxury rentals, you are at liberty to move whenever you want. You can go anywhere and do anything without any additional responsibility at hand. The main issue here is security. If you leave a house that you’ve bought, who’s going to look after it while you’re away? When you’re renting a home, this isn’t an issue as your landlord is responsible for these matters.
2. No Additional Expenses
If the property you are living in gets damaged in any way, you are not supposed to pay for the damages (as long as you didn’t cause the damage, of course). The owner of the property will pay all the additional expenses including the homeowner’s association fee, insurance, property taxes, etc. You are asked to pay your rent every month, and nothing more than that.
3. No Additional Responsibility
Most damage to your property is covered by the owner of the house. Renters, therefore, are there only till the agreement ends. After your agreement ends, you don’t have any further financial and legal responsibilities when it comes to your home.
Now that we have looked at the pros of renting a luxury home, let’s dive into the cons of renting one.
Cons of Renting a Luxury Home
If you have opted for luxury rentals, you won’t have the chance to enjoy your bachelor pad for as long as you want. The timespan of your stay is uncertain in the sense that your owner can give you a notice any time they want (they do have to give you notice at least 3 months in advance, though). After that, you will have to look for a new place to live. House hunting can be an overwhelming process – one which requires time and countless hours of long discussions with a realtor.
2. No Security
If you choose to rent a place, you have no security for the future. You will effectively be at the mercy of your landlord. You can neither build your wealth using your home equity nor can you settle yourself in one place. Moreover, if you have a family, you will have to make ends meet while paying rent every month, so this is something that you need to factor in whenever you’re thinking about renting a luxury home as opposed to buying one outright.
3. No Freedom to Make Changes
If you are looking to change something around the house, you will have to ask permission from the owner of the house. If they permit, only then you can make substantial changes. Otherwise, you are not at liberty to do so. Technically, it is your residence; however, you cannot make modifications as per your wishes since you don’t officially own the place.
4. You Have No Control over Rent
The amount of rent you pay every month might not remain the same. You cannot control the rent or any increments in your rent that you are asked to pay. It is entirely up to the owner. They might change your rent, though they do have to give you prior notice before they do so. However, the notice is less of an issue. If you’re set in your payment schedule and you’ve budgeted accordingly, your landlord increasing your monthly rent with cause a fair bit of a financial setback.
Luxury homes are hard to come by. Even when they are on the market, the renting vs buying your next property debate might rear its ugly head. However, if you are familiar with all the factors that might affect your purchase, it might be easier for you to choose between the two. Choose wisely!