If you are thinking about renting a home instead of buying, it’s important to learn the pros and cons of both of them. The following information will help guide and protect you if you considering living in a rental-home, and prepare you for when you decide to get into the housing market.
TIP #1: USE A REALTOR®
If you’re like most renters, you search the classified ads like Kijiji and Craigslist, hoping to come across a great opportunity to rent. You may stumble across one—maybe you won’t. Not many people realize that you can use a real estate agent to find a place to rent.
REALTORS® have access to a large database of properties you may not find online. Quite often, the fees are paid for by the landlord who is seeking their next tenant. It’s basically a win-win for renters.
Real estate agents can set up showings to view home rentals and even help you fill out all the relevant paperwork to make sure everything is in order. With the help of an agent it will be easier to find a house to rent, and you’ll be assured that you’re getting into a good lease.
TIP #2: GET YOUR PAPERWORK IN ORDER
Before venturing out into the world of house renting, it’s important to get your paperwork in order.
Most landlords will ask for credit checks, recent pay stubs, contact information, and references like your current employer or previous landlords. Get all this information ready so your prepared when you find the rental house you like.
You can beat out the competition by having all this paperwork ready to go when you fill out an application, and it makes you look organized, prepared and responsible—being prepared and appearing responsible is a real bonus for impressing your new landlord.
TIP #3: MAKE A PLAN
It’s a great time to make a plan for how long you intend on being a renter. Perhaps you’ve chosen to rent a house because you haven’t settled on the city of your dreams yet.
Maybe you’re still saving for a downpayment on a home purchase. Or perhaps you’re working to build back your credit before buying a home. There are plenty of cases where renting is the most logical option. Having an idea of how long a lease you’ll need to sign shows that you’re thinking long term. Landlords love to sign long-term leases as it shows stability.
Remember, you don’t want to get locked into any agreement and have to sublet or break the lease in the future. So think ahead and consider how long you want to stay at this property before you sign on the dotted line.
PROS & CONS OF BEING A HOUSE RENTER
It’s good to be aware of the pros and cons of living in a rental house so you can be completely prepared before you make your decision as to what works for you and your situation.
THE PROS
- You have the freedom to move when you want (within the confines of your lease).
- You are not always responsible for the maintenance of the property.
- Some expenses might be paid by your landlord (e.g. condo fees).
- The ability to put your money into other investments that yield higher returns.
- Allows you time to work on building or improving your credit score.
THE CONS
- Your monthly rent is likely to increase each year.
- There’s no equity being built with rent payments.
- When you leave, you have nothing to show for all of the rent you’ve paid.
- There may be less stability with how long you can live there.
- There may be more rules to follow from your landlord.
WHEN BUYING A HOME MAKE MORE SENSE THAN RENTING
Sometimes renting does make the most sense for your situation. Sometimes it’s a long term plan, and sometimes it’s on a short term but if you’re considering working towards buying a home, make sure it works for you.
When buying a home you should not spend more than the recommended 32% of your income on your mortgage, and no more than 40-45% of your fixed monthly costs. Staying in line with those numbers will keep you on a budget, and more financially secure.
By following this home ownership strategy, buying instead of renting does make sense.
THE PROS
- Your payments build equity as your home increases in value.
- It’s like putting away savings every month just for living there.
- The equity your home creates could be used towards a newer, larger home.
- Buying makes it easier for upward movement in the market.
- There is a comfortable stability with owning a home.
- You’ll never be forced to leave and you can live there indefinitely.
- You are in charge and can make renovations or changes to the home.
- At times it may be cheaper than renting.
THE CONS
- You may need a sizeable down payment saved up to purchase a home.
- There will be other monthly costs with home ownership
- You’ll have to consider things like property taxes, condo fees, etc.
- You are responsible for all the home’s maintenance and upkeep.
TIMING MATTERS
When deciding whether to buy or rent a house, the right time matters. Just like everything else in life, you have to be ready for home ownership. Instead of going for the biggest house on the block, starting with a smaller starter home or condo might make the most sense.
Your first home may not be your dream home, but it will get you in the market.
Whatever your choose, it’s got to be the right decision for you and your family. There’s no right or wrong answer when it comes to buying or renting a home. Talking to a real estate agent can help you figure out the best time to make the jump from renting to purchasing.
We’re here to help. If you’re ready to take the plunge with either renting or buying, you can view recent listings in an around Brantford Ontario to get started.
