[COLUMN] Should I buy or rent?

Image by Shahid Abdullah from Pixabay

THE ongoing debate of real estate is — “Should you buy or rent?”

The right answer is: it depends. It depends on your situation and the factors in your lifestyle, your short-term goals, and long-term goals. The real estate market is hyperlocal, meaning that the market is based on your local market, as specific as your neighborhood.

If you are planning to live in an area (city or neighborhood) for a short period of time, i.e. 12 – 36 months, you can simply compare the monthly cost of rent and the monthly cost of a mortgage, for the same type of property within the same neighborhood. In an area with a lower cost of living, the monthly mortgage of a house can be the same if not lower than rent. In higher cost of living areas, the average rent is lower than the mortgage expense for the same property.

A prime example is comparing high-valued properties near the beach or a city’s downtown area. The monthly rent of a beachside condo will be less than the mortgage monthly payment. When you purchase, you will need to factor in the down payment, property taxes, insurance, homeowner association fees, and the interest on your home mortgage loan. When you’re renting, you’re only responsible for the monthly rent plus your utilities expense.

Ask yourself: “Why do you want to buy?”

The cons of buying. The initial cost and out-of-pocket expenses are higher. You will need a down payment, between 3.5% to 20% of the purchase price. You are now the property owner and responsible for the maintenance costs, the mortgage loan, property taxes, and overall upkeep of the property. If the real estate market crashes, your property can be worth less than what you purchased it for.

The pros of buying. You are now a full-fledged homeowner. All market appreciation of your home can help with your long-term financial goals.  You can take the tax deductions offered to homeowners (see your CPA). You don’t have to worry about the fluctuations of a landlord’s monthly rent or lease term. Your monthly payment is invested back to reducing the loan and providing you with equity. You can design your home’s interior and exterior to your taste. You can set down your roots in the neighborhood of your choice for the long term. When you do decide to sell it, you can benefit from the net proceeds.

Is it now or never? As I tell my clients — don’t try to time the market. Decide based on your goals.  Be ready to purchase when the time comes and when you find the right property. Although it’s currently a seller’s market, you can still purchase while finance rates are at their historically low. This allows you to purchase a higher-priced home but keeping your monthly payment low. The best time to buy was yesterday and the next best time is today.

Life’s Short, Love Where You Live. 

Call / Text 213-608-5837 for a complimentary initial consultation, property value assessment, or questions for Selling, Buying, or Investing in real estate.  Connect with me @jasonarealtor on Facebook, Instagram, and LinkedIn.

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JASON AGCAOILI, REALTOR | Ca DRE #01947185

JASONAREALTOR.com | HomeSmart Realty Group.  Your Realtor for the Los Angeles Metropolitan, South Bay, Beach Cities, and Long Beach. | Member – California Association of Realtors and the South Bay Association of Realtors |Member – Coalition of Filipino American Chambers of Commerce

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Jason Agcaoili

Jason Agcaoili is a realtor with HomeSmart Realty Group, serving the Los Angeles Metropolitan area, South Bay and Long Beach.  He is a member of the California Association of Realtors and the South Bay Association of Realtors. CA DRE #01947185. For more information, please visit JASONAREALTOR.com.

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