Decision time: Renting property VS buying a house
Category Buyer Advice
The choice between renting property versus buying a house can be a difficult one to make. Owning a home has significant benefits, but so does renting.
The question is an important one, regardless of whether you're moving into your own place for the first time or you're just looking to move house. The answer depends on your needs, finances and long-term goals.
NS Property Solutions' millennial property practitioners Amy Wessels and Marno Muller share their insights regarding the benefits of buying and renting. These estate agents have solid experience in the real estate industry, with Amy in property rentals and Marno as a residential sales agent.
Here's what they have to say:
Benefits of renting a home
1.Get to know the area
Renting is the perfect way to find out if you like living in a specific area, and it's an especially useful tactic for remote employees in 2021. With the rise in remote working, many workers are 'semi-grating' to smaller towns. Renting homes, instead of buying property right away, gives these workers time to know which part of town suits them best.
"If you sign a six-month or year-long lease, you'll get first-hand experience of what it's like to be a resident of a particular community, without the need to make a long-term commitment," explains Amy, who supports NS Property Solutions' landlords and tenants across the Northern Suburbs of Cape Town.
"If you find that the area is not for you, you can easily go try out another neighbourhood once your lease expires. Easy, right?"
2.Save on additional costs
It's sometimes more affordable to rent a property because you don't have to pay the additional costs that homeowners have to cover, such as levies, rates, taxes and home insurance.
Check out our residential homes to let to see how you can save.
3.Have the freedom to change jobs
Renting is also recommended when you're at the start of your career. At this point, you're likely to change jobs more frequently than you would 10 years on. Investing in a home near your place of work might not be the right fit for you just yet.
"Renting is often less responsibility and admin for tenants, especially young people," notes Amy. "If you think your career might change in the near future or you're hoping to emigrate, becoming a tenant can be less effort than taking on the responsibilities of a homeowner."
4.Reduce the stress of moving in together
Renting is also the ideal option for couples moving in together for the first time. There is often a lot of pressure on couples who are building their life together for the first time while at the same time also going through the process of buying a home. In these cases, renting a home while adjusting to your new living arrangement is a good idea.
Benefits of buying property
For every good reason to consider renting, there are just as many reasons to contemplate buying property.
1.It's the logical next step in your property journey
The place to start when you're considering a property investment is by having a look at your long-term goals. If you see yourself settling down in a location for several years or you know you're ready for a long-term investment, then buying a home could be the logical next step.
Once you've identified your long-term goals, it's important to take a hard look at your financial status. Buying property is a major investment with long-term implications. If you think you might be spread too thinly financially and you're not sure of financial stability in the future, it's advisable to consult a financial planner or advisor before you buy.
Buying is still worth serious consideration, says Marno, who specialises in working with first-time sellers and the sales of deceased and divorced estate sales in Kraaifontein and Brackenfell, Cape Town. "We often see tenants renting in the same area for several years when they could easily have bought a home because they have the finances and credit record to do so," he explains.
2.It's the perfect investment
Buying property means investing in an asset, which has several benefits. Under the right conditions, it might make more sense to spend your income on paying off your own property, rather than renting one.
"You could also earn an income from renting out your home, if the market conditions are favourable," says Marno. "And it's a great way to bolster your credit score!"
Property is an excellent investment because:
- There will always be a demand for housing
- It doesn't lose its value
- You can buy a home using a loan and still make a profit
- Buying a house is a stepping stone to more significant investments
- You can leave a legacy for your loved ones
Need more reasons why property is one of the best ways to invest your money? Read our article Investing in property: Why it's still the best investment you can make.
3.Stability
There are also emotional reasons that drive people's decision to buy property.
"Our clients often find that they have more stability when they own their home because they are certain of their accommodation," notes Marno.
A word of warning before you decide to invest in property
Many tenants, first-time buyers and young individuals are often very keen to become homeowners, but there are dangers to jumping in too quickly.
"We have heard of buyers making impulse purchases because they like the home," says Amy. "Everyone falls in love with a property at some point, but it's not enough reason to go ahead and buy the home. Property investment is a long-term commitment, and you will lose money if you change your mind and sell too quickly."
Marno has also heard of buyers that rush to make a decision because they feel pressured by family or friends to make a choice. "Buying a home is a deeply personal experience, and it pays to be certain of your choice."
Simply having the finances to buy a home is not reason enough to do so. Investing in property is a rewarding but intricate business, which deserves careful consideration.
Flipping a house: Tread carefully
Buyers are sometimes tempted to invest in a home that they can 'flip' by upgrading it and reselling it for a higher price. While many investors have definitely seen great returns when flipping property, the conditions have to be just right to do so, explains Marno.
For starters, the property must be in an area that's up and coming. These are neighbourhoods where homes are still affordable and it is reasonable to expect that property values and the demand for homes will increase soon.
Added to that, the investor should have the experience to know how to upgrade the home efficiently and affordably. Renovating can also be a stressful experience, so it's essential that you're in the right headspace when you kick off this process.
If you're convinced that flipping a home is for you, then be sure to work with an estate agent that can help you identify the right location and find buyers when you're ready to sell.
Want to speak to a qualified, experienced agent? See what we offer investors here.
Where we live has emotional significance and for many putting down roots means owning their home. Buying property can be a very rewarding experience - and investment - if and when you're ready. However, renting has its advantages too, and could be exactly what you need in the short term until you're ready to settle down.
Author: NS Property Solutions