Friday, October 11, 2013
Common myths about "Buying" vs "Renting"
As you all know by now, I'm a huge fan of Trulia.com. IMHO, it offers the best real estate tools, allows you to dive deep when researching real estate agents, and is more user-friendly than most other sites that advertise the same features.
Again, totally my own opinion and nothing more.
If you would like to try out one of Trulia's new tools, here is their awesome "Rent vs Buy Calculator"; this tool is unbelievably helpful, and simple too. Talk about user-friendly, the RVB tool not only breaks down your current cost to rent vs your current cost to own, but it even accounts for your tax bracket; which helps paint a better picture of one vs the other.
I have written a few posts in the past about Buying vs Renting (feel free to check out Example 1 and Example 2). And no matter how many things you read online or hear on TV, it will always be a case-by-case decision for you as an individual. There is no correct answer, but if you break it down based on your own needs as a single person or family, you will find yourself with a better plan to make that decision.
Aside from a side-by-side cost comparison, and reviewing the most common myths in this article, the most important, general question I ask all of my clients upfront is, "How long are you planning to stay?" Not only is this a hard question to answer for anyone, but it's something that can change with each passing day.
What if I change jobs?
What if my family grows?
What if I don't get that raise?
What if we have to relocate?
What if there is a tragic personal event?
What if ... What if ... and so on, and so forth.
These are all very good questions, and normal concerns at that. The more answers you have, the better off you will be. But the truth is that most people don't have those answers, which is why buying real estate is considered a risky endeavor. But so is investing in gold, picking stocks, buying antiques, and even putting money into your 401K.
They are all "Risk vs Reward" propositions, where typically the brave and well-prepared perform the best. You have probably heard the expression, "If it was easy, everyone would do it." It's true, which is why there is risk. If everyone did it, the risk would be low as well as the return.
If you want to be in the best position possible to decide whether you should buy or rent, run your numbers and learn what works best for you and your current short/long-term goals.
As always, I'm here to help if you have questions about it.