Jay Allen's Blog
The option to buy vs rent is a topic that many will debate at this time of year. Each New Year is a clean slate, and it prompts us to think about what we would like to accomplish in the months ahead. It is worth considering the benefits of each approach before deciding how to proceed.
In today’s post we’re going to break down some of the benefits of renting an apartment and of buying a home.
One thing to note first, however, is that it isn’t always as simple as buy vs rent. Some living situations draw on the pros of each type of living. For example, living in a condo might be a good option for people who want the privacy and independence of owning their own home, but who also don’t have the time or desire to keep up with maintenance.
So, as we compare buying and renting, keep in mind that the features of each are not mutually exclusive.
Renting an apartment
Most people who are living on their own for the first time start off renting. For younger people just out of school, renting offers the first taste of independence without the prerequisites of homeownership.
When you rent your first apartment, you’ll learn the skills associated with budgeting for your monthly expenses, making your rent payments on time, and you start learning some of the skills that it takes to run a household.
In terms of monthly costs, apartments can vary greatly. Depending on where you live (and how luxurious the apartment is) you could end up having rent and utility payments that are much lower or much higher than mortgage payments for a house. However, apartment leases often come with the benefit of utilities, trash removal, and other expenses built in. They also typically require the landlord to maintain the apartment and the land it sits on. Live in the northern part of the country and hate shoveling snow? Make sure your lease specifies that your landlord will provide snow removal.
One technique that many renters take is to find an apartment that is small and affordable while they save up for a home. In this case, it’s worth selecting an apartment with fewer amenities if your end goal is saving for a down payment.
And what if you want to own a home someday but haven’t quite decided where you want to settle down? Maybe your work keeps you moving from place to place or you’ve always wanted to move away to somewhere new. Renting is typically a better option for those who aren’t quite sure what their plans are for the next coming years. They can have a stable place to live while they figure things out and plan their next move.
Buying a home
Once you’ve rented a home for awhile, you might become increasingly aware that you want more control over your residence. Your vision of a perfect home might require significant renovations/alterations...which are typically not allowed in a rental. Achieving your ideal home environment might require purchasing a home that offers the right amount of space or layout, then customizing it to fit your wants and needs.
As we enter tax season and you review your prior year's spending, you may also notice how much money you pay toward rent each year, which is essentially a net loss. When you buy a home, your mortgage payments might be going to the bank, but someday the money you’ve paid toward that home will be yours in the form of equity. You can then use this as a down payment for another home. This financial benefit cannot be understated. Since house values dependably increase over time, owning a home is a great investment toward your future.
So, those are the main pros and cons of renting vs buying a home. Think about your circumstances and determine which one makes the most sense for you right now. Then, start planning for the future.
No two vacation residences are alike. As such, it pays to take a thoughtful approach as you conduct a search for your optimal vacation home.
Here are some tips to get you started:
1. Establish Vacation Home Must-Haves
Think about the features you want in your vacation home. By doing so, you can hone your vacation house search to residences that offer the features you want.
For example, is direct beach access important to you? How about a refreshing in-ground swimming pool? Maybe ensuring your vacation home has a state-of-the-art cooling system is important. Whatever your requirements are, make a list to help narrow down the options.
Don't forget to make a list of preferred cities and towns for your vacation home, too. With this list in hand, you can check out residences in cities and towns that meet your expectations.
2. Create a Homebuying Budget
A homebuying budget is crucial. It is important not to be distracted by the "fully loaded" offerings that are just out of your financial reach. Not only can this be a waste of your valuable time...but it can interfere with your ability to be happy with the options that do meet your budget!
To establish a homebuying budget, it often helps to meet with banks and credit unions. These financial institutions employ friendly, knowledgeable mortgage specialists who can help you evaluate different mortgage options for a vacation home. Plus, if you have any mortgage concerns or questions, these specialists are happy to respond to them.
3. Collaborate with a Real Estate Agent
When it comes to searching for a vacation home, it can be helpful to work with an agent who understands the seasonal fluctuations that influence your local market. This is certainly valuable knowledge for helping you determine the correct offer price to acquire your vacation home. But also, if you intend to rent the house during periods of non-use, your agent can offer insight on the logistics of such an arrangement. Some agents in vacation communities offer both homebuying and rental services...so if this is something that interests you, it is recommended to select an agent who is qualified to handle both tasks.
Ready to acquire your dream home? While you might have already identified your ideal residence, some negotiations may be necessary before you enter into a formal agreement with the seller. In some markets, it may be possible to acquire your new home at a more favorable purchase...while in other markets, you may find yourself negotiating terms that favor the seller in order to make your offer stand out against competing buyers.
Common negotiating points are the purchase price, deposit amounts, deadlines for inspection/financing contingencies, the closing date, appliances, and repairs. Needless to say, negotiating with a seller is a delicate dance that requires some finesse...and if you fail to keep your cool throughout a negotiation, you may miss out on the opportunity to purchase your dream residence.
So what does it take to remain calm during a negotiation? Here are three tips to help you do just that.
1. Take Your Emotions Out of the Equation
Don't take it personally if a home seller wants to negotiate. Instead, view it as an opportunity to ensure all parties involved in the transaction get the best results possible.
In many instances, it's easy for buyers and sellers to let their emotions get the best of them. But if you feel overwhelmed by stress and frustration, it is essential to take a step back and assess the situation. That way, you can avoid making any rash decisions that could put your chance to purchase a top-notch house in danger.
Try to maintain a positive outlook throughout the negotiation.
2. Know Your Options
You may invest many hours in a negotiation, and you might even make various concessions along the way. But despite your best efforts, there are no guarantees that your negotiation will be successful. Know when to walk away. If you come to the realization that a "meeting of the minds" is not possible, it may be best to focus your efforts elsewhere.
3. Consult with Your Real Estate Agent
Your real estate agent brings a wealth of experience to the conversation and can be a valuable resource when navigating the sometimes complex process of negotiating with a seller. This real estate expert can respond to any concerns or questions you may have throughout a negotiation and act as a buffer between you and the seller when things get heated. In addition, he or she will provide honest, unbiased recommendations to help you make an informed purchase decision.
A prepared homebuyer understands the ins and outs of the real estate market. As such, this individual may be better equipped than others to purchase a top-notch residence at a budget-friendly price.
Becoming prepared homebuyer may be easier than you think – here are three tips to get you ready for your house hunt.
1. Narrow Your Home Search
Consider your day-to-day activities as you kick off your home search. If you regularly take the bus or train to work, you may want to consider homes that provide quick, easy access to public transportation. Or if you are a commuter, look for a location in close proximity to the highway. Interested in a particular school for your kids? Make sure to focus on the part of town that feeds into that school.
2. Establish a Price Range
Although you know that you want to buy a home, you may have no idea what it will cost to obtain your dream home. However, if you enter the housing market with a home price range in hand, you'll be off to a good start!
Meet with banks and credit unions in your area. That way, you can learn about myriad home financing options and choose a mortgage that complements your finances. Most importantly, these banks and credit unions can help you estimate your monthly payments at different purchase prices, which is valuable knowledge when creating your budget.
3. Work with a Real Estate Agent
A real estate agent is a homebuying expert who will do everything possible to help you optimize your productivity. If you collaborate with a real estate agent throughout the homebuying process, you can increase the likelihood of getting the best possible results.
A real estate agent will set up home showings, negotiate with a home seller's agent on your behalf and help you get the best price on a home. By doing so, this housing market professional will ensure that you can enjoy a seamless homebuying experience.
Become a prepared homebuyer today – use the aforementioned tips, and you can maximize your readiness to reap the benefits of a quick, efficient homebuying journey.
After you complete a home showing, the question on your mind will be "Is this the one?" Sometimes it's a clear yes. Other times, you may want to set up a follow-up showing before deciding to move forward with an offer. Or, if you are dissatisfied with the results of a showing, you will want to continue your house search without looking back.
It helps to know what to expect after you attend a showing. Because if you have a plan, you may be able to speed up the process of going from homebuyer to homeowner.
Now, let's take a look at three tips to help you make the best-possible decision about a house following a showing.
1. Assess the Pros and Cons of a House
Performing a comprehensive home analysis is a must after a showing. That way, you can weigh the pros and cons of a residence and decide whether a house is right for you.
Think about how you felt as you walked through each room of a house. If you can envision yourself as the owner of a home, you may want to move sooner rather than later to submit an offer to purchase.
Conversely, if you find a house is in need of major repairs or simply does not suit your lifestyle, you should not hesitate to continue your search.
2. Consider the Next Step in Your Homebuying Journey
Sometimes, the house that you are considering gets snatched up before you have a chance to prepare an offer. No sense dwelling on the one that got away. Keep your eye on the other options in front of you and don't get discouraged.
More importantly, think of this as a learning experience. The next time you find a good fit, you'll be able to identify it sooner...which will position you to be more decisive.
3. Collaborate with a Real Estate Agent
If you are unsure about the best course of action at a showing's conclusion, you may want to consult with a real estate agent. This will enable you to gain expert insights into the housing market and make an informed decision about how to proceed with a particular residence.
A real estate agent is happy to teach you about all aspects of the housing market. Following a showing, a real estate agent can meet with you and help you review all of the options at your disposal. And if you decide to submit an offer to purchase a house, a real estate agent will make it easy to put together a competitive homebuying proposal.