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Should You Buy or Rent Today?

As the real estate market continues to shift, analysts are weighing in. Record-high rents across the country are begging people to ask: Should I buy or rent?


Old-world wisdom suggests owning a home is always wiser than renting. Renters are throwing their money away toward someone else’s home, right? This may not always be the case. Here are the pros and cons of renting and buying right now:

 

PROS OF BUYING

IT’S WORTH THE INVESTMENT
The old age adage of putting your money where it’s most valued comes into play. Owning a home is an investment. Home values continue to climb—much like the double-digit appreciation during the bubble of 2005 and 2007. As prices and appreciation increase, the value of the investment does too.


YOU’RE THE BOSS
One of the most difficult factors of renting is lack of control. If the landlord does not want to maintain the property, you are out of luck. You have the final say on the lifestyle and decisions in the home. Owning removes the risks associated with a landlord making the decisions.


STABILITY
Post-COVID era, we are all searching for stability. Market analysts suggest homeownership boosts satisfaction levels and creates a healthier environment for owners and family. The National Institutes of Health states “intangible benefits” for people who own their homes.


IT’S CHEAPER
Across the country, owning a home is 35% cheaper than renting. Trulia shared that people who can afford to buy a home should hire a real estate agent to begin their home search. If you plan on staying in the same place for five years or longer, experts claim it is better to purchase than rent.


CONS OF BUYING

PAYING FOR MAINTENANCE
Although you are in control, this can become taxing as maintenance issues will arise. If the pipe in your home bursts, it’s your responsibility—and yours alone—to fix it. There is no more landlord who will handle the maintenance in your home. You are also responsible for paying for it—and it can be costly.


RISKS OF VALUE DECREASING
When the housing bubble burst in 2008, home values dropped a whopping 50%. Homeownership comes with its own risks. Depending on the location and economic strength of your area, it can make or break the value of your home. A downward trend or housing market crash can immensely affect the equity found in your home.


DOWN PAYMENT
Although you can put down as little as 3%, down payments can be tough. Factor in closing costs, attorney fees, and more—and the cost you owe can feel unreachable. The funds must be available at the time of purchase, or it won’t happen.


PROS OF RENTING

NOT BOUND TO ONE PLACE
If you are not looking to stay put for long, renting is a great option. It is easy to move if a new job comes up or you simply want greener pastures. Another plus is not having to worry about selling your home if you do decide to relocate.


NO PROPERTY TAXES
In states such as New Jersey, taxes can be astronomical. The landlord is solely responsible to pay the taxes. Although they may be factored into your rent, you have the choice to move if the costs become too high.


DEPRECIATING ASSET DOES NOT AFFECT YOU
If the home is depreciating, you are not stuck with it. As another crash may loom on the horizon, renters do not have to worry about being financially and legally responsible for a home. There is no risk associated with renting in this situation.


CONS OF RENTING

NO CONTROL ON RENT INCREASE
The current situation proves just how dire rent increases can be to renters. Many renters are being faced with an eviction as they can no longer afford the rent. You either pay up—or move out.


NO BENEFIT
Other than a place to stay, renting proves no benefit to you financially or in the long run. You receive no tax benefits, breaks, or equity building when you pay rent. The home is not yours, and even though you are paying off the landlord’s mortgage, you are entitled to no capital gains upon move-out.


CANNOT MAKE CHANGES
If you want to surround yourself with upgrades, think again. Although your landlord may allow you to upgrade their home, you reap no benefit once you leave the property. However, most landlords may not want you touching their property—and you are stuck with as-is.


BOTTOM LINE

If you are weighing your options on whether you should rent or buy, consider the following: the location, real estate market trends, the down payment, and how long you aim to stay in the same place. Renting may outweigh the costs of homeownership if you do not want to be locked into a mortgage or have the ability to easily move. If you want stability and control, buying a home is the better choice. You reap the benefits of equity, capital, and creating the home you dreamed of.

Interested in purchasing Multi- Family Rental Properties or Rehab Single Family Development Projects? Contact us today!

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JLJ Capital is a middle-market private commercial real estate lender dedicated to providing short-term financing for multi-family and mixed-used real estate assets across U.S. with a focus on New York, New Jersey, and Texas.

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Jonathan Lewis

Jonathan Lewis

Chief Executive Officer

Justin Podolsky

Justin Podolsky

Partner

Robert Kim

Robert Kim

Managing Director – Finance

Lowell Bacchus

Lowell Bacchus

Managing Director – Credit

Kunyang (Dan) Li

Kunyang (Dan) Li

Vice President – Underwriting

Casey DeFluri

Casey DeFluri

Senior Associate – Underwriting

Alec Oriolo

Alec Oriolo

Associate – Originator

Sophie Zhang

Sophie Zhang

Financial Analyst