Five Reasons to Rent
Five Reasons to Rent
Humble Dollar
HOMEOWNERSHIP offers many advantages, as we detailed in the previous section. But there’s no guarantee you’ll make money, especially if you own a house for just a few years. Thinking of purchasing a home? Here are five caveats—which may prompt you to continue renting.
First, given the risk of declining property prices, you shouldn’t buy unless you can see staying put for at least five years and preferably seven years or longer. While it’s hard to imagine we’ll suffer another decline like that of 2006-12 any time soon, a smaller drop is entirely possible.
Second, homes are horribly expensive to buy and especially sell, which is another reason you need a long time horizon. There’s the mortgage-application fee, home inspection, title insurance and legal fees when you buy—and the 5% or 6% real estate brokerage commission and local transfer taxes when you sell.
Suppose your home’s price rises a few percentage points a year, but you end up selling after just five or six years. Once you figure in all the costs of buying and selling, you may not make money.
Third, owning a home involves greater hassle, with more bills to pay, maintenance to deal with and repairmen to call. If you’re renting, many of these problems fall on the landlord’s shoulders.
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