Rent or buy a house? Buying real estate as an investment and security

Rent or buy a house – The current property is just too small and you decide to move. A big step with many questions arise. For many, the first question is: rent or buy? This question is not so easy to answer and many circumstances can play a role in the decision. There are many advantages and disadvantages for both alternatives but in the end you have to decide which option is the right one for your living situation.

Decision support: rent, buy, live

Buying a property is a big decision that should not be taken lightly. There are various pros and cons and for some it is the right decision while for others it is the wrong one. The living situation is an important feature in the decision and can help in making a decision.

Advantages: Investment, investment and ownership

There are many advantages to buying a home. The investment in a house is a financial investment that has a high value. The house will even grow in value through possible renovations on their part and you have invested your money wisely. Even if you take out a loan, after paying off you have an object with high value, which can be useful for you in old age or in other life situations.

When you buy a house you have complete self-determination over it. When it comes to renovations, it’s up to you to decide what to change, what it should look like and who should do it. The property is also yours, so if you want to make changes to it, it is also at your discretion. So they are very free in their decisions about the property and are independent of others.

Real estate as an investment: Special

1. Part: Classic or exotic investment – Which property is suitable as an investment?
2. Part: Real estate as an investment – What do I have to watch out for?

Another advantage of buying a house is that you have a certain security, because the property is your property. So you don’t run the risk of being evicted or having to endure inconveniences due to alterations the landlord wants to make. You are your own master in your own house and you probably only get this feeling when you buy or build a house.

Disadvantages: Responsibility, debt and reserves

However, buying a house can also bring disadvantages. To buy a house you usually have to take out a loan. That means you have to get into debt and are therefore bound to pay off this loan. In addition, you should build up reserves, because you have to pay for all necessary repairs. You are solely responsible for your home and sit on all the costs that the house causes.

Another disadvantage is that you will have higher monthly costs than if you rent. Not only the utilities that you will have to pay, but also the loan that you will have to pay and the reserves that you should build. The last disadvantage is that you are more inflexible. If you have to move to a different location due to work, want to expand or downsize, the house will have to be sold or rented out first. After all, you are responsible for the house and need to take care of it. This can quickly turn out to be more difficult than expected and you have a risk for which you are responsible on your hands.

Rent real estate: Flexibility

Renting a property is easier than buying a house. However, there are also many advantages and disadvantages, compared to a house purchase that should be considered. Of course, it depends on the specific life situation, which decision is the right one, but there are some decision aids.

Advantages: Flexibility and low costs

Renting a house can have many advantages. First of all, you have lower monthly costs, because you do not have to pay off a loan or something similar, but only the warm rent monthly. This point directly includes the second advantage, because you do not have to go into debt to rent a house. There is no need to take out a loan and you are not dependent on a bank. Moreover, a large, modern house may be affordable in rent, but the purchase price is beyond their means. So, you get more for your money if necessary. If repairs are needed, or accidents like water damage occur, you won’t be stuck with the costs, because your landlord will bear them, as he is responsible for the property.

The last advantage of renting a house is the great flexibility. If life circumstances change and you need more or less space, a bigger garden or you move to another place, you can simply cancel your lease and do not have to worry about re-renting or the like. You maintain your flexibility much more with a rented property than with a bought one, and especially when you are young, flexibility is not to be underestimated.

Disadvantages: Limited and not secured

Unfortunately, there are also some disadvantages that you should consider. Of course, with a rented house you are more flexible, but unfortunately still limited in some things.

For example, they do not have self-determination over the house, so if they want to make changes, this decision is not up to them, even if they affect their home. This can concern the keeping of pets but also changes to the house itself, such as the installation of a fireplace or the redesigning of the garden. In the end, the landlord always has the final say on changes to the house or property, even if you don’t agree with them. Often tenants and landlords get along well and simple solutions can be found, but often the opposite is the case and the landlord decides over your head.

Another disadvantage is that you have no financial investment when you rent a house. If you intend to rent a house for more than 10 years, you will probably spend more money on rent each month than you would have needed to pay off a loan.

Over a long period of time, it makes sense to consider an investment in the form of real estate to have a reserve in old age. The last disadvantage of an apartment building is the permanent danger of being terminated. Of course, it often happens that tenants and landlords get along well, but even then there is the danger that the landlord needs the property for his own use. Quite quickly their home can be taken from them, which is a risk well worth considering.