ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Should You Rent or Buy a House?

Updated on April 9, 2019
Flavio Lopes profile image

Flavio is a financial market enthusiast with an economics degree and a master in strategy. He is a stock and real estate investor.

Buy or rent a lovely house? Here is the question!
Buy or rent a lovely house? Here is the question!

Rent or Buy?

Renting versus buying question can be a tough debate. The reality is there is no simple answer to this question. It will depend on where you are at life, on your income, what is your goal and what do you want in life.

In this article, I will address what factors you should consider when deciding whether to rent or buy so as to make the smartest decision.


Can you really afford a home?

The first question you need to answer is, can I really afford a home? This means you take into consideration not only the costs owning but also the costs of purchasing a home.


If you want to know what costs you will incur in buying a home in Portugal please check out my other article here: https://hubpages.com/money/What-are-the-taxes-I-have-to-pay-when-buying-a-new-house-in-Portugal


Typically in capitals or big cities, the house prices skyrocketed to such high levels that it might be worth for you to rent instead of buying.

This is especially true if you do not have a relatively high income. In this scenario, it can take a lot of time for you to save enough for the down-payment and you most likely struggle to be able to repay the mortgage. In this case, rent do not buy.

What is cheaper rent or buy?

You have the money to the downpayment however due to the high prices practiced in some hot housing markets it might be you will be better off renting instead of buying... at least for now.

Let's say you want to buy a house in London and have the money for the downpayment. The mortgage you will pay can still be higher if you can rent for a cheaper price in the same area. If you opt to buy a house for investment in this scenario, you would have a negative monthly cash flow which can only be offset if the house appreciates at a rate that can mitigate the difference between your mortgage and the rent your tenants pay.


So what should you do?

In this case, you can be better off postponing the purchase of your house and invest the money you have for the downpayment in other ventures which can bring positive cashflow.

For example, open a company, invest in yourself and acquire a scarce and marketable skill.

Rent a house / bedroom to save more at young age!
Rent a house / bedroom to save more at young age!

Mobility is important?

As a tenant, you are free to move whenever you please and do not have to pay for home maintenance.

If you left university recently or you are at the stage of earning and learning, renting should be preferred to buying.


Why?

At the early stages of our lives, we are not always sure what we want to do but you should focus as much as you can in learning and earning. Mobility is key in this phase because you do not want to miss out If an interesting job opportunity comes and you are not able to make the move because you have already fixed costs you need to pay.

Besides, there are some costs you need to consider as well, which is maintenance costs. As a tenant, you do not have to pay for maintaining your home which can lead to more saving and invest in other ventures.

When should we buy a house?

Buying a house can bring a lot of costs but it also brings a lot of benefits. We say if you are young, buying may not be the smartest move but there are some cases, buying a house is the smartest decision to make so I will address them as well.


You are married so it is time to settle down and grow a family.

Both of you have good income jobs, stable careers. In this case, you want to buy a house to settle down and grow a family. This is assuming you have money for the downpayment and some left for an emergency fund.


You are an entrepreneur but not an investor

Entrepreneurs love to take risks. As soon as a good opportunity appears you like to invest your time and money so you can make a successful enterprise.

For the entrepreneur reader, your residence is not going to be an investment but a saving account. Looking at your home from this perspective will allow you to put some money aside as you are paying your mortgage gaining equity in your house.

This way you are not putting all your chips you have in your business and "saving" some for the house you are paying off.


You are financially successful

If you have multiple and stable income streams then buy a house. Whether it is for investment or to live in, buying is the most desirable option.

The only note is, do not buy something for you to live in that is more than 20% of your net worth. This will allow you to make more investments and bring more cash flow to your household income.

Do not forget... your home is not an investment!

Do you prefer to rent or buy

See results

© 2019 Flavio Lopes

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)