During a Sunday get together, the rent vs buy question came up and a lively discussion ensued. The individuals who were pro-renting argued that renting provided:
- cash flow/opportunity cost: not having money tied up in a mortgage, taxes, and insurance, allowed more money for investing, travelling, miscellaneous purchases
- flexibility: if they wanted to move into different neighborhood, change size , or relocate for a job, their choice is not dependent on first having to sell their home
- better lifestyle: they argued that they could rent a nicer place in a nicer area than they could afford to purchase
- maintenance-free living: don’t have to worry about repairs, yard work, pool cleaning
The pro-buyers argued that buying was better because:
- it builds equity: which helps build your net worth. It is basically a forced way of saving money.
- tax benefits: interest on a mortgage is currently tax deductible, thereby reducing taxes you owe
- gives you control over finances: you are not subjected to rental increases
- stability: since home ownership is fairly long term, owning a home creates a sense of security and community
- maintenance: don’t have to wait for landlord to change or repair something. Have control over quality of work of repairs and type of work done (i.e wood floors vs changing carpet)
Obviously both renting and buying have their pros and cons. The New York Times rent vs buy analysis says that overall, if you stay in a place for 5 years or more, you are better off financially buying. This analysis assumes that the landlord pays utilities, which for the most part in Miami-Dade is not the case. The tenant usually pays all utilities, except for those that are provided by, and included in, the condominium’s maintenance fee.
So what side of the fence are you on and why?