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Buying vs. Renting Real Estate


Buying vs. Renting Real Estate

by Robert Bialkin

Balancing the economic factors of home ownership compared to renting can be exhausting, but the numbers can be crunched in detailed rent vs. buy calculators online. Unfortunately, the results can vary as much as the opinions in online articles and all seem to come to the same rather unhelpful conclusion: it depends. Sometimes it’s best to just close the computer and do it old-school with a pen, paper, and pros/cons list. 

The major cons of home ownership seem to be the high maintenance and upfront costs, opportunity cost of not investing the down payment, and inability to recoup those costs without living in the home for at 7 years or more. However, my mortgage turned out to be more than my rent, but not by much. My down payment money was not being invested anyway because I didn’t trust the stock market. And, I’m not leaving Sonoma County so I was able to mitigate the cons by being patient and buying a home that I would be satisfied with for the long haul.

Renting clearly has its benefits for those who may need to move for work or just want to try a certain area before buying. However, I found that most pros of renting were completely washed away by a single factor: having a landlord. Landlords can raise rents, be so overbearing that tenants will pay for repairs themselves just to avoid the stress of dealing with them, and often sell the home forcing tenants to make costly moves at inconvenient times.

I believe the non-economic benefits and pride of home ownership outweigh the benefits of renting if one can afford it. As a Realtor® I am biased, but that doesn’t change the fact that so long as a person buys the right home, ownership also makes economic sense. The interest on a primary residence can be tax deductible, meaning that the IRS is essentially paying your mortgage! Plus, equity in a home can be used to finance other income-generating investments such as college tuition or starting a business. Buying is also a forced savings plan, leaving homeowners with a low mortgage balance that can be refinanced into a lower payment when income drops at retirement. 

Robert Bialkin is an attorney (CalBar 265854) and REALTOR® (CalBRE 01958883) and broker associate with W Real Estate (CalBRE 01795950). He welcomes your real estate questions.