Should I Keep Renting and Buy an Investment Property Instead of a Home?
Modern first-time buyers are faced with the decision of whether to buy a residential home, or an investment property instead. This is a relevant issue that needs substantial time and research in order to make the right choice. Working with a trusted and seasoned mortgage broker is the first step to making a long-term decision.
Is it high time to buy your dream house or continue renting and buy an investment property instead? The answer lies in looking into the pros and cons of home versus investment property ownership.
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Investment Property Pros and Cons
Buying an investment property and renting it out is one of the most popular ventures among young and veteran investors today. As long as you do your research and everything lines up well, rental properties could be a great long term investment.
- Investment properties provide income from renters. This direct income stream comes in a form of monthly rental income that goes straight to your account.
- You may gain through property value growth. The secret to ensuring a boost in your property value is through purchasing a rental property in a location where future developments are inevitable.
- Property investors also gain through their equity or additional property value through upgrades and maintenance. Updates may significantly add value to the property without major financial costs If you spend your funds Wisely!
- Renting out your property also means risking on the kind of tenants you will be dealing with. Make sure you prepare yourself for possibilities such as tenants not paying their rents on time or not paying at all. Good property management and landlord insurance substantially reduce these risks.
- Investment property owners need to pay for the cost of property ownership and insurance regardless of the income generating status of their property. The silver lining is that your property is covered and protected.
- Venturing into investment property requires you to be actively involved in its operations. Unless you hire a property management company, you need to deal with the repair, maintenance, and other concerns that your tenants may request for.
Home Ownership Pros and Cons
Owning your dream house is the pinnacle of your plans. However, the more pressing question is, “is this the right time to buy a house or not?” Take into consideration the upsides and downsides of home ownership to find your answer:
- Owning a house gives you that sense of stability and security. This is something you don’t get in renting, knowing that you can easily relocate and transfer at will.
- Compared to renting a house or apartment, owning your own home offers greater privacy and allows you to do repairs or upgrades without a landlord’s consent.
- Your house may have the potential to increase in value and build equity for your future.
- Owning a house is long-term financial commitment. It may not be a good option if you are not that stable with your finances or you are planning to relocate in the near future.
- Since it is your house, you are responsible for all the repairs and maintenance. It’s not a wise idea if you don’t have the time or interest to deal with minor and major improvements.
- Mortgage payments could be on a fixed or variable rate, although most home buyers adopt the latter. Regardless of the mortgage rate type, mortgages are often higher compared to rents.
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Should you keep renting and buy your first investment property instead of a house? Investment properties have their strengths and weaknesses, as does home ownership. Consult a reliable and experienced mortgage broker today to make a decision that makes financial sense for your plans.