Renting Vs Buying A Home

Renting Vs. Buying A Home: Which Is Right For You?

Differences between renting vs. buying

Renting vs. buying a home isn’t a matter of ownership. Here are other key differences between the two options.

  • Buying a house can build equity

Homebuyers can capitalize on the equity their home accumulates over time. That means if the home’s value goes up, you’ll cash in on the higher value when you sell. Plus, with a fixed-rate mortgage, you won’t have to worry about rising rents.

“Interest rates are so low now,” Hopson says. “That means borrowing money is very inexpensive today. In Dallas, where rents are high, it can almost be as affordable to purchase as to rent in many parts of the city. If you can qualify for a home and build some equity that ultimately makes more sense than renting.”

  • Tax implications

Another factor for buyers to consider is whether you will be able to deduct the mortgage interest at tax time. Tax laws allow those who itemize their taxes to write off their mortgage interest payments. However, not everyone is eligible to itemize deductions, and changes to the tax laws  means that more people won’t be able to deduct as much of their mortgage interest and property taxes as they used to.

  • Home maintenance costs

Homes need repairs and maintenance over time, and when you’re renting, those costs are generally the landlord’s responsibility. For instance, in an apartment, if the HVAC system or refrigerator breaks, the landlord has to fix it. On the other hand, as a homeowner, you’ll be on the hook for those repairs and ongoing seasonal maintenance, and they can add up fast.

  • Want flexibility? Rent

If you’re moving to an unfamiliar city, have an unstable job situation or don’t know what neighborhood will feel like home, renting for a period of time can be a great option.

“During that rental period, people really get a sense for what they like or don’t like, and we can also start exploring different purchasing options during that time,”

  • Consider your life stage and goals

While no one has a crystal ball, it’s important to evaluate your current life situation and how much it’s likely to change in the immediate future.

Clients who are going through life changes, like divorce or downsizing, to rent as a way to decompress before making a large purchase that may not be right for their new lifestyle.

For clients who have a changing personal situation, such as getting married or planning to have a child soon, we encourage them to look at properties they’re not going to outgrow quickly,” Another consideration: Can you afford a home that will fit your lifestyle in the next few years, or will a tight budget limit your options?

“It may be better to wait or rent for a little while until you can afford the home, you can live in for some time or grow into with their family,”

  • Bottom line: Choose what’s right for you

It may be helpful to talk with a trusted real estate agent to help you think through the decision to rent vs. buy a home. Here’s a list of pros and cons to help you on your way.


rent vs buy pros and cons

Renting vs. Buying a House: Pros & Cons

Pros of buying:

  1. “Average house prices have been consistently rising faster than the average income in most developed countries.”
  2. “Buying a home provides you with certainty; there’s no risk that you’ll be displaced by a landlord.”
  3. “Living in your own home also allows you the freedom to renovate and decorate your home as you please.”
  4. “Greater privacy.”
  5. “You may then be able to use the equity to fund an investment such as shares or a managed fund.”
  6. “There’s pride in homeownership, which also closely ties you to your community.”
  7. “Mortgage payments, in general, don’t vary that massively over the life of the loan, while rent payments keep going up.”

Cons of buying:

  1. “When you buy you’re effectively leveraging your savings to invest in property. You could just as easily do this with shares or some other investment class. So when people tell you that it’s the only way to become financially independent, they’re wrong. Shares are normally a better long term investment than property, albeit with greater volatility.”
  2. “Homeownership can be more expensive when you factor in rates, building insurance, cost of repairs, and strata fees. Maintenance on a property you own is as much “dead money” as rent. Council rates, water service rates, land tax, etc. – all equally “dead money”.”,
  3. “People should put aside costs of about 1% a year of the capital value of the house to maintain it properly.”
  4. “If you buy a house and pay it off over ten or twenty or longer years you still have to pay insurances, rates, bills, maintenance, fees, etc.. For as long as you live in that house.”
  5. “When you buy a house (and if you are like me i.e. normal bloke with normal working wages and partner stays at home) then you go under this massive debt and next 15-20 years of your life is spent on thinking how to reduce this loan and all your efforts are spent on that. All our money is tied up paying the loan off.”

Pros of renting:

  1. “With renting you have way more flexibility to move location, to walk away after a lease and to save for other assets.”
  2. “Renting gives you an opportunity to live where you want without the major commitment that a purchase would entail.”
  3. “Investing in index funds is much easier, safer, and cheaper than housing.”
  4. “It’s less initially outlay, you have a greater choice to live in a nicer suburb (than if you bought), you have freedom, but at the end of the day, you have no asset. Yes, you can put your money into something else but the best you can get from a relatively safe asset (e.g. bonds is around 4% at the moment).”
  5. “If you are renting and saving as you go along, you will be able to make decisions more wisely and perhaps have multiple sources of income rather than saying that this extra money that I have should go into my loan account.”
  6. “Lifetime renting is the norm in many other parts of the world.”
  7. “Can easily upgrade to a nicer place, downgrade to a smaller place, or readily change location.”

Cons of Renting:

  1. “If history is a past indicator, the cost of renting will steadily increase over the years due to inflation and a rise in property prices.”
  2. “To make renting more effective than buying you need to be investing the money in higher-yielding bonds/shares etc. rather a savings account.”
  3. “In short, paying rent is dead money.”
  4. “If you’re renting, but not investing the extra money that you otherwise would have put into a mortgage, then obviously you’ll end up with nothing.”
  5. “Can’t modify the house too much (unless you have a decent Landlord).”
  6. “Regular inspections.”
  7. “A problem for retirees renting is that as their income dwindles – and many folks are worried they won’t have enough in retirement funds to continue their previous lifestyle – market rents tend to keep increasing with inflation.”

If you are looking for property for Rent or Buy in Pune just call BHATNAGARS. We are the top real estate agency in Pune.

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