Is Renting Better Than Buying a House?
When you hear people talk about renting versus buying a house, you’ll often hear them say that paying rent is like throwing your money away every month. They’ll tell you that owning your home is a much better bargain and that you’ll save money while investing in your future if you buy instead of renting.
All that might have been true when you were a child, but is it still true today? After the housing crash in 2008, lots of Americans have a new perspective on real estate and renting houses. Let’s take a closer look at which option is best in the 21st century.
Don’t Worry About Saving for a Down Payment
When you move into a rental property, the worst you can expect is to pay your first and last months’ rent, as well as a security deposit. And, in most places around the country, the deposit and the last month’s rent are one and the same. That’s not the case when you buy a house. You’re either going to have to save a significant amount of money or take out a loan to cover your down payment on your mortgage loan. That means, from the very beginning, you could end up with two loans to cover your home.
Freedom to Move When You Want
Can you guarantee that your next job is going to be in the same city where you live now? If you’re like most people today, you know that this is no guarantee at all. More and more corporations are willing to relocate their employees from other cities (and countries) than ever before. And, when you rent, you have the freedom to move whenever you want.
You won’t have to worry that the market is flat or declining, or that you won’t be able to afford to pay the mortgage on your new and old homes at the same time while you wait for your old home to sell. Instead, you can just terminate your lease and move to your next home.
Forget About Real Estate Taxes
When people tell you about how much money you’ll save with a mortgage instead of rent, they often forget to tell you about the property taxes you’ll be paying in addition to those mortgage payments. And, if your county tax office decides that your area is improving, your property taxes are likely to increase over time. Thus, you could be looking at a much more expensive place to live and no way to get out of it without finding a buyer.
No Need to Save for Maintenance and Repairs
Finally, houses and condos have numerous hidden expenses in the form of maintenance and repairs. If you own the property, then you are responsible for taking care of all of its needs. On the other hand, if you’re renting and you have leaky pipes or a problem with the roof, it’s up to your landlord to take care of it, at no cost to you at all.
Yes, rental rates around the country are on the rise. However, when you figure in all of the costs of owning a house, you can easily see that renting is often much more affordable than buying a house. And, in addition to all of your financial savings, you will have a lot less to worry about on a daily basis. Essentially, you can think of the slightly higher rental rate you pay as if it were insurance against bad housing markets, taxes, maintenance, repairs, and all of the other things you won’t have to spend any money on while you’re renting.
So, do you still think that renting is throwing your money away, or are you starting to think that renting could be a better option than buying a house?
Where Should You Invest Your Money in 2017?
The economy has been steadily recovering over the past eight years since the housing bubble burst in 2008, and people are starting to regain confidence in real estate, the stock market, and other investment vehicles and assets. That said, though, with so much going on in the US and around the world right now, it’s hard for most people to know what’s going to happen next or where they should invest their capital for short-term or long-term investments.
Fortunately, there are a few investment vehicles that are incredibly good bets for 2017 and could bring up significant positive ROIs (returns on investment), whether you want to see returns after a few months, a year, or several years.
High-Yield Saving Options
You probably already know that a traditional savings account’s interest rate simply cannot keep up with inflation. This means that stashing your savings here for several years will actually decrease its worth. However, there are some high-yield options. Online banks, for example, often have higher interest rates than traditional savings accounts. And, if you do not need liquid funds for several years, you may want to consider a CD (certificate of deposit), which comes with slightly more risk but will usually have a much higher return, as well.
Gold and silver have long been great investments to hedge against inflation. Over a long enough timeline, they will always appreciate, and they will almost always outpace inflation. Precious metals are a good, stable investment and, thus, a good way to diversify your investment portfolio. At the same time, you certainly don’t want to make them your only investment, especially if you want to significantly increase your net worth.
Real Estate Investment Trusts (REITs)
REITs are corporations or trusts whose sole focus is on investing in large and lucrative real estate developments. When you invest, you will not directly buy any real estate. Instead, you will purchase shares in the trust, and then you will get quarterly returns on your investment based on the profitability of the property and the percentage of its equity that you own through your shares.
REITs offer investors a means to invest in real estate without ever taking ownership of a property. Unlike a lot of other real estate investing opportunities, they offer truly passive income, which makes them very interesting to investors looking to grow their net worth without adding a lot of working hours to their days.
Recently, we’ve seen a significant rise in the popularity of peer-to-peer lending sites. This model of investing allows you to help someone else by lending them a specified amount of money. They will then pay that money back over an agreed-upon period of time with a set interest rate.
This kind of setup benefits investors because interest rates are higher than they would get with most savings accounts and some other investments. At the same time, it benefits borrowers, as they will be able to qualify for loans that they could not necessarily get through a bank. Interest rates are often lower than borrowers could get elsewhere, as well, making peer-to-peer lending a win-win situation in most cases.
These are four of the best places and vehicles to invest your capital in 2017, for both long- and short-term investments. Whether you choose one or all of these avenues, though, be sure to do your homework before investing. Every investment comes with some risk, but that risk should be calculated, and you should be properly prepared for it.