Buying or renting. It is one of the toughest discussions people have when purchasing or renting a home. We have seen the good and the bad with both. Today though, we hope to break it down on which one is the better decision for you. So, let’s talk about what it looks like to make the decision between either buying a home or renting a home.
Let us start by saying we have gotten this question a lot. It is one of the popular topics to discuss, especially in Northeast Arkansas. The answer, at least in our opinion, is it's really both. It absolutely depends on your current situation. People tend to think that buying is more favorable because you own a home and people also believe renting is better because you can save. When it comes down to it, you must look at your lifestyle and where you plan to be in the future. For instance, some questions you may need to ask yourself before you are looking to buy, or rent are:
- What are my goals or my plans for the next five years?
- What's my budget?
- How much money am I willing to spend of that budget?
So, there's a lot of thought that needs to really go into a decision like buying or renting because it is truly one of the biggest decisions that you'll ever make.
What are your plans for the future?
One of the questions we typically ask our clients is “How long do you plan on living in Northeast Arkansas or living in Jonesboro?” Because a rule of thumb for us is that if you're paying your personal closing costs and other small fees, you've got to plan on being in that home at least a minimum of four years.
Why typically four years? The reason being is because it takes about four years for you even to recoup just those closing costs that you pay out to your lender that's giving you that loan. A lot of people, if they plan on staying for a shorter period than four years, begin to start off upside down from what has been paid for the home originally.
However, with the massive growth of Jonesboro recently whether it is new younger families moving in, younger couples just first starting out, people moving from out of town for a new job, and even entering college at Arkansas State University; most people are just not sure how long they're going to be living in northeast Arkansas.
So, when you are looking to buy or rent, knowing that the area is growing can help your decision on which one to choose. For people looking to rent, they don't realize that in Jonesboro there is a very large amount of rental property. It's not all apartments, we promise. Although we have a good number of apartments in Jonesboro, there are a lot of rental homes as well. Right now, in late 2019, a little over 50% of all of Jonesboro is living in a rental home or space.
One of the major topics that have come up about renting or buying, and it's really taken years of experience for me to come to this realization, is that there are actually exceptions to this rule of living in your home for four years until you recoup or gain from your purchase.
You see a lot of times individuals or kids coming to Arkansas State University or NYIT here in Jonesboro decide to purchase a home. The reason being is because you must look at that piece of property, if you don’t need privacy and can rent rooms, as a possible income producing property for you. Which by the time that four years is up, you have actually made something back.
It becomes an easy decision sometimes for that to take place for families sending kids to college. We have had clients look at homes, bought them, and they've been here for three or four years to then turn right around and sell that piece of property.
Now, we know that Jonesboro has grown the last three or four years and we have seen an increase in prices that we didn't necessarily see in the past.
So, people that have bought homes several years ago are seeing a great appreciation now, but that's not always the case. We tend to be slightly conservative and we always want to make sure that if you bought a property and get ready to sell it that you would know how much you are going to gain or lose.
If you are a first-time home buyer, you may be excited with the amount the bank will lend you. However, when you are purchasing a home don’t forget the additional costs of utilities and regular maintenance of that home.
Do you have a budget?
We always recommend setting a monthly budget for your home payment but know that the budget doesn’t include the possibility of an air conditioner breaking down or a water leak from the fridge. Those unknown possibilities may cause harm to your financial situation. If they do, then you may want to look at renting. Renting a home or an apartment gives you the ability of having a monthly payment that typically covers utilities and maintenance.
If you go buy and spend too much on a home than your initial budget, then after the first three or four months the romance is over. That fabulous new home smell is now gone. You now are stuck with a house that feels like a great burden rather than the initial joy you started with when you purchased the home.
Your payment and bills for that home are too high which is only going to change the way that you do life. We are huge proponents in making your home fit your lifestyle instead of trying to limit your lifestyle to fit your new home.
What have we learned?
At the end of the day, we realize everyone wants to own their own home. It’s the American dream! There is a time and place to buy a home rather than renting. However, depending on your financial situation and how long you plan to live in Northeast Arkansas, that could determine if renting is the better option than purchasing a home.
If you want some sound advice or you're wrestling with some of these questions right now, then give one of us a call at 870.273.0633 or email us at firstname.lastname@example.org. We would love to sit down and have a quick advising session with you.
Ultimately, we want you to feel confident whether you are buying or selling your next home.