The Real Estate Market Sucks, Now What? by Ken Beasley

Author:Ken Beasley
Language: eng
Format: epub
Published: 2019-03-11T16:00:00+00:00

CHAPTER TWO

RENTING VERSUS OWNERSHIP

The current market conditions are very unusual, so when comparing whether to rent versus owning a home, you must analyze your own individual needs. On the bright side, if you do choose to own a home, property values in most parts of the country have declined from 30% to 50% over the past year so there are some great buys out there.

If you have recently lost a home, or haven’t decided if now is the right time to get into the real estate market, then this chapter will offer some insights into the benefits of renting versus the benefits of ownership, and how they will affect you in the long run.

As the housing market declines and more properties are foreclosed on investors will buy up the distressed inventory, making more rentals available to the open market.

When that happens, rents will go up throughout the country. People need to be educated as to the benefits of ownership versus renting.

Only 30% of the people in California can afford to own a home. It’s usually easier to pay someone a monthly rent than to worry about the problems that can come with owning property. In reality, most people would love to own the home they occupy, but never really set goals for themselves. I’m here to tell you—“home ownership” is possible!”

This chapter is going to cover seven reasons why it’s better to own than rent. The questions you should ask yourself about “RENTING versus OWNERSHIP,” are as follows:

a. Which choice offers more value?

Paying rent results in one thing, the value of getting that receipt for paying your monthly obligation. Sure, you have a place to live, but remember, it’s not your home, you can’t make alterations, you usually can’t have a pet, and, in reality, you must abide by the rules of the “LANDLORD.”

When you own a home, your monthly mortgage is not wasted. It accrues equity for you. A loan payment is made up of principal, interest, taxes and insurance. The “principal” reduction results in equity build-up, and is like a forced savings account. Your “interest” part of the payment is an IRS tax write-off. The property tax proration (monthly portion) is a tax write-off, so it’s apparent that rental payments are not as beneficial as mortgage payments. With new loan programs, most home buyers realize that mortgage payments, and rents, are almost equal in most states.

b. Which method offers more stability?

One of the negative aspects of your monthly rental payments is that you are usually at the mercy of your landlord. Your rental payments increase each year, and, the only one that benefits from these increases is the property owner/landlord.

When a person buys a property, they normally take out a loan against the property. The lender, for loaning the money, receives a document called a “deed of trust/note” against the home (property). This document states that the buyer/borrower owes the lender the balance of the money. This money will be paid back, in monthly installments, and will be paid off over an estimated thirty years, depending on the structure of the loan.

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