Your choice of whether to buy or rent a condominium will depend on several factors. Funds are one little bit of the puzzle, however, not the sole aspect you should think about. If you're struggling with which aspect of the buy versus rent fence to go with, these pointers could help make the right decision.
1. Calculate the Price-to-Rent Ratio
The price –to rent ratio is less complicated than it sounds. Simply look for a condo in your area for purchase and a condominium for rent. Be sure they possess comparable features such as the same amount of bedrooms and bathrooms and also identical square footage.
For instance, you may find a $200,000 condo for sale in a great neighborhood, whilst you may find a similar condo on the next block renting for $1,000 per month (which turns out to $12,000 per year). Dividing $200,000 by $12,000, you have a P-to-R ratio of 16.7.
Bronniche states that a rent ratio of anything more than twenty usually means monthly costs of condo ownership will surpass the cost of renting a similar condo.
2. Determine Your Budget
One other aspect that you should think about when deciding whether to buy or rent your next condo is your earnings. If the purchase prices of condo properties locally go beyond what you make in 3 years, that could be a sign they are overpriced where you are. If that is so, you should be looking at other locations or neighborhoods if you are intent on buying.
3. Determine your needs
Do you intend on making any changes to the family size? When you get a condo, constructing a fresh room or wing is definitely an available option. After you rent, you are stuck with the area and layout you have. Owning your own property also gives you the freedom to make other, more invasive, changes to the inside, such as remodeling your kitchen or expanding the master suite. Most condo associations don't allow tenants who are simply just leasing the unit to make any significant changes to the inside.
4. Think About How Long You Want to Stay
One more significant factor to consider is how long you intend on staying in the area. Is your work fairly stable, or do you project starting a new position at another company soon? If you are unmarried and living apart from your family, you may decide to move closer to your parents once you start having children. Renting a condo may make more sense if you are not fully settled in your area. It offers you a lot more flexibility to relocate as the need arises. If you purchase a condo, you could be stuck in that place until the 30-year loan is paid off, or until you can find a buyer that will offer you what the condo is worth.
5. Consider the Stipulations of Renting
Needless to say, there are always guidelines to live by when you rent or buy a flat. Many property landlords and associations bar their residents from owning pets, performing business out of the unit, and a bunch of other laws. If they are stipulations you can live by, renting can be considered a great option. However, if you are the sort who doesn't want anyone telling you how to proceed in your house, buying your next condo might be the way to go.