One of the biggest financial decisions taken by adults of all walks of life is the money they spend on real estate. Whether for a house or a commercial space, or renting or buying the property, there are multiple pros and cons to consider before making a decision. Of course, depending on your financial situation and your lifestyle requirements, the choice between renting or buying will make itself obvious. If you’re looking for a property in places like Delhi NCR, partnering with a prominent real estate developer can provide valuable insights into the local property market.
Let us take a look at the array of pros and cons to consider.
Why should you consider renting a property?
The pros of renting a property focus on the lesser commitment that such properties require. A few of them have been explained below.
- Lower upfront costs – Even though most rented properties require the tenants to pay a security deposit before moving in, it is substantially lower than the down payment to purchase a property.
- Tenure flexibility – Rented places allow tenants to commit to a flexible tenure, unlike an owned property, which, in most instances, you cannot just pack up and leave.
- Maintenance responsibility – Property owners are the ones responsible for the upkeep of the property. For tenants, this helps them save on regular maintenance of the property.
- Investment flexibility – As there is no big financial commitment involved with rented properties, renters are free to invest that money elsewhere.
On the other hand, as we can see in the next section, the cons of renting focus on the lesser investment return for the renters in the long run.
- Lack of equity – Rent does not contribute to ownership over time as it does not build equity.
- Increase in rent – Owners can increase the rent over time, making it quite expensive in the long run.
- Restricted control – There is a limit to the changes and decorations that renters can make to the property.
- No tax benefits – Property owners can often benefit from tax deductions that renters cannot access.
Is buying a more viable option for you?
In the case of buying, there are pros and cons as well, as described below. Buying is a better option for long-term investments and for people who have enough savings to put a down payment but will also continue to be financially stable. However, the cons go into the longer commitment that comes with buying a property, compared to renting.
Some benefits include –
- Creates equity – Owning a property builds equity over time as the mortgage gets paid down, which is why purchasing real estate is one of the greatest investments.
- Stability – Being a property owner brings a sense of stability and ownership.
- Tax reliefs – Owners often receive benefits on mortgage interests and property taxes in many cases.
- Property appreciation – The value of a property can increase in the future, leading to a great profit when sold.
Some drawbacks include:
- Higher initial payments – Compared to a rented property, buying involves a large down payment, which can put a significant dent in the savings.
- Maintenance responsibilities – As the owners, management of the property and its upkeep falls on them, which incurs a considerable cost.
- Less flexibility – Selling a house takes time, and owning a property and the investment that has gone into it makes it difficult for owners to expend that money into other areas.
- Market risks – With the real estate market being fairly volatile and many factors being responsible for property value, it is possible for its appreciation to go differently than expected.
After looking at both sides, it is imperative to consider these points as well as all your personal goals, whether short or long-term, in the decision-making process on renting or purchasing a property. However, another thing to remember is that a person’s financial situation can change over time; therefore, it would be prudent to see the ideal solution for you currently. Therefore, in addition to the above points, you should consult reputable real estate developers in your area to explore your options.
