Which is More Beneficial – Buying a Condo or Renting?
I know what you must be thinking right now. Isn't that question a little bit obvious? Unfortunately, the answer to this question is not as easy as it was decades ago when common wisdom dictated that you buy a property as soon as you can. In fact, the schematics and dynamics of ideologies have evolved quite a bit over the past few years thanks to the cold hard economics that owning a home now brings to the table. No need to worry though. Here are a couple factors that we have put together to help you determine whether it is smart for you to buy a condo or continue renting.
- Which one can you afford comfortably?
- The amount of money you have at your disposal after taxes and retirement contributions.
- All other debts you owe including student loans, credit card loans, and auto loans. After all, if you are planning to add another loan to your already piled up loans you have to have cut down on the other loans first.
- Your priorities. Is buying a condo a priority right now? Or are there other pressing matters that you need to sort out first?
2. Weigh the opportunity cost of buying a condo versus renting
While buying a condo may be a financial stretch for some, the truth is that it is still yours at the end of the day. And that has to count for something (pride of home ownership is a very real thing). On the flipside, if you decide to rent, you have nothing to call your own since you are essentially paying the owners mortgage every single month. So here is where you analyze your opportunity costs in detail and see what works best for you and what it would cost you to forgo the other.
Ultimately, there is no smart or dumb decision because it all just depends on individual factors, preferences and where you are at financially. Nonetheless, the considerations we have explored should help steer you in the right direction if you are having a hard time making a decision.