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Buy or Rent ?

A. Renting

Advantages

  1. Tenant rent at a location that is convenient to their lifestyle, holding other factors constant
  2. Less or no Emotional attachments. Tenant judgment is not blinded by emotional attachment to the house/pace of residence
  3. Tenant can move out any time within reasonable period of notice as per tenancy agreement
  4. Largest risk in the tenancy agreement is bore by the land lord/lady

Demerit

  1. Land lord/lady has final say and influence on decisions affecting the home
  2. Limited freedom for modifications. Tenant can’t make changes on the residence to meet changes in their taste and preferences
  3. Sunk cost: Expensive in the long- run and there no chance of recovery rent expenses i.e rent is a recurring expense

B. Buying

Advantages  

  1. Once full ownership is achieved the owner becomes the final decision maker and assumes rights of ownership
  2. Multiple options are available to the owner g. Resale, Equity release, Rent out,
  3. Value appreciating Asset. You can improve the home at you will hence increasing its value. Properties are by their nature gain value over time
  4. Valuable future asset/wealth. Depending on the location, market and other economic and social factors often at times it is cheaper to own than rent. Total return outweighs the cost of investment.
  5. Security/Collateral. The home can be used to access short-term/long-term finances/funds
  6. Stability : Domestic, social and financial. Provides a permanent shelter
  7. Time Share: You can sell a portion of the home based on time of occupancy i.e. the home can be shared/owned by multiple persons

Demerits

  1. Physical location immobility
  2. Emotional attachment. Home owners are many at time blinded to sale the home even when the demand is high and the home has gained high value and is at the peak if market value cycle
  3. It is capital intensive to buy a home
  4. Losses may be realized when the Value of home may falls. These are rare cases. However, it is a possible outcome.
  5. Properties are not liquid assets i.e. it not easy to convert a home into cash, the process takes a while

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