#rentingvsowning

[cgirealty]

🏠 Think renting is cheaper than owning? That’s a myth! 🏠 Homeownership has proven to be more stable and cost-effective in the long run. With steady payments and building equity, owning a home is an investment in your future. Don’t just rent—own your dream! 🌟 🌐 CGI.realestate

[justsellinghomes]

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[thesuperwallflower]

Buying versus Renting

It’s been a week since Jay and I started discussing this tedious topic. We have been looking at several social media posts about houses for sale, condominium units for rent, available rent-to-own units, and so on. It’s enticing to see them sold out on social media at impressively affordable prices, with promotions that are too good to be true: free appliances, ten percent off the total price, no downpayment, and everything else that makes you want to jump on the chance and sign that contract as soon as the site visit is done and over with.  We narrowed down the factors that we needed to consider as to whether it’s better to rent or own.  First, proximity. I have been away from my family far too long, and the thought of living farther away when I’m already married surprisingly frightens me, as opposed to what other couples want when they settle down and find a place of their own. Jay’s work is at a business district, and as soon as I go back home, I’m thinking of finding a job in the same area, which obviously requires both of us to consider looking for places in the metro.  Second, availability. Most of our options are around Manila, San Juan, and Mandaluyong, which are cities surrounding our work locations. Most of the units we’re looking for must be accessible to commonly used forms of transportation such as MRT and buses. Townhouses are quite far,  though, as most of the affordable ones are in San Juan and Quezon City, with access to near LRT stations and jeepneys. 

Third, price. Most of the 30-square-meter, one-bedroom units in the metro offer easy, flexible payment terms that range from 3.5 to 7 million pesos. Townhouses are offered at a similar price range, with the downpayment at a twenty percent minimum. Agents for most of these options offer assistance when interested parties apply for housing loans from government agencies or banks.

Lastly, capacity. At the moment, we (mostly Jay) have raised adequate funds for unit reservations, ten percent downpayment for condominium units, but barely enough for twenty percent required payment to the bank for a housing loan approval for townhouses. The monthly fees may seem feasible, but to acquire a million-peso loan as an initial cut out of the four-million loan for the total house cost feels herculean and redundant. 

With those in mind, Jay started looking around, checking out all those houses and units we saw posted on social media. Here’s what we found out.  Some agents would post payment terms in a manner that makes potential buyers feel it’s easy, affordable, and in Filipino terms, “abot-kamay” (within reach). 

Some, on the other hand, would ask for a move-in cost of around a hundred, then ask you to pay a few more bucks every month (around 20-30), then on the 12th month, you’d have to pay quarter to half a million, then do it again on the 24th month, and another on the 18th, and another on the 36th, until you’re completely buried in debt and eventually have no choice but give it up, sell it, or have it rented to someone else. 

Some owners of townhouses would sell two-floor, 40-50-square-meter houses at the same price and you’d definitely want to check them out. If you choose bank financing, up-front, you’re going to have to pay 20 percent of the total cost of the house and live comfortably with the monthly fee which you’ll pay to the bank at 1.60% interest or higher. Then again, how else do you get the million-worth downpayment but through another loan? 

All things considered, this must be partly our fault that we did not start looking into this as early as we started dating because of course, we did not want to turn each other off by looking into the farthest possible future of getting married, buying a house, and raising kids, did we?

In an article written on Asia property in 2018, there’s an undeniable increase in interest rates for real estate through the years 2013 to 2018, understandably due to the rising number of office spaces, gambling centers, and companies for outsourced industries, all situated in Metro Manila. 

There’s an apparent increase yet again in the interest rates of real estates in the first half of 2019, due to factors like supply and demand, economic growth, and inflation. Speaking of supply and demand, the spike is brought about by the number of foreign settlers in the country, who could not buy houses and land as the law prohibits them from doing so, hence working around the law legally by taking advantage of ownership of freehold real estate through property developers, with the property developers, in turn, taking advantage of the influx of immigrants. This being said, there’s a foreseeable shortage of available real estate properties in the first half of 2020. (Spectrum Magazine, 2019)

Jay was informed by one of the agents he spoke with about this condominium building that has already been pre-sold to immigrants. Funny enough, they may have probably stayed in the Philippines only for a few years and yet manage to buy living spaces much easier than do most of us. Then again, it’s definitely not their fault that we can’t buy a place of our own, and maybe, out of frustration, I’m merely passing the blame or making useless excuses. 

Going back to the question at hand, last night we had another grueling discussion on the pros and cons of renting and owning. 

Pros of Owning

Investment. The first couple of years may feel burdensome, as you have to crawl your way out of paying for your place, but it’s ultimately a great idea to own something that builds equity and increases value with time. In one of Jay’s visits to a house we were interested in buying, we were able to get a glance at the property’s land title. What is currently valued at 4 million was once bought by the owner in the 80′S at 40 thousand pesos.

Pride in Ownership. It certainly does bring a sense of fulfillment to actually own something, albeit the fact that partially, it’s yours and the bank’s (if it’s not fully paid). It is an achievement to work hard for something and see a tangible product of your daily struggles at work. 

Privacy. Nothing beats the security of knowing that the place is yours and you can make changes with it without people getting in the way. 

Cons of Owning

Long-term financial commitment. Most properties lock buyers to a 15 or 25-year contract of payment if they wish to pay the property as a cheaper monthly rate. This means more effort on saving up for emergency funds and more effort into finding other means of earning money. 

Ties to the community. Owning a property makes it more difficult for owners to move out, find a location more suitable to their changing needs. Options to get out of this problem would be to rent out the property to others (which kind of defeats the idea of buying your own place). 

Maintenance costs. As though association costs, mortgages, and other fees aren’t enough, when something needs to be fixed or renovated in the property, the responsibility is shouldered by the owners themselves. 

Being “house-poor”. To keep up with mortgages and debt consolidation, some owners borrow on top of their existing loans, which ultimately leaves them nothing. 

Pros of Renting

Financial flexibility. With minimal and short-term financial commitments that come with renting, tenants can plan their budget easily for utilities, rental costs, and other expenses. Should they encounter financial troubles, they can easily work around their finances because they are not tied to a fixed, not to mention overwhelming, mortgages. 

Good for newly-weds. Couples who just got married may surely have a lot on their hands especially when it comes to handling finances. It would probably be best to start the first years of their lives with as minimal financial conflicts as possible. 

Maintenance costs. The problem of fixing and costs of repairs are not for the renters to worry about. The landowners shoulder this responsibility, thus making more room for renters to allot money for other expenses. 

Moving around. Because renters are not tied financially to their rented residence, they do not have to be tied in one location, and based on their preferences and changing needs, they can move around and find other living spaces as they deem fit. Because of this, they can also be flexible about their career, as they can change work locations whenever they feel the need to. 

Cons of Renting

Possibility of rising rental costs. Since properties increase value over time, some landowners may opt to increase rental fees.

No ownership. Long-term rental costs amount to the same value of the property sans the ownership. 

Sources: Investopedia, Smart Parenting, iMoney

At the end of the day, it’s about cutting losses. Why do we need to own? Do we even need to own anything? For how long are we going to pay for something that will never be ours? Which option will leave us fewer things to think about and help us live life more?  What choice will make us use more of our time, resources, and efforts for the things that truly matter?  After lengthy discussions, we have yet to arrive at a decision. It’s all open-ended, it’s frustrating, it’s exhausting, but at least I don’t have to go through this alone.

[nekaclements-blog]

Is it really cheaper to own?⠀ ⠀ Uh, hell yes! Not only is it cheaper to own, you can actually make money (read: build wealth) through #Homeownership 🏡💰⠀ ⠀ Imagine saving hundreds of dollars every month. Imagine building thousands of dollars in Equity just by saying buh-bye to renting and buying your 1st home.⠀ ⠀ I want to share one of my favorite videos with you and its all about... you guessed it.. #RentingVsOwning.⠀ ⠀ You can check it out on my You Tube channel by going to: bit.ly/ownvsrenting⠀ ⠀ And pretty please make sure you subscribe while you're there so you don't miss any of the new videos dropping this month!!!