Rental properties are one of the most lucrative businesses to get into. When you are cutting your rent check each month, you are inadvertently making your landlord rich and paying off their mortgage instead of your own. The plus-side of owning a home doesn’t stop there. Here are some benefits to owning your own home versus renting:
- Building Your Net Worth
It’s no secret that renting is akin to throwing money at the wall. Yes, you’re securing a place to live but youare not building your net worth and acquiring any assets. Your monthly rent payment could be a mortgagepayment going towards the largest asset you own- your home!
Owning a home, versus renting, allows you the ability to do more with your propertyand home. You can add coats of paint,change the carpet, tear down a wall, change the landscaping and more. The home is yours to upgrade, change orremodel. Bonus: many upgrades add toresale value!
As time goes on, a home appreciates in value (much like stocks can if the marketis right). For example, if you buy ahome for $200,000 and it appreciated by 3% per year for 3 years, the home wouldhave appreciated in value to $218,545. Thatis a solid investment, especially if you intend to stay in the home for manyyears.
- Tax Benefits
Homeowners can deduct mortgage interest and property taxes when they file tax returns eachyear. The significant savings on taxescan make owning a home as cheap as, if not cheaper, than renting.
- Mortgage Costs Don’t Rise
Most of us have been in the boat of a landlord or apartment complex raising ourrent. With a mortgage, that can’thappen! This creates a lot of budgetstability.
- Forced Savings
When a homeowner makes a mortgage payment each month, a portion of that is goingtowards paying the loan down. This givethe homeowner more equity in their home. This is essentially the owner being required to invest in their ownhome.
Through appreciation, most often a home can be sold for more that it was purchased for. This is a bonus for homeowners. When they do decide to sell, they can often make a profit.
Overall, owning is superior to renting for many reasons. Next time you think you’re not ready to commit to a mortgage, just remember that you’ve already committed to paying off someone else’s with every rent check.