Renting a Chicago Apartment vs. Buying a Condo or Home
Anyone who is currently renting and thinking about buying a condo is probably experiencing some level debate over which is better – to rent or to buy? Of course the answer to this age-old question depends on your personal situation, but if you are someone with the goal of making a sound, long-term investment, homeownership may be the right path for you!
As with any major life decision, the options are weighed with several advantages and disadvantages on both sides. Both renting and buying have their pros and cons, so which is best for you? Keep reading and find out...
Probably the single most important reason to purchase a condo or home as opposed to rent an apartment is to gain equity.
As a renter, there is no way for you to build equity from your place of residence. The money you pay every month goes to the landlord and when all is said and done, you’ve got nothing to show for the thousands of dollars you spend every year on accommodations. When you own the property, the money you pay each month goes toward the mortgage balance and as that amount decreases your available cash equity increases. Plus, if the value of your condo or home goes up over time (which is typically what happens in the real estate market), your line of credit against the property will also rise, giving you a solid source of funds for future investments.
Homeowners receive tax incentives that renters are not eligible for.
The amount you pay in interest on your mortgage is tax deductible, as is the amount you pay for property taxes. Also, if you ever decide to sell your real estate, you will not have to pay any taxes on profit made from the sale of your home or condo – it’s tax free.
When you own your home, you have the freedom to redecorate and remodel the living space to suit your style and needs.
Unlike when you reside in an apartment that is owned by someone else, homeowners are masters of their domain who can paint walls, hang pictures, redo tiles, replace appliances, put in shelving, knock down a wall, etc.
Ease of moving is limited if you own property.
Instead of just waiting until the lease is up or paying extra to break the contract, you now have the responsibility of selling a condo or home if you want to move. Depending on the real estate market, this can be a fairly quick process or it can drag on for months. Generally, if you are going to buy a home, you should plan on staying in it for at least three to five years to avoid losing money on your purchase.
Typically, more cash is needed upfront to buy a condo or home as compared to the amount of money required to lease an apartment.
In addition to the downpayment (which can range between 3% and 20% of the price of the property), you have to cover other closing costs including transfer taxes, attorney fees, title insurance, appraisal fees, credit report, etc. (which usually equal one to two percent of the mortgage amount).
Condo and home owners are responsible for property upkeep and general maintenance.
Instead of calling the landlord or property manager to fix problems and provide replacements when something breaks, homeowners have to take care of issues themselves and oftentimes have to pay for it out of pocket. However, most condominiums are part of an association, which is responsible for maintenance of the building and community areas. Each month, condo members contribute a certain amount of money to the association in order to accumulate funds for regular services and even a reserve for unforeseen expenses.