Everybody wants to own their own property, but we are living in tough economical times and it's getting harder and harder to get on the property ladder. However, it might not be such a bad idea to rent a property whilst saving for your dream home (short term and long term advantages). Whether you are buying or renting a property, each one has it's pros and cons.
Buying - The Benefits
Buying a property is and will always be a great long term investment to generate regular income or a profit through renting it out or simply reselling it. Aside from the obvious benefit of being able to make changes on and in your property (since you own it) there are a few benefits that some people do not consider.
Your property can be used as security to obtain loans and finance from various institutions such as banks and private loan companies. Having a property or two on your name proves you are a dependable citizen and a potentially good investment in terms of giving loans and finance to for future endeavours.
In some cases the property can be bought cheap, renovated or built on to and then either be resold at a higher price to make you some profit or it can be put into your will to be left for your children or beneficiaries. Your property, as mentioned earlier is yours to do with as you please and this also includes the benefit of being able to maintain it yourself and make improvements as you wish without things getting complicated, unlike when renting; having to ask permission and follow special channels!
Buying - The Drawbacks
There are some very clear drawbacks to buying, to start with you are personally responsible for all taxes and levies associated with your property as well as paying back the loan you took out to purchase the property.
These costs can be spread out over years, setting you back over a long term by chasing cash you would have normally had, out of your pocket. To make costs worse you also have to take out Home Owners Insurance, which sometimes includes Life Insurance and in other cases excludes it. The trick is you have to have Life Insurance with Home Owners Insurance to reassure the bank that they won't lose out in the event of your death or damage to the property. All this combined with Interest Rates that never stay the same can make owning a property very costly.
Another clear drawback is that if you just purchased a new property and intend on using it as a home, this ties you down for years if not decades. The repayments of the home loan means that you probably won't have money to move whenever you want to. If the neighbourhood suddenly turns bad, you're stuck there!
Renting - The Benefits
First of all renting means you can relocate yourself within a month or two and settle down pretty much anywhere you choose to on short notice. You put down your deposit and get it back at the end of the lease agreement, providing the owner finds the property in the same state as when he rented it to you.
Another benefit is you're not responsible for the maintenance of the property you're renting, that's the owner's problem! You only worry about the things you own inside the property your renting such as your furniture. If the fridge and stove came with the property and it broke, it's the owner's problem, not yours.
Which can be very nice providing the owner tends to the problem in a timely manner. Extra costs are also cut since you only need to insure your own belongings and usually don't need to pay special levies and taxes on the property, leaving you with quite a bit of extra cash at the end of the day.
Renting - The Drawbacks
You have to ask permission for everything, usually you have to inform the owner for permission for something as small as hammering a nail into the wall! This can be very tedious and annoying. You also have to follow the property rules as set forth by the rental agreement, if it says no braai, then you don't braai, if it says no noise or music, then no noise or music! (How to deal with noisy neighbors)
You also have to put up with other tenants if you're renting an apartment in a building, sometimes this can be annoying too because you follow the rules but they don't always do the same. You also can't use your rented property as security to obtain loans and finance for other things such as a car, all a rented property really proves is that you can pay rent on time. That's about it.
In the end it really depends on you and your own personal needs. If you're in the market for an investment a property is just what you're looking for. Renting a property on the other hand is more suited for you just wanting somewhere nice to live without much hassle attached to it.
A property can be a good long term investment and generate money through renting it out or reselling. Renting a property is excellent for a few strings attached place to call home with the freedom to relocate at the drop of a hat.