Renting or Buying
The path to picking the perfect property
Advantages of home-buying
You own the property
If buying a home is your goal, property ownership is a good advantage. After buying a house, you own the property, which means you can customize it however you want and truly make it yours. (Be sure to check with city regulations and Homeowner Associations before you get too crazy with the custom builds!) If specific living space needs are high on your priority list, owning is likely the way to go.
It can be an investment
Home ownership can be a long-term investment. You have the potential, in the long run, to sell it for more than what you bought it for. Remember though, this is potential and not guaranteed, and the payoff in the end may not outweigh the financial burden of a mortgage while you are paying it off.
There are tax advantages
On top of some of the obvious advantages, owning a home offers tax advantages as well. Homeowners can typically deduct mortgage interest and property taxes thus reducing their overall tax burden. This financial benefit can make owning a home more affordable in the long-run in certain situations.
You get stability
Another reason why owning a home might be for you is stability. While living in your own house, no one can change any rules and your mortgage typically doesn’t change by any significant amount, especially on a fixed mortgage rate. The amount you pay monthly will remain constant, so it’s easier to plan out your finances for the long-term.
Downsides of home-buying
Unpredictable home maintenance and repair costs can affect savings quickly. For example, if major repairs are needed (i.e., the roof, any heating or AC issue, or most issues related to plumbing) you could be in for a steep repair bill.
It can be costly
Moving into a home can be costly and usually requires a significant initial sum of money to buy the house, known as a down payment—on top of real estate agent fees. Be sure to read any contracts involved in the buying process.
It can be a long process
Buying a house is a potential long-term investment. Once you purchase a home, it won’t be a simple process if something like a new job requires a move. The entire buying and selling process can take months or even years.
Property taxes, another expense that is often not discussed, will cost you extra—over and above the expense of your mortgage. Property taxes are a tax paid on property owned by an individual or other legal entity. 1
Advantages of renting
There's extra flexibility
Renting provides flexibility, especially for those still figuring out their long-term plans. Renters can move without the hassle of selling a property, making it a suitable choice for individuals with an ever-changing lifestyle or those who prefer not to be tied down to a specific location. Check with a rental property’s lease agreement before you sign anything. Some property owners require a minimum stay (6 months – 1 year).
It can be more affordable
Renting can offer a more affordable alternative in hot real estate areas where home prices may be high. Also, renters are not responsible for property taxes, homeowners insurance, or maintenance costs; these are typically the landlord’s responsibility. This can free up additional funds for other purposes, such as saving for the future or investing.
It can be a good alternative in an unpredictable market
Another aspect to consider is the current state of the housing market in your current location. Real estate markets are constantly changing, and it is crucial to assess whether it is a buyer’s or a renter’s market. If housing prices are high and the market is competitive, renting may be the way to go until the market stabilizes or becomes more affordable for buyers.
Downsides of renting
Rent can increase
Your landlord can increase the rent at agreed upon times in your lease. This makes costs unpredictable and complex to plan for the long term. Be sure to read your lease agreement and check to see if you’re in a rent controlled area.
No tax benefits
Unlike owning a house, as discussed above, renting a property has no tax benefits. With renting, unlike a home, there is no possible higher return on value than what you paid for because you don’t own anything.
Customization requires approval
Apartments/rental properties also offer minimal freedom with your design choices, and any changes to your house or your apartment likely need a landlord’s approval. This may even include changes like pet ownership, as many apartments have a no-pet policy.
It is also important to note that the current market is different for every city, and these costs specifically apply to Reno, but at the very least, knowing these costs and what to look for can get you into the right mindset for the future. All the ongoing costs were calculated using the average price for the state itself. This does not cover every expense that comes with renting or buying and is more to give a general example.
2 Zumper. “Average Rent in Reno, NV and Cost Information.” Zumper, http://www.zumper.com/rent-research/reno-nv. Accessed 11 July 2023.
3 “Reno, NV: Realtor.Com®.” Realtor.Com, http://www.realtor.com/realestateandhomes-search/Reno_NV/overview#. Accessed 11 July 2023.
4 “Average down Payment on a House: Here’s What’s Typical.” Average Down Payment On A House: Here’s What’s Typical | Rocket Mortgage, . Accessed 11 July 2023.
5 “Today’s Mortgage Rates: Bank of America.” Today’s Mortgage Purchase Rates | Bank of America, promotions.bankofamerica.com/homeloans/todays-rates/mortgage?subCampCode=41473&dmcode=18099642983&cm_mmc=CRE-SD1-_-Google-PS-_-Bank_of_America_Home_Loan-_-Brand_Core__642983&gclid=CjwKCAjw-7OlBhB8EiwAnoOEkykNBH4szau3NrTEqJ3qxkC_ji93fJFOPobEAG-YJ0sv0A5dBFd5VhoCiycQAvD_BwE&gclsrc=aw.ds. Accessed 11 July 2023.
6 How Much Do Apartment Utilities Cost by State? – Rentcafe Rental Blog, http://www.rentcafe.com/blog/apartment-search-2/money/apartment-utilities-breakdown/. Accessed 11 July 2023.
7 Fitzpatrick, Mark. “The Best and Cheapest Renters Insurance Companies in Nevada for 2023: Rankings, Reviews and Rates.” MoneyGeek.Com, http://www.moneygeek.com/insurance/renters/best-cheap-renters-insurance-in-nevada/#:~:text=Average%20Cost%20of%20Renters%20Insurance%20in%20Nevada&text=Nevada%20renters%20insurance%20is%2019.0,average%20of%20%24159%20per%20year. Accessed 11 July 2023.
8 Clever Real Estate. “Buying a House in Nevada? Find out How Much It Will Cost You.” Clever Real Estate, 3 Dec. 2022, https://listwithclever.com/cost-to-buy-house-nevada/.