Every one of us come to make this decision at one time or the other, whether to buy (own) a house or rent a house. I encourage you to read to the end of this post because it’s going to help someone in making the right decision. Do you want to own a house or rent a house? Let us look at the disadvantages of buying a house and renting a house. In summary renting a house can be compared to eating fast food or snacks. While buying a house can be compared to eating pounded yam or fufu, or other solid food
Renting a House
Advantages of renting a house:
- You don’t have to worry about maintenance cost. Maintaining a house takes time, money and planning.
- There is some amount of mobility. You can decide to relocate to another city or location at any time without having to worry about whom to sell or rent the house to.
- The short term cost of owning a house is always lower than the short term cost of owning a house. Take for instance, if you have N200K you can easily get a house to rent at the rate of N100K per annum and use the remaining change to pay for agent and agreement fees and also use the remaining one for upkeep but you can hardly see a house that you can buy at the rate of N1M not to even talk of N200K.
- With renting you can easily live in an urban area. It is easier to have an accommodation in urban area with renting than owning a house in an urban area. You have to be a multi-millionaire to own a house in a well-developed and urban area.
- You are never tied down to a mortgage.
- You don’t have to worry if the neighbourhood depreciates.
Disadvantages of renting a house:
- Noisy and dirty neighbours. If you rent an apartment you will definitely be sharing some facilities with other neighbours who has divers attitudes and characters such as dirty and noisy lifestyle which you will be forced to tolerate at all cost as long as you want to stay in that environment.
- You can’t change anything without permission of the owner.
- There are times you may not get a place to rent at certain location.
- There is lack of privacy. The owner can intrude into your privacy at any time due to some emergency or similar occurrences.
- A rented house is not an asset and you are therefore not building equity.
- There are lots of restrictions and freedoms such as restrictions on certain pets and some social lifestyle.
- Rent could rise at any time.
- The owner can decide to sell the property at any time thereby disrupting your general plan. You may be asked to vacate the property at the time you are not financially buoyant to rent another house. Then that will be an embarrassment.
- The attitudes, manners and characters of some house owners and neighbours are uncivilized and so annoying and there is little or nothing you can do about it.
Buying (owning) a House
Advantages of owning a house:
- It is an asset and appreciates with time.
- You can do a long time financial planning.
- You benefit if the neighbourhood appreciates. Eg if the area develops into an urban area or commercial area you have a lot to benefit from it. You can sell that same property at 100x the amount you bought it.
- You have creative control over your house: You can renovate, decorate redesign your house to your taste and financial capability without having to take permission from anybody.
- You have no restriction on pets and other social lifestyle.
- On the long term you spend less compared to someone who rent the same house that same period.
Disadvantages of owning a house:
- You are responsible for secondary cost such as taxes, insurance, upkeep and maintenance.
- You have some restrictions on mobility except proper planning is in place as to who to maintain the house.
- Equity goes down if the neighbourhood depreciates. There are some factors that can cause neighbourhood to depreciate. E.g natural disaster such as flooding, earthquakes, war or communal clashes etc.
- You are tied down to a mortgage.
- You are responsible for deciding on the appropriate and proper price of the property so as to be able to sell the property in due time and to be able to make maximum profit and not to lose at the end of the day.
Why you should rent a house instead of buying a house
Here are my recommendations.
- If you are not financially buoyant – Rent a house
- If you prefer living in a well-developed and urban areas to living in a suburbs or outskirts of the town. – Rent a house.
- If you don’t have a plan of staying in a particular place for a long period of time, say 3 years and above. – rent a house.
- If you have a more lucrative business to invest in, other than Real estate.- Rent a house.
- If you are saving money for an urgent project or event such as marriage or trip. Rent a house.
- If you are in a place that is prone to incessant natural disaster such as earthquakes- rent a house
- If you are in a place that is prone to incessant to war and communal clashes- Rent a house
- If you are an employee who is not sure of when his/her transfer letter will come- Rent a house
Why you should buy a house instead of renting a house
- If you have enough finance that can buy or build a house- Build a house
- If you have a plan of staying in a particular place for up to 3 years and above- own a house
- If want to have an asset that appreciates over time- own a house