Here, lifelong Washingtonville resident Paul Biagini, owner of Biagini Realty, discusses the key factors to consider in whether to buy or rent your home.

To rent or to own? That is the question.

At least it is for many professional millennials and other potential home buyers, who ask my advice on whether buying a home makes more financial sense for them than renting. Believe it or not, the answer is not obvious. The old-school notion that you should buy a house because it’s a great investment is no longer a one-size-fits-all proposition.

In the past, the own-or-rent decision was largely driven by whether you were drawn to apartment or house-type living. Again, that is outdated. The opportunities to rent a stand-alone house are greater than ever before. So the decision should be apples-to-apples with comparable properties. If you’re thinking about moving from a small apartment and purchasing a large house, you’ll find that it’s more expensive simply because you’re getting more square footage and likely some property.

Let’s examine some key factors that should be considered in a rent or buy decision-making scenario.

Home ownership as a sound Investment… or not.

According to economists, housing today is not as good investment as stocks, for example, which offer nearly 10 times the return in the long run. Yes, in a good market, a modest home price increase can increase in the homeowner’s equity. But a decrease in home value, as seen in the last real estate decline, can also wipe out your hard-earned equity.

The Overstated Benefit of Mortgage Deductions

Interest on home mortgages is deductible, which sounds good, but is frequently overrated. The deductibility doesn’t offset the fact that you are paying someone interest – a lot of it. It’s still an expense, and a large one. If you’re seeking a big tax deduction, you could always make a contribution to charity.

“Control Issues”

Renters should keep in mind that they don’t control their housing situation. The landlord may decide to sell, or raise the rent at the end of the lease.

A key benefit of owning a house is that you’re in control. It gives you flexibility but it also requires flexibility. You can update your home’s amenities with money from a raise or bonus. But with control, comes responsibility.

Responsibilities

When the roof starts to leak, you need to repair your roof. You need to have reserves for unplanned repairs.

When you rent, the landlord picks up the taxes, insurance, maintenance and sometimes even utilities. If you buy, plan on handling these things yourself and replacing big ticket items, like water heaters and furnaces some years.

Cost Comparisons

Comparing monthly payments to rent, is a good starting point. However, keep in mind that some of that monthly payment goes to principal. It’s like saving.

Take this test.

You can call an accountant and ask them to run numbers for you. And there are comparative rent and mortgage payment calculators available online. But here’s a simple experiment that won’t cost you anything.

Start putting money aside now. Let’s say that you’re paying $1500 a month in rent, and you estimate that your all-in cost for a new home would be $2,000 a month. So, put aside $500 a month, every month, for a year, to show that you can cover the higher monthly payment. You’ll see how you’ll do under a homeowner’s scenario and save some money to boot.

Is buying superior to renting?

In the end, that’s a question only you can answer. If your budget is tight, and you don’t mind giving up vacations and restaurant meals or other sundries, then go for it. If you don’t want to compromise your lifestyle in any way, you may want to hold off.

Call Hudson Valley real estate brokerage Biagini Realty. Paul Biagini can help you sell or find your perfect home in Orange County, Rockland County, Putnam County, Sullivan County, Ulster County, Dutchess County, Westchester County, Albany County and the Philadelphia metropolitan area.

About the Author: Paul Biagini is a lifelong resident of Washingtonville and a Hudson Valley real estate expert. Paul Biagini also maintains a residence in Philadelphia and is a Delaware Valley real estate expert with extensive ties to the region’s core. Paul Biagini owns several real estate offices stretching from Albany to White Plains and performs transactions in New York City as well.