Most families today are very familiar with this practice: call a property owner, pay a few months rent as advances and deposits, move in, and religiously pay the landlord monthly rent. The lessee does not own the house, but merely possesses it. This is a legal differentiation that simply means that while paying rent, one cannot be deprived of the use of a property. There are advantages and disadvantages in renting a house, here are some of them:
- Minimal Maintenance
Since the one renting does not legally own the house, he could not care less for depreciation and obsolescence. The pressure of upkeep stays with the owner to maintain profitability and extend the life of the structure. So when plumbing is broken, the lessee is generally spared from stress. The need to keep the house in order only comes up to ensure acceptable safety and convenience for the occupants.
When a family or a singleton rents a house and suddenly decides to move out, no significant loss in his asset base happens. Unlike an owner, the lessee has more choices of residence if he so wishes.
- Expandable Home Capacity
If after some years, a family that is renting a house grows, it can easily find a bigger and better home. The new upsized family can also upgrade houses without minding its financial impact so much, as compared to the buyer looking for a bigger house.
- Flexible financial commitment
No mortgages or monthly amortization binds one when renting a house. After deciding to abandon a house, one can just choose to end a lease contract and move to a different place without losing any collateral or initial investment.
- Perception of Instability
This leads to a reduction of assets in a portfolio that is a tad unattractive to lending and financial institutions. Should the renter decide one day to borrow from a bank, a negative asset score could result in rejection of applications.
- No Real Investment Value
Rents are also usually viewed as short-term since most occupants do not intend to stay at someone else’s house perpetually. Because it is tentative in nature and no real investment value is presented, a sense of personal accomplishment is wanting.
Deciding between buying and renting a house is not easy. A lot of it has to do with maturity and the realities of one’s personal economic stature. Both have their functional advantages and negative sides but the wisest decisions are results of an honest understanding of priorities, sincerity in planning for the future, and realistic forecasting.
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This story first appeared in MyHome May 2017, written by Lloyd Capilit Llaga. Edits have been made for MyHomeDesign.ph.