Renting vs. Buying in So. IL

This week I’ve run into several people who are convinced there is no way out of the rental cycle. Spending a good chunk of your paycheck every month and then never seeing that money again. It’s gone. Poof! Like magic, but not as fun to watch. Many folks think it’s simply too costly to buy a home and believe they’re saving money by renting. Nothing could be farther from the truth. I’d like to go over a few myths about renting and show you how easy it can be to become a homeowner.

Myth 1: Renting saves me money!

Rentals in our area can range drastically in price. An average two bedroom apartment in Marion will run you around $575 and will require a security deposit. Over the course of a year you will be spending roughly $6,900 on rent, not to mention any money you may lose on your security deposit. After your contract ends and the remainder of your security deposit is returned all the money you spend on your rental is gone. It is in someone’s bank account, but not yours. For that amount of money you could be making payments on a home and that money would still be yours in the form of equity in your home. When the time comes you can sell your home again and get that money back, and potentially even more if conditions are right and you take care of your property. Renting is simply spending money but buying a home is a form of investment. One is giving your money away, the other is investing it.

Myth 2: Maintaining a home is way too much work and prohibitively expensive!

One of the perks of renting a home is the benefit of having someone else fix your leaky faucets, cracked windows, or scratches Fido left on your front door. People seem to think that the time put into maintaining a house is a waste, but it is a great way to maintain or add value to your investment. Any improvement you add to your home can potentially add value to the investment and make you a bit more money if you choose to sell. According to Realtor.com you can see respectable returns on your home improvements and repairs, some like fiberglass insulation can actually net more than they cost to install. Just like the payments on your home the cost of repairs and updates adds to your investment. Whereas rent money is gone forever, the money you invest in your home stays with you. Suddenly when your money reappears the magic becomes a lot more fun to watch.

Myth 3: Real Estate is a dangerous game, I’ve seen The Big Short!

While many people took a hit when the housing bubble burst in 2008 real estate remains one of the safest long-term investments you can have. I say long term because although it has ups and downs like most types of investments in the long term is provides a steady increase in value. For the most part most homes have regained their pre-crisis value and then some. Although homeowners saw loses in the short term, those that held on to their property and didn’t sell at the low point saw a return of value and in some cases even a profit within a few years of the bubble. Prices may fluctuate, but real estate remains a sound investment. You can help increase the value of your property with maintenance and improvement in any market. Rent money has a 0% chance of a return on what you put in, even with fluctuations buying remains a better option.

What it all comes down to is this: Do you want to invest your money or do you want to give it away? For a similar price and a little bit of elbow grease that monthly expense can become a monthly investment. Interest rates are still pretty low but they will most likely increase as the market continues to improves so there’s no time like the present to go from renter to home investor. Shoot me a message on my Facebook page or give me a call if you have any further questions or want details of what I can do as a Realtor to help make becoming a homeowner a simple experience!

 

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