landlordsuccess.com
That is what you might say when you receive notification from your landlord that your rent is going up. Nationwide rents are projected to increase this year. How much depends largely on where you live, but consider supply and demand. If you live where there are less rental properties you can be sure your rent will go up accordingly. Anecdotally, I am aware of two situations in which the rent is increasing by $100 per month. These two examples are in two different regions of the country-but in desirable communities. Over the past couple of years it may have been wise to rent-until the housing market began showing that there was once again appreciation and that it would remain relatively stable. We are there. Projections for appreciation in housing are at 4% as a national average. Let's think about that for a minute. It is true that you have to pay to live somewhere. But most people would rather pay to live somewhere that is making them money than somewhere that is making someone else money.
Really- we all need a break about now. Let's put a pencil to it. At current increases in appreciation and at current interest rates, someone purchasing a home this year will pay $9092 less in housing expense (including payments and maintenance) than a renter. Speaking on a national scale a home owner has an average net worth of $174,500 and a renter $5000. To be sure those numbers encompass a wide range of economic circumstances-but it is true that the fastest way to accruing wealth in the USA is property ownership.
For those 35 years old and younger owning a home will double their current net worth.
For those with a high school diploma home ownership will triple their net worth.
This is the time of year that many landlords are asking their renters to renew their leases. Before you sign on the dotted line-ask yourself these questions:
1) Do I have a job that has stability?
2) Have I established a credit history?
3) Am I planning on remaining in the area for at least three to four years?
4) Do I have the ability to save money?
5) Am I willing to undertake the responsibility of taking care of my own property?
If you can answer "yes" to the above questions chances are you are ready to buy. But how will you know if it makes financial sense?
Let's do a little rent VS buy analysis:
Your rent = $750 per month - that would be $9000 per year
Your house payment at on a $100,000 home with an interest rate of 4.50% including taxes and insurance would be $675.98 or $8111.76 per year. (Obviously taxes and insurance vary from community to community but this is average for the local Lafayette, IN area)
The total interest that you pay on your loan for a year would be $4750 of which if you are in a 15% tax bracket would be a $712.00 tax deduction and if your property taxes are $75 per month they would total $900 or a total of the two of $1612-which is what you could deduct from your taxes- so of that $8111.76 total you can subtract $1612 which makes owning a $100,000 home far less expensive than renting a $750 per month apartment. Keep in mind there will be costs that you might not accrue in a rental-plumbing, electric, lawn care-that's now on you-but in the end you will be paying less for a property that is increasing in value.
Before you sign that lease again-at least see what buying a home would entail. It is definitely worth it!
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