If you want to purchase a home but are unsure about the current market and the potential impact such a large investment will have on your finances, RP Funding CEO and host of the Money Minute radio show, Robert Palmer is here to help with expert financial and real estate advice on whether you should rent or buy a house.
As one Money Minute viewer asks, “Am I better off renting an apartment, renting a home, or buying a home?”
Robert’s Response on Renting vs Buying a House
I’m a big fan of owning real estate. It’s one of my main rules to increasing personal wealth. If you look at how wealth is created in America, owning real estate is a huge part of the wealthy’s personal financial statement. To achieve that personal wealth, you need to forget about renting property and instead buy a home.
Buy a House Sooner Rather Than Later
The sooner you own a home, the better. I believe, everyone at one point in their lives, says “I’d like to own a home.” No one wants to die a renter. So, if you’re planning on owning a home at some point in your life, sooner is better because you can lock-in prices and interest rates before they go up.
Make Sure You Are Ready to Stay Put
Purchasing a home is a huge investment that can yield a large return over time. However, the only way to make any money back on such an investment is to build equity by staying in that home for several years, although you could turn it into a rental property down the line if you wanted another source of income but you will want to see what your cash on cash return will be like before proceeding. If your profession requires you to relocate frequently, you’re not quite ready to settle down, or you find yourself in a situation where you may be moving again within the next year, then you are better off renting a home.
Buy and Rent a House
However, if you know where you want to be, then stop throwing money away on rent. Go ahead and set down roots and invest in a house. Even if it is just a starter home in the city you know you want to live in, you can buy that house, live in it for a short period of time, move out, and then rent it out to someone else. This is a good way to get a steady bit of income coming in. You could also give all of the worries of renting out a house to someone else, whilst you live happily in your new home. Looking for an experienced property management company offers you the option to rent out your household, without becoming weighed down with the daily chores of being a landlord. The money you then gain from that property will help you down the road when you’re ready to purchase your dream home in the future.