Nowadays, more and more people are questioning if whether buying and owning a home is part of the American Dream. Whether it is due to the housing crisis that took place a few years ago, Millennials not wanting to be tied down to one location, or an overall uneasiness about the future of the economy, conventional wisdom may be slowly shifting away from owning a home. Today, we will look at some of the advantages of looking for homes for rent. Of course, every coin has a flip side so we will look at the disadvantages in a later post.
Six Advantages Of Looking For Homes For Rent
1. Depending on the landlord and the lease you sign with them, you will normally have to pay an upfront cost to secure one of the homes for rent that you are looking at. It is not uncommon that you will be required to put down a security deposit along with the first month’s rent. Depending on the home and the area, this security deposit could be another couple thousand dollars that you will have to come up with. However, compare this with the down payment required when buying a home and it is definitely much cheaper to initially get into homes for rent. If you take the median home price in Ventura County as listed by the United States Census Bureau of $442,200 and multiply this by the minimum down payment currently available of 3.5% for a FHA loan, you will see that this comes out to $15,477.
2. If you buy a home, you are usually responsible for all maintenance and/or repairs. If you own a townhouse or a condo, most of the maintenance on the exterior of your home may be covered for you, but those expenses will be part of any HOA fees that you will be paying. If you are looking for homes for rent, you will not have to pay anything for any major repairs that are related to normal wear and tear throughout the years. Of course if you are found responsible for causing any damage, this is another story. In addition, any minor items like changing a light bulb may be handled by the owner of the property or the management company depending on the terms of your lease.
3. Unless you have a lot of money to spare, buying a home is a big commitment and you are most likely going to need to stay in that home at least 4 to 5 years in order to not lose money. Even if your home appreciates at a reasonable rate, there will still be realtor commissions and closing costs that you will need to consider as part of the equation. However, when you are looking for homes for rent, you have more flexibility to come and go as you please. Whether you need to relocate often as part of your job or you just don’t want to make the commitment of being “stuck” in a home, homes for rent afford you certain options that you may not have when you purchase a house.
4. In today’s financial landscape, qualifying for a mortgage may not be the easiest thing to do for everyone. Tight lending standards have made obtaining a home loan for those who are considered high risk borrowers either very costly or unattainable. Most lenders want to see that you have a decent income, low debt-to-income ratio, job stability, and a good or excellent credit history and score. Even if you have the down payment saved up, if you do not meet one or two of these criteria, a bank may still be unwilling to lend to you. For those potential borrowers, searching for homes for rent may be the only option until you resolve whatever issue is preventing you from getting the loan. Another option that these borrows may want to consider is the lease option, or rent-to-own. More information about the lease option can be found in our Ultimate Guide to Buying and Selling Real Estate in Ventura County.
5. In the past few years home prices in Ventura County, along with the rest of Southern California, have been seeing a considerable increase since the housing market started to rebound in the early part of this decade. Although no one can predict the future and speculating on housing prices can be a dangerous game, there seems to be more and more people who are beginning to become cautious about the rise in housing prices. As prices come closer and closer to nearing the peak they reached prior to 2008, some experts are concerned about the affordability of housing. Especially if interest rates rise as many are expecting them to within the next year or so, buying a home could become out of reach for many families. I know several people who bought prior to the housing collapse who were expecting the appreciation to continue as part of their financial planning. Although some of them came out okay, there were others who were stuck with properties that they didn’t know what to do with. So if you are banking on aggressive appreciation and creative financing just to be able to afford your home, you may be better served looking for homes for rent.
6. Although everyone will have their own opinions and morals on this next point, searching for homes for rent could also be a good option for couples contemplating spending their lives together. As prices in Ventura County slowly become out of reach for people with one income to afford, many couples look to combine their incomes when purchasing a house. Before taking this financial step, many couples choose homes for rent for a period of time to make sure that they will be able to live together for the rest of their lives. Again, this is not the time or place to discuss the moral aspects of this, but this is reality and is something that many people are now doing as part of their relationship building.