Options: Rent or buy?

The question of whether to rent or buy continues to arise, especially among first-time buyers and those relocating to this area.

According to Trulia, owning a home is less expensive than renting in 75 % of U.S. cities. Renting practically becomes the only option if you cannot qualify for a mortgage and it’s a preferred option if you plan on being in an area less than three to four years or you believe your employment is at risk.


One of the gauges used to make a buy versus rent determination is Trulia’s Rent vs. Buy Index. It takes the price of an average house and divides it by the cost of renting a house for a year in the same city. If the result is under 15, buying is the cheaper alternative. Other important considerations are how likely it will be to sell the home when you plan to leave, or in the alternative whether you can benefit from an investment opportunity.

It is recommended that prospective buyers financially project what would happen if they sold in three, five or seven years. This can also help buyers select a home as well. If a home has more red flags (negatives) because of its location, condition or other factors, then another home with more potential that requires, for example, only decorating would be a better choice.

Homeowners relocating to another part of the country or the world may wish to rent their homes as opposed to selling. A big concern is dealing with tenants from afar. If tenants do not pay their rent, the owner may not be able to repay the mortgage. It can also be challenging to monitor maintenance and repairs of the home as well.

An important consideration in renting a home are the carrying costs. If renting yields a positive cash flow, then this is a good option.

Unfortunately, for many homeowners with adjustable mortgages, this may not be the case.

Another option for someone who is single or divorced is to rent out a portion of their property. The income can help pay a portion of the mortgage, utilities or other expenses. The downside of this option is having less privacy and it requires more tolerance of the tenant’s life style. Others choose to downsize from a single-family home and live in a condo/town home that offers a sense of community where decisions are made by consensus.

With the increasing number of our population becoming seniors, their friends and relatives have concerns with their continued independence. Studies show that people do better when they live near what is “dear to them” like friends, family, congregation or their interests.

However, if there is a noticeable shift in a senior’s behavior, it may be time to pursue services that enable them to stay in their home or explore residential facilities for their specific needs. Depending on finances or resources, these options can be weighed with family or a trusted friend.

Options are often determined by your finances and resources. If it is a financial stretch to choose an option, it can have adverse consequences on your health, career and put you in a risky position should something unexpected occur. Living within your means is always the best option.


Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue. Questions or comments may be e-mailed to [email protected] or reach her directly at 203-249-2244.

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