Buying or renting a property: what’s more worth it? This is a question for many peoples, especially those who are starting a new life.
Certainly home ownership is one of the highest expenses that we make over a lifetime. Due to the facilities provided for financing, it is possible to dilute the purchase of the property in up to 30 years.
Therefore, the effect is long, the cost is high and, the decision is very important. When to buy and when to rent? Each choice has its advantages.
Renting or buying property has more to do with the moment of each one than with the moment when the country passes.
The denominator of this comparison is what will decide each person’s next step. But it is worth mentioning that the fact of renting a property today does not jeopardize the acquisition of the property in the future. Everything is just the moment.
Imagining an “‘ buy or rent simulator property ”app, it would show you that according to the latest Focus survey of 2017, GDP (Gross Domestic Product) has a 2.70% increase for this year. And this improvement will certainly be noticed in several segments, including the furniture sector, which has been recovering since the last months of 2017.
First, it is necessary to keep in mind the concept of opportunity cost.
Opportunity cost is a term used in economics to indicate the cost of something in terms of a missed opportunity
That is, the cost caused by the resignation of the economic entity, as well as the benefits that could be obtained from this waived opportunity. Or, even, the highest income generated in any alternative application.
The option of renting accommodation is much easier to take. In addition, the rent value goes up much less compared to the real estate value. This is a great benefit if you are unsure whether to buy or rent a property.
The rent is more advantageous because the purchase is only feasible to guarantee a well-being for the residents.
When it comes to investments, the possibility for the consumer to start a capital market to increase income is much better.
Unfortunately many see rent as a villain, but that is not true! Quite the opposite. Believe me, it can be very interesting to pay every month because the values are much lower compared to the low percentages of the properties.
Another point in favor of rent is the maintenance cost, which is very low compared to the property itself. There are condominiums that make periodic renovations, and the owner pays the entire cost. Over time this value is not so irrelevant.
Buying a property is not an investment with guaranteed success. As the market goes up and down it can devalue a lot, or grow at a much slower pace.
How to decide to buy a property?
When you own it, you can do whatever you want with the property: renovate, paint, drill, use whatever your creativity and pocket allow, that is, create the home of your dreams.
In addition, you have the peace of mind to live on the roof that belongs to you, and, of course, if the market price of the property goes up, the appreciation follows.
There is an account that can help a lot in the decision, which is to find out the rental rate of the property. Just divide by the property value and multiply by 100.
If the rent of the apartment costs, for example, R $ 3 thousand and to buy, it is worth R $ 550 thousand, the rental rate is 0.55% per month. If there is money to buy in cash, just compare the main conservative investment alternatives, such as savings, fixed income funds, CDB and direct treasury.
If the rental rate is higher than the investment income, the property is worth buying. If it is smaller, continue renting and invest the money.
If you do not have the money to buy the property at once, compare the rental rate with the famous Total Effective Cost of Financing, which the bank is obliged to report. If the rental rate is higher, in general, it pays to buy. If it is smaller, rent.
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