Renting vs Buying an Apartment – Which one should you go with?
As an adult, one of the hardest decisions to make when moving out and living independently is whether to rent or buy an apartment. It is not an uncommon situation if you are pursuing an active and convenient apartment lifestyle like many other millennials around the world. Although the apartment lifestyle does not confine anyone who makes the decision to rent or buy an actual apartment to have that lifestyle, it is still a very hard decision to make since the benefits from both ways are quite similar to one another. If you are currently finding yourself in the middle of this dilemma, let us help you make the next decision and solve your problem. In this article, we will help guide you on how to choose between renting or buying an apartment by considering your budget, financial plan, lifestyle, and many more factors.
Renting an apartment refers to the process of having access to the apartment by making a monthly payment to the owner of the apartment as an exchange. Although the payment is made monthly, the property does not belong to the individual but to the landlord or owner of the apartment. Renting an apartment is a short-term process, allowing more freedom to relocate or change lifestyle preferences. Buying an apartment is a financial commitment that an individual makes to have the apartment as their own property. This process involves the buyer and seller have an agreement in the exchange of property on an agreed payment. Buying an apartment can be done in a one-time payment transaction or monthly mortgage payments according to the agreement term between the two parties involved. Now that it is clear what renting and buying an apartment means, let’s get to know the details of renting and buying an apartment.
Everything you need to know about Renting an Apartment:
If you are still unsure of what renting an apartment will look like, here is a guide on the Pros and Cons as well as responsibilities when renting an apartment
Pros of Renting an Apartment:
- Great for limited financial budget and freedom to invest in business opportunities
- Monthly rent payments based on a fixed amount
- Does not require a big amount of money to own a property
- Better mobility without restrictions to move out anytime with prior notice
- No maintenance costs or tax payments on the property
- Access to facilities in the building without extra cost
- Low insurance costs to cover monthly
Cons of Renting an Apartment:
- Having limited control over your property
- Rent payments may increase which affects your financial situation
- Short-term benefits that do not offer stability or permanent residence
- Trouble in finding a new residence if the landlord decides to sell or stop renting the apartment
List of responsibilities when Renting an Apartment:
- Pay monthly rental on time
- Take accountability for your own utility costs
- Take proper care of the apartment and the essentials that come with the apartment
- Adhere to the rules and regulations made by the landlord
- Inform the landlord of any repairments needed or take accountability for the negligence of the property maintenance
- Allow the landlord access to inspections
- Give the landlord proper notice before moving out
- Be responsible for the consequences if breaches any of the agreed terms and conditions
Who mainly rents an apartment?
Most people who rent an apartment are usually those who have just started working or studying away from their hometowns, someone who just moved out or started a small family with a budget.
Everything you need to know about Buying an Apartment:
If you are considering buying instead of renting an apartment, you should be familiar with the pros and cons of buying an apartment and some main responsibilities of being an apartment owner.
Pros of Buying an Apartment:
- Build your equity values
- Have full freedom to renovate or customize your very own living space
- Able to enjoy the comfort and privacy of your own place
- Have the options to rent out the apartment, sell or live in the apartment anytime you like
- Invest in long-term stability and have a permanent place to live in
- Own property at an affordable price
Cons of Buying an Apartment:
- Have to pay a huge amount upfront fee to buy an apartment
- May have a hard time renting or selling the apartment
- You own the apartment unit, not the building therefore have to share the living space with others
- Have to take responsibility for maintenance, tax payment, utility fees, and other additional payments
Responsibilities of an Apartment Owner:
- Adhere to the apartment building rules and regulations
- Pay taxes and other maintenance, and insurance fees on time
- Notice the building owner or apartment manager of any changes in ownership or renting to tenants
- Make sure that tenants or guests do not cause nuisances to other neighboring apartment units
- Give contact details of the person living in the apartment whether personal or tenant personal information
- Take responsibility for tenants’ complaints and other issues that may arise
Who Usually Decides to Buy an Apartment?
The decision to buy an apartment is as important as buying a house, although on a more affordable front. Those who choose to buy an apartment tend to be individuals who like to live independently with a secure income flow or a new family with a stable income looking to own an affordable residential property before moving to bigger investments or investors who plan to rent apartments for passive income.
Comparing Renting vs Buying an Apartment
Renting or buying an apartment has different advantages and disadvantages. It is undeniably hard to come to a decision at the end of the day. To make it a lot easier to choose, let’s consider the major differences between renting and buying an apartment:
Where does the money go?
Think carefully that in your current financial situation, it is more worth temporarily renting the apartment or owning the apartment for long-term stability.
The cost differences:
There is also a great difference between the cost of renting vs buying the apartment. This has a huge impact on your finances and will be very helpful in the decision-making process between renting or buying.
Building equity vs mobility:
If your finances allow, consider what is more beneficial and suitable for your current lifestyle as well as in the future. This is a question of building equity value over time and having free mobility to roam around or relocate.
The responsibilities that come with the decision:
It is also great to consider the extent of responsibilities you are willing and capable of having since the difference in responsibilities is vast as well.
Checklist to Help You Decide Between Renting or Buying an Apartment
Here is a quick checklist you can answer to determine which method is better for you:
- How much can you reasonably afford?
- How long do you plan to stay at the apartment?
- Are you ready to settle down?
- Which is better for you long term?
- Will your decision support your lifestyle?
- Are you willing to change your lifestyle to adjust to your decision?
- Do you have financial support to make the decision?
- Are you looking at an apartment that you really like or are you open to exploring more?
Whatever decision you end up making, renting or buying an apartment, it is still a good investment to make as an adult. After all, if you prefer an apartment lifestyle, either renting or buying will allow you to live the lifestyle you want and give you access to continue having an active and youthful lifestyle before settling down when you enter your 30s or 40s later on. If you plan to look for an apartment as well as having a helpful consultant to your real estate problems, do contact the CBRE team for more details on real estate services and opportunities for investment.