CONSIDERING WHETHER TO RENT, BUY OR BUILD?
A year ago, almost to the day, the hole was dug for our new home. We are about to reach the 7 month mark of living in our home and there are so many things I have learned in the process of building. After having renters for over a year we are still watching the housing market and have returned to considering whether or not to sell our first home or to continue renting it out.
So as any blogger would, I’ve blogged about what we’ve learned in our process. But the question we started with was why?
Why are you renting? Why are you buying? Why are you building a home? Understand your why before you pursue the how. This was us 18 months ago.
Should We Rent?
After college we were like most couples and on the search for a job. We didn’t know where we were going to end up or for how long. We knew that buying a property or home wasn’t going to be the best option for us.
We were told that to receive a return on an investment when it comes to real-estate that you should wait at least five years before selling; and that still depends on the market, it may be longer or shorter.
Having received this advice, we knew buying wasn’t in our near future. As we searched for a place to rent, we took into consideration a few things: how much space did we need, how long could we consider living in the same place, and how much a month did we want to save while we rented.
We found a small apartment that allowed us to store our items, start a family, while still allowing us room in our budget to put money away. We didn’t just take the nicest rental we could find because we could afford it.
There is a lot that can be gained from renting; but you just have to be conscious of your budget, and stick to a plan.
Pros to renting:
- Managers help with updates and maintenance
- Temporary living in case of move
- Lots of renting options
- On-site amenities
- Some utilities included
- Opportunity to save money
Cons to renting:
- No investment being made
- Limited to house or apartment as is
- Can be more expensive than owning
- Not always updated
Should We Buy?
Once we felt we were established in our jobs, we started to consider purchasing a home, and we started by getting pre-approved. We were able to understand a lot about the buying process, how much we could afford, and what the best options would be for us just by meeting with a home loan adviser.
For us making the decision to buy only came when we felt that we could invest the money and longevity into a property that would be a good investment. We could have decided to build right away but never having owned a home before; we felt that learning to be a home-owner might be better than jumping into it blindly.
For some, owning a home might come easy, but to us; we wanted a used house that wouldn’t require difficult upgrades, but would eventually transition to an investment property. We ended up buying a 1,700 sq ft house that was 5 years old. It was perfect.
There is a lot to be said for buying a used home. In fact, we went back and forth trying to weigh out the options before we eventually decided to build. Here are a few examples of items we discussed when we were facing this decision.
Pros to purchasing:
- Established neighborhood
- Established landscaping
- Generally finished basement
- Shorter move-in time
Cons to purchasing:
- Purchased “as is”
- May need improvements
- Not customized to your liking
Should We Build?
After owning our home for five years we were day-dreaming about building a home more and more. We weren’t sure we were ready financially to pursue building a house. Just by happenstance we decided to look into the market, understand our current home’s value, and what building a home required.
What we learned about the market and the value of our home surprised us; and it was in a good way. But deciding to build a home wasn’t just about finances, it was about being prepared to make a large long-term investment. Building a home was giving us the opportunity to customize a house and add or remove things we missed or disliked in our first house.
Building a house would require us to live somewhere temporarily while it was built, it would be a longer process. We would also have more space when it was finished, but we wouldn’t be able to afford to have some of the basic things we had in our current home like a fenced yard, and finished basement. We truly had to pause and weigh out our options.
Pros to building:
- Brand new structure
- Customized Options
- Customized landscaping
- Clean & fresh
- More space & storage
Cons to building:
- More expensive than buying
- Basement may not be finished
- Not always an established neighborhood
- Lots of initial extra costs (appliances, landscaping, window treatments)
- The process can take a long time
As you can see we considered a ton of things before deciding to build. Even after the process is over and we’ve lived in our new home almost 7 months, there are still things I would change if we did it again. But building just about put me in solitary confinement; so it will be a long time if we ever decide to do it again.
We’ve also loved certains aspects about our house. We initially didn’t finish the basement but had the walls framed in. After exploring other homes and seeing layouts, we are considering changing the layout of the basement. I’m actually pretty excited about this.