Rent vs. Buy — The Dilemma

Posted by Matt on May 1, 2012 in Buy v Rent | 0 comments

Most think that a Real Estate professional wants to encourage her clients to “buy” versus “rent” because it is more financially beneficial to the agent. There will be circumstances where renting is truly the best decision at the time. A true professional desires to see his clients appreciative of an unparalleled customer service experience through attention to detail, sound recommendations, and the meeting of the needs of each and every individual on a case-by-case basis. However, there comes a time in the big economic picture where it is more advantageous for the client to step confidently into the shoes of home ownership.

Recent results of a study released by Trulia show Miami as the number one city in America where it is now more advantageous to buy than to rent. “With rental values strengthening across South Florida, contrasted against the best home values for purchase that we have experienced in the last decade, more and more residents are returning to home ownership.

This is good news for our future homeowners in 2012 and in the future.

Many homebuyers who were priced out of the market will now have a window of opportunity to enter the market – especially while the interest rates remain low.

In spite of the distressed market, 2011 was a stellar year for the number of South Florida homes sold. Non-distressed properties, properly priced, move at the speed of light and often times have multiple bids – and some of those bids are either cash, full-price offers, or both.

Our industry is trying to educate potential buyers as to the shifting rent-versus-buy dynamic. Remember — just some of the benefits of owning a home may include:
• Mortgage interest deduction.
• Property tax deduction.
• Homestead Exemption (an added benefit).
• Deductible home-buying expenses.

Your accountant would be the best resource as to how homeownership would benefit your particular financial and tax picture.

For years several of my friends would rent as I would encourage them to buy. They would keep telling me, “next year, next year.”

“Next year” became “next decade.” How much money have they poured into the pockets of their landlords? How much tax dollar did they forfeit? How many homes could they have bought and sold (to upgrade their investment) which would have benefited their retirement portfolio? How much investment property could they have purchased that would have been of a tax and/or retirement benefit?