Buy or Rent? Pros and cons of each

At Homes of Distinction we can assist you with both the buying and selling and your renting requirements but whether it is better to buy or rent a property is a subject which can be long debated and for which there is no single correct answer. In the end, it depends on your personal preference and your needs at the time.

Here we outline the pros and cons of each:

Buying a property

Pros

• Offers the long term benefits of growing your financial wealth
• Affords you the potential of a good return on your investment should you sell your home for a higher price than you paid for it
• You may renovate and alter your home freely and as you wish
• It's your property so you make the rules
• With a fixed bond repayment, you know how much your monthly repayment will be
• Buying a home is normally a long term investment which gives you a sense of stability and security
• Paying your repayments on time each month can improve your credit score
• You have the potential to refinance your bond to withdraw large funds in order to finance a large purchase.

Cons

• It's a big financial investment as you need to have funds upfront for the deposit, transfer costs, bond registration fees and any repairs or renovation costs you wish to make
• You are responsible for the monthly payments such as bond repayments, rates, taxes and homeowner's insurance
• You run the risk of not making a profit when selling at a later stage should the market be depressed or the area become less favoured
• Moving out is more complex as you will need to sell before moving on - you can't just pack up and leave after serving the notice period like a tenant
• You are responsible for all maintenance or repairs.

Renting a property

Pros

• Is ideal if you are not planning to stay for a long time
• Allows for the easy flexibility of giving notice and relocating after serving out the notice period - usually 2 months
• Apart from the rental, you are only liable for the insurance of the household contents
• It gives you a chance to save and build some capital if you cannot afford to buy your own home at that time
• You can enjoy a higher standard of lifestyle if you rent in an area that you cannot afford to buy a property in
• You are not responsible for any maintenance costs
• The rental amount is fixed for the duration of the lease agreement - usually 6 or 12 months

Cons

• You do not have any sense of stability or security
• There is no guarantee that the lease will be renewed when the lease agreement expires
• Rentals usually escalate annually and by the amount listed in the lease agreement
• You are bound by the conditions stipulated in the lease agreement
• You have to obey the landlord's instructions
• You cannot renovate or alter the property without the prior approval of the landlord
• You are not increasing your financial worth but, instead, your rental payment is paying off the landlord's home loan.

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Consider these pros and cons, and what your needs are when deciding whether it is better for you to buy or to rent a property.

To contact us, follow the link: https://www.homesofdistinction.co.za/

To contact one of our Real Estate Agents, follow the link: https://www.homesofdistinction.co.za/agents/