Renting Vs. Buying a house – Which Is Best for You?
For many Nigerians, getting a house is fulfilling a lifelong dream. Among Nigerians, it is seen as a thing of joy that many gather people to celebrate with them. It has even become a trend on social media for people to post their newly purchased houses and get congratulatory messages in return. The entire culture around purchasing a house could make you wonder if it is that much of a big deal.
Well, the debate on if renting or buying a house is better has been a long stretched, and indecisive debate. However, we are here to provide you with detailed information to help you make a sound decision.
To quickly dispel the myth, regardless of your present financial capacity, the decision on whether to rent or buy a house can be made anytime while you may work towards it as life progresses. The Nigerian real estate market has evolved impressively to the state where people can now pre-plan their house purchases, short-let rental and so many more. So, whether you have the finances with you now or not, you can always set a plan for yourself.
Now to the big question of the day, renting vs. buying a house, which is best for you? Let’s find out together!
Renting Vs. Buying a House
The decision on whether to rent or buy a house is largely dependent on personal preferences such as personal goals, lifestyle, and financial capabilities. For instance, someone with a personal goal of relocating to another country, will see renting a house as a cost-effective choice. The bottom line is that you are the one at the center stage, and weighing other related options can help you make a decision faster.
Before we proceed, you should also note that regardless of the option you are going for, you will need an income stream to settle in. The only variance is that, for the rent option, you don’t need so much for the initial deposit.
In summary, the decision on either renting or buying a house is emotional and financial. For many, it is not just about having the financial security to get a mortgage, but they are also looking at the future they have envisioned.
Renting Vs. Buying a House – Which Is Best for You?
Read through to find the option that is well suited for you. We have compiled the advantages of renting with the advantages of buying a house. Similarly, the disadvantages of both options are included.
Advantages of Renting a House
- Experience Gathering: Putting out your first foot with rental offers you the opportunity to gain firsthand experience of what owning, and maintaining a house could entail. With this, you can make better decisions in terms of location, the kind of structure you want, and fittings you will need, if the aim is to get a house at a later time. Moreover, buying a house is a decision you might want to make with your life partner or future home in view, renting an apartment offers you more time to ponder on it.
- Saves cost: Renting is fixed, so you can always work within your budget. Also, the landlord footing the maintenance bill, gives you more room to save.
- You are excluded from property tax: As a tenant, you are exempted from property tax payment.
- Flexibility: This is one of the key advantages. With rental, you are mobile, moving anywhere in the country with or without extensive planning becomes no issue. In addition, you can easily move to your working environment if you switch jobs.
- All gain, no loss: To burst the myth around renting being a waste, when you rent an apartment, you are paying to stay in the apartment temporarily. In essence, you are being offered a service.
You might also get access to extra facilities like gym, pool, garden, playground, etc. If you were to consider buying a house with all these facilities, it may cost you a fortune.
Advantages of Buying a House
- Ownership: Buying a house automatically makes you the owner of the property and this confers on you, the right to furnish to personal preference. You call the shots on how you want your house to be.
- A mortgage tied to your belt: When you get a house, you automatically have a mortgage tied to you that you could use for other benefits and investment. You could decide to lease out the apartment and get returns. Similarly, the house can stand as a collateral for your financial investments.
- Stability: With buying a house, you become fixed in a permanent residence. This invariably makes things a lot more stable around you.
- Equity: The housing trend in Nigeria has proven to be progressively appreciating. Buying a house gives you the opportunity to record an appreciation on your property when ready to sell.
- Bye to fixed monthly/yearly payment: For so long, this has been one of the major reasons Nigerians consider buying their own houses.
As a house owner, you are exempted from the pressure of meeting up with monthly or yearly rent. Also, you are free from paying for another person’s mortgage.
Disadvantages of Renting a House
- Difficulty settling in an area: With rent, it’s quite difficult to permanently reside in an area. Although most landlords prefer to have long tenants, but, anything could come up to displace you.
- Rent could increase: As renewal draws closer, the landlord can decide to increase your rent, and this may put you at a disadvantage.
- Policies guiding your tenancy: For every rental contract, there are policies set in place on how the house should be used. Some would say only a maximum of 3–4 people can stay in the rented house. A few others have “no pet rules”. As a tenant, you will be bound to comply with these rules if you wish to maintain your rental contract.
- No equity: As a tenant, no equity is being recorded for you during your stay in a rented apartment.
- Flexibility to terminate the contract: Due to the flexibility to terminate the contract between both parties, your landlord can with quit notice terminate your contract.
You may be thrown off balance if you are not emotionally and financially ready for it. Read also, know you right as a Nigerian tenant.
Disadvantages of Buying a House
- Large down payment: To buy a home, unlike renting, you need a large deposit for your down payment.
- No flexibility: As a house owner, you cannot change your residence easily.
- Maintenance fee: In addition to the maintenance costs you as a homeowner are responsible for, you may also pay other maintenance costs that you don’t pay as a renter.
Some of these extra charges include repairs, house cleaning and maintenance.
- Property Taxes: You will be required some property taxes.
Frequently Asked Questions
Is it better financially to rent or buy a house?
The answer to this question mainly depends on your financial capacity. However, I’ll let you in on an old trick. One way to determine the price difference for a house you are considering renting or buying is to determine the rental value of that house. Then multiply with the number of years you will be living under a roof (lifetime). Compare the grand price with the to the one-time purchase price for the house. Then you can go for what looks financially feasible.
The bottom line is that you consider your pocket, consider other factors like your goals and personal preferences. Then go for what works best for you!
Regardless of the decision you make, just be sure it is what will be benefit you on the long run. If you need further advice and consultancy, you can always reach out to a realtor to discuss the offers that might be best for you.
From all that you’ve gathered, which would you say is better, renting or buying a house? Let’s know your thoughts in the comments section