Choosing Between the Rent or Buy Scenario
Is it better to rent or buy is a question frequently asked by tenants, with market conditions the way they are, much more so by residential tenants instead of commercial tenants. It's a good idea for real estate investors to ask whether renting or buying makes more sense also.
Here's why.
In my real estate investment business, I always suggest that the real estate investor I work with learn to think like a tenant. Preferably before buying an investment property, and thinking about whether to rent or buy is a perfect example.
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There are always predictable hard and soft costs in any real estate investment. A few are:
One of the things many investors overlook is how the tenant views the opportunity cost of renting versus buying. Tenants will look at this rent or buy situation from an objective, financial viewpoint, but also very subjectively as well.
Cheaper to Rent in Most US Cities
A recent CNN Money article caught my eye and is a perfect illustration of this rent or buy point.
In summary, the story describes how in most major U.S. cities homes prices are so low due to oversupply and demand for rental units has increased so much, that in most cities it's cheaper to buy a 2-bed home than to rent one.
=> Rent or Buy | How To Rent My House Training
Real estate investors need to consider whether or not this trend will continue, and what markets will be most and lease influenced.
Rent or Buy from an Investor Viewpoint
In addition to learning how to think like a tenant, real estate investors should also have a good feel for what direction real estate in their market is heading. While I never try to time the top or bottom of a market - that's a fool's game - what I do try to do is look at both the macro and micro trends whenever possible and then conduct a 'reality check' to see if the trend makes common sense.
One of the most important trends, and also a question I'm often asked by the investors I work with, is, "What's happening to prices in the real estate market?".
In other words, are they going up or down.
Up until the year 2000 or 2001, there was a pretty good correlation between income levels and home prices. This changed when money became easier and creative financing - think low or no-doc loans and interest-only mortgages - kicked in.
Common sense says that when you can finance something the price goes up, and the more you can leverage something the higher the price goes.
Jeffrey Roark
Property Management Training
How To Rent My House
Is it better to rent or buy is a question frequently asked by tenants, with market conditions the way they are, much more so by residential tenants instead of commercial tenants. It's a good idea for real estate investors to ask whether renting or buying makes more sense also.
Here's why.
In my real estate investment business, I always suggest that the real estate investor I work with learn to think like a tenant. Preferably before buying an investment property, and thinking about whether to rent or buy is a perfect example.
=> Learn Property Management Training
There are always predictable hard and soft costs in any real estate investment. A few are:
- Leasing fees & other acquisition costs
- Mortgage, if leveraged, versus the time the property is vacant, aka Negative Cash Flow
- Utilities and other property upkeep done at the landlord expense because there isn't a tenant
One of the things many investors overlook is how the tenant views the opportunity cost of renting versus buying. Tenants will look at this rent or buy situation from an objective, financial viewpoint, but also very subjectively as well.
Cheaper to Rent in Most US Cities
A recent CNN Money article caught my eye and is a perfect illustration of this rent or buy point.
In summary, the story describes how in most major U.S. cities homes prices are so low due to oversupply and demand for rental units has increased so much, that in most cities it's cheaper to buy a 2-bed home than to rent one.
=> Rent or Buy | How To Rent My House Training
Real estate investors need to consider whether or not this trend will continue, and what markets will be most and lease influenced.
Rent or Buy from an Investor Viewpoint
In addition to learning how to think like a tenant, real estate investors should also have a good feel for what direction real estate in their market is heading. While I never try to time the top or bottom of a market - that's a fool's game - what I do try to do is look at both the macro and micro trends whenever possible and then conduct a 'reality check' to see if the trend makes common sense.
One of the most important trends, and also a question I'm often asked by the investors I work with, is, "What's happening to prices in the real estate market?".
In other words, are they going up or down.
Up until the year 2000 or 2001, there was a pretty good correlation between income levels and home prices. This changed when money became easier and creative financing - think low or no-doc loans and interest-only mortgages - kicked in.
Common sense says that when you can finance something the price goes up, and the more you can leverage something the higher the price goes.
Jeffrey Roark
Property Management Training
How To Rent My House
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