Renting Vs. Buying NJ Real Estate

The advantages and disadvantages of owning and renting NJ Real Estate

When considering buying a home, the first and most important decision you will make is whether purchasing or renting a home is beneficial and affordable for you. In most cases, it is better to buy a home than to rent. Due to declining interest rates and housing values, buying NJ Real Estate is much less expensive these days in comparison to years past. In contrast, it is also less expensive to rent. If you are not planning to live in the same area for more than five years or you will likely be encountering a career change and anticipate your income to decline, renting a home is the more economical option. In addition, if you are starting a family or are thinking of doing so, keep in mind that your future home needs are likely to change in the coming years. In this case, it is more logical to rent a home suitable for your present needs and defer buying a home until you have a more settled family situation instead of purchasing a home that you will outgrow. Consider the following pros and cons list:

Renting Advantages:

  • Fixed payments for lease term
  • Low or no maintenance required
  • Freedom to move at lease conclusion
  • Renting does not require a large outlay of cash. Most rentals require a security deposit which is typically equal to 2-3 month's rent, but that is much less in comparison to what is normally needed for a down payment when buying a home. Monthly cash costs may also be reduced, as utilities may be included in your rent payment.

Renting Disadvantages:

  • No opportunity to gain equity. Although you are helping pay the owner's property taxes through your rent, you cannot claim any deduction for these taxes on your tax return. The owner is also gaining equity in his/her property, but you are not. Equity is increased value in any property you own. But, as a renter, you are not building any equity.
  • No tax advantages in renting
  • Limited or no ability to personalize space

Buying Advantages:

  • Balance of mortgage decreases and equity increases over time, regardless of home value
  • Complete freedom to redecorate or remodel
  • NJ Real Estate tax benefits available

Buying Disadvantages:

  • Costs vary for NJ Real Estate (i.e.: mortgage, property tax, maintenance)
  • Unstable equity: can increase, decrease or stay the same
  • If you choose to move, you generally must wait until the home is sold
  • Any maintenance and costs of the NJ Real Estate is your responsibility. All homes require upkeep and maintenance. In addition, many first-time home buyers cannot afford to hire a professional to fix things that break. Experts suggest you set aside 5% of the purchase price to cover maintenance and repairs when you buy a home.