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Renting vs buying property pros and cons, and how to move from renting to buying

11 November 2020 12:02 PM

A R1 million home loan costs about R7800 per month right now. What is your rent? What are the pros and cons of buying?

RELATED: Renting vs buying property – it’s an interesting calculation right now

Driven by record-low interest rates, many tenants, having made the calculation, are deciding to own – not rent - the home they live in.

Anecdotes suggest that once free-living and travelling Millennials are reconsidering their priorities and diving into the security of owning property.

Do consider the pros and cons of renting versus buying the home you live in, says property investor Grant Smee.

If you decide to buy, spend at least three to six months investigating the market before putting in an offer to purchase.

Related articles:

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Some pros of renting (for more detail, tune in at 10:30 am on Thursday)

  • It’s flexible. If you’re not sure where you want to be in the long-term, or if you’re unsure about your income or job, then renting is probably best.

  • Renters are not responsible for maintenance.

Some of the cons of renting

  • Paying rent is an expense. You are not investing, and you will not make any returns.

  • You are bound by the landlord’s rules.

Some of the pros of buying

  • You own an asset that can appreciate in value and earn a return.

  • You can renovate and decorate as you please.

  • You can earn rental income.

  • You can put savings in your home loan.

Some of the cons of buying

  • There are loads of hidden costs such as transfer and attorney fees.

  • You’re less mobile – if you need to move, it may take many months to sell.

  • Returns are not guaranteed. Property values can and do sometimes fall.

Smee offers the following tips on going from being a renter to an owner of property (for more detail, tune in at 10:30 am on Thursday):

  • Get a pre-approval.

  • Deposits: Build up a buffer.

  • Join forces if you struggle with affordability.

  • Consider low-cost, low-maintenance “lock-up-and-gos"; they rent out easily.

  • Consider “rent-to-own”.

  • Build up a good track record.

For more detail, read: “Tips to go from renting to buying” by Smee.

11 November 2020 12:02 PM

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