Skip to content

To Buy or To Rent.

January 7, 2011

 New York is one of the countries largest metropolitan areas with an ever-changing real estate market. With average house prices dropping enough to make buying worth it, there are many significant pockets where renting is where it’s at (including Manhattan and the New York suburbs). This buy-vs-rent dilemma is at the forefront for anyone looking to move and is something real estate agents take into account when showing us prospective listings. The first thing to do is take into account the type of lifestyle you are looking to maintain, or even create. Are you a soccer mom with 2.5 kids, a husband, 2 dogs and a mini-van? If so, then having a home with yard space would be an important factor. A safe quiet neighborhood without too much street traffic, with good zoned schools would also highly impact the purchase choice. Now that you know what you want, the most important factor is how long do you want to stay? If Suzie soccer mom only wants to stay a year or two, then renting is more affordable. For a long-term stay, anything 6 years and over, buying is more financially stable.

According to an article I read in The New York Times, if a renter is spending  on the low-end $2000 a month for a home that has a purchase price of $300,000, after three years it becomes better to buy. Here’s why. Buying will save you an annual cost of at least $2,000 (that’s a month’s rent) because your home value is rising, which gives you a better sell back price, and in most cases property taxes, interest on the mortgage payments and portions of the common charges are tax-deductible. Home property values rise each year, especially for those homes with renovations (even in a struggling real estate market). Buying also gives a sense of security, a place that will be yours. You also have more financial flexibility with options like refinancing.

On the flip side, some people don’t want to deal with the hassle of being a home owner. Price hikes include maintenance, property taxes, renovation fees and homeowner’s insurance. You have a much larger initial cost and higher closing fees when you sell. Many people prefer to pay for a rental property where everything is taken care of for them. Aside from utilities, the only worry is how fast we can call the landlord when the heat isn’t working right. For people like me, who are a 1 person household (3 really if you count my me0w-meow’s) on a fixed income, buying isn’t always cost-effective. When problems arise in the house, like a broken boiler or roof damage, it’s easier to call the landlord than have to take on that expense ourselves. Buying also hinders the flexibility to move around, which many long-term renters appreciate.

So to answer that ever elusive question of whether to buy or rent, here it is. It depends on you. If you want to have the flexibility to move around every 2 years or so, then renting is the more logical and cost-effective solution. If you want a place where you can see yourself staying for 6 plus years, then buying will save you more in the long run. At GAI (, we would love to help you figure out which choice is the best for you by handling all your Tax & Bookkeeping needs. Call us at 212-979-6830 or stop by and we can help break down a budget and payment plan that works for both renters and buyers!

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: