Renting or Buying - Why it's not just about money

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Renting or buying real estate which is better quora

Those who work in the IT industry usually earn a decent salary. For one or the other, if an ideally at least six-digit amount is in the account, the question arises at some point: Should I rent or buy a property? And if a purchase is favored: personal use or investment? The first answer to this question may surprise some readers of this text: renting or buying is not just a question of money.

Renting or buying real estate which is better 

Because even if there is enough money, i.e. at least 20 to 30 percent equity, to get a cheap mortgage loan to finance a property, this does not necessarily speak in favor of the purchase. Before that, you should think about whether you really want to have a property as a property and whether the home fits your own idea of an ideal life. But: when does it fit?

Who is more likely to buy for?

• For people who have always dreamed of their own four walls, perhaps also because they grew up in a house with a garden or in a condominium in the city.
• For those who feel more secure in their own home, not least because they no longer have to live with the risk of not being able to pay rising rents in retirement.
• For all those who have no problem with the fact that they owe a bank several 100,000 euros, and can sleep soundly, even if they know that it will now take them one, two, three decades to pay off the debt.
• For thrifty people who can cope with the fact that they (and their family) often have to budget more carefully, especially in the first years of debt repayment. And they also don't get in a bad mood if they can therefore go on vacation less once a year, eat less twice a month or have to drive the old car longer in order to have enough money for the annual special repayment.
• For potential owner-occupiers of a property who can and want to stay where they want to buy for the foreseeable future, because a change of job and location is not an issue for them.
• For all those who accept to become immobile themselves with a self-used property, as the name suggests (although a property in a reasonably good location can also be sold again).
• For private investors who have a good feeling when they can see what belongs to them and live in it, while they can't do much with a securities account with numbers on a screen.
• For hobby craftsmen who are not annoyed by the fact that their own house is doing work. Sometimes it rains in through the balcony, sometimes mold appears on a wall, sometimes the heating has to be serviced. There is always something to do, as experienced property owners know. Either the owners have to lend a hand or hire craftsmen, which is often not an easy task in big cities.

If you don't want to take all this on yourself, you probably live better as a tenant or tenant.

Then it’s better to be a tenant

Economic considerations can also speak in favor of this, not only because globally investing stock index ETFs have, at least so far, yielded better returns in the long term than real estate. What also speaks for renting: If you prefer to stay mobile and tenant, you will not get a "lump risk" into the house with your own property. This is the case when – as is often the case with many young families – all the money is in the property and there is nothing left for other investments.

And what is often forgotten: if you buy a condominium, you have to deal with other owners. You may have to agree with people with whom you don't really want to have anything to do privately on how to renovate the roof or install a heat pump, for example. In addition, you must be financially able to create reserves for renovation work that is due at some point, if you do not want to incur additional debt.