You are surfing the internet and saw a listing of a condominium unit for sale near your workplace. The asking price is Php 3.5M, with a 20% downpayment and Php 18,000 amortization per month for 20 years at 4% annual interest. Another condo listing with the same size is offered for rent at Php 22,000 per month.
To buy or to rent? That is the question.
The debate of buying vs. renting is never-ending with both sides full of valid points. One side says buying a home is a good investment while the other says buying is not a smart move. The thing is, different lifestyles have different dwelling needs. There are several factors to consider such as your financial capacity, needs, priorities, choice location and future plans. You have to think long and hard when making this decision. Here are some pros and cons of buying and renting to help you make your decision.
The Pros of Renting
Easy to Move In. Moving into a rental is easy. For most, you will only need to pay one month advance and security deposit to move in.
Hassle Free to Move Out. Moving out is as easy as moving in. Don’t like the landlord? Move out. Nosy neighbors? Move out. Reassigned to another location? You can move out and look for another place. However, note that your landlord might refuse to return your security deposit even without any damages or repairs incurred.
No Property Tax. As a tenant, you do not own the property. No property, no property tax.
The Cons of Renting
Increasing Rents. Taxes and repair in the condo complex are computed into your rent. However, should these costs go up or down, you have no control over annual rent increases.
Lease Deadline. Tenants have a monthly obligation to their landlords: lease payment. Say you had an emergency that put a huge dent in your budget and now you cannot make rent. What would happen? Some landlords will understand your situation and will give you an extension. Some landlords will not. For some, non-payment of three months’ rent is a basis of eviction.
No Equity. According to Miriam-Webster Dictionary, equity is the value of a piece of property (such as a condominium unit) after any debts have been subtracted. As a tenant, you cannot build equity, as you do not own the property. If an investment potential is what you are after, buying a condo is the way to go.
The Pros of Buying
Ownership. There is a sense of pride and security in owning your own condo. You can do with it as you please. You can paint your unit purple; install constellation patterns in the ceiling; renovate the kitchen, and own an exotic pet. Most of all, no one will evict you for late rent payments. There is no landlord to answer to.
No Payment Hikes. A mortgage has a fixed rate. Your developer will provide you the schedule of fees so to guide your check releases.
Build Equity. A condominium unit is a long-term investment that will appreciate over time. Eventually, it will pay for itself and if you play your cards right, can make you money.
The Cons of Buying
Money Down. Properties always cost a lot. Unless you have a truckload of cash to pay upfront, you will need to put a down payment and apply for a home loan application. Then there are the closing costs and the annual property tax.
Cost of Selling. When you are ready to put your unit on the market, you might already picture the money going into your bank account. Reality check, selling a unit costs money too. First, you will need a real estate agent, which costs up to 7% percent of your unit price in commission. Then, you will need to show house either through an open house or web listing, in which you will need to touch up the unit and fix the minor and major repairs. Lastly, there is the closing cost. Closing costs are expenses over and above the property price including Capital Gains taxes, transfer tax, documentary stamps tax, title registration fee, and notary fees.
Maintenance. The least of a renter’s concern is the maintenance and repair of the unit. Condo owners, on the other hand, is responsible for all the repair and maintenance of the interior of their condo. You will have to buy and change that busted light bulb and call your plumber for that clogged toilet.
Buying or renting a property is always a big financial decision. Your choice would be dependent on your priorities, plans, and finances. Federal Land has options that can give you the best of both worlds with their Lease to Own payment plans.
With Federal Land, owning your first condominium is easy. Just contact a representative to inform us of your intent to buy, provide a government-issued ID and a duly filled-up BIR Form 1904/1903, fill up the reservation application form and buyer’s information form, pay a reservation fee at MetroBank and viola! The unit is booked under your name. And we are ready to start your home loan application through in-house or bank financing.
Made up your mind? Check out these least to own properties just for you. Or email us at [email protected] for more information.