Time to make a Pro and Cons List
Pro
- Living in this house is slightly cheaper than living in a similar house – At least $200 – $300 a month cheaper.
- Sense of Ownership and Pride
- Can do whatever you like to your home
- Rent does not go up (except an increase in tax, that usually also increases rent)
- No possibility of being throw-out of your place due to default of landlord
- Your house can appreciate
- Something about owning a home, makes you “honest”
Con
- Something Breaks, its your problem – Financially and Emotionally. Furnace, Roof, A/C, Water Pip Breaks, Foundation Issues, Toilets, Dishwasher, Fridge, Oven, Washer, Dryer, Water Heater and everything else you can’t think of until it happens. A house is like a living creature that requires upkeep on major components. It’s a bit of a gamble actually – You might go 5 years with no problems or you might get 5 problems in 1 year.
- As SOON as you buy your house, you most likely lost 6% of your home value – if you bought at Fair Market Price from a broker. Lets say you bought a house for $200k. You want to sell it the next day? Maybe you can find another buyer for $200k – Then you have to pay $12,000 in commissions to sell it. Most likely you are out 6% the day you move into your home.
- Improvements to your home rarely result in an actual gain.
- I did a rehab for approximately $25k, but it also made me realize how valuable my time can be to me. If you valued my time at even $10 an hour that $25k would quickly become $35k at least. My father also contributed a lot of time as well – Trust me, the time I put into this home — It was a loss. I did enjoy the process however (for the most part).
- Although I am saying that it “costs” me $795 a month to own – that is if you count the equity against the cost – That means its actually $960 out of pocket a month. I might be able to find a house this size for $960 if I find a desperate landlord.
- You are not flexible to leave for job opportunities
- You are not flexible to leave for preferences of home. (Maybe you thought you would like your place but quickly found you want something else)
- You have to put up with stress of selling your home when you actually do sell the house. (This can include bids / lowballs offers / inspections / concessions / brokers and realtors / loan officers / etc.)
- Your house can depreciate
- You tend to find ways to spend large quantities of money, that even infrequently can add up. (I want new carpet, I want a new vanity, etc)
- The larger the house the more it costs to heat and furnish your home.
- Less Free Time – Think – Yard Work and “To Do Lists”
- Things you can even plan – Dead Tree in the back of your yard? – That’s going to cost you.
- Bad Neighbors – Can’t relocate after your lease
- Very good chance that once you “dig in” to your new home – you are going to find problems, possibly costly ones even after inspection.