The Renting vs. Buying a Condo Debate: A Guide for Newlyweds
Shortly after marriage, newlyweds often experience yet another huge milestone: moving to their first home as a married couple. And many are confronted with the question of whether they should buy or rent a condo. Renting a condo has its pros and cons, and so does buying a condo. So which one works for you best? Here’s a newlyweds’ guide to help you make the right decision.
Consider your long-term plans
Most often than not, newlyweds are not ready to take root just yet. Consider where you see yourselves in the next five years. Will you be switching careers or attending graduate school? Such life decisions may require you to move to another city or country, and may make renting a condo a better option. You do have the option of reselling your home, then profit from its appreciating value. But note that five years may be too short a time, and your property may not have appreciated enough in value and you could end up losing money in the process. There is the option though of leasing the unit out instead, so you could earn passive income. It all boils down to weighing the pros and cons relative to your own personal circumstances.
Evaluate your financial capability
Many newlyweds pay for the down payment through a loan from their parents or by using some of the wedding gifts they got. But this could only get you so far. Beyond just the down payment and monthly amortization, there are many other expenses to consider. You will have to pay for property taxes, insurance, and association fees. You also need to put aside a fund to cover monthly maintenance and home repairs. The advantage of buying a condo though is that you won’t have to deal with rental prices that are subject to volatile changes and could skyrocket unexpectedly.
Study the market
Real estate prices can be volatile in some markets. Check whether the business climate is just right for purchasing a home. You will be investing a huge amount of your hard-earned money, so this is not to be taken lightly. If the real estate market is in a rising bubble, your home’s value could easily plummet once the bubble bursts. Low housing inventory can also cause prices to rise, and could tempt you to buy a unit before the market escalates further. The best way to check if the prices are just right is by checking how they compare to the prices in the past few years. Fortunately, the real estate industry in the Philippines continues to be favorable for investors. And the supply is abundant enough to keep the prices viable for homebuyers.
Be ready with an exit strategy
Picture what you’d do when you finally have to move out of your home. Come up with an exit strategy. Should you decide to move to another city or country, will you sell your condo unit or lease it out? If the home prices drop, how do you plan to deal with it? If you will have to relocate quickly, how do you plan to cope if you aren’t able to sell or lease out your home just as quickly. Consider all the possibilities and be ready with contingency plans.
Take long-term costs into account
The long-term cost of renting can be huge in the sense that you won’t have anything to show for the monthly rental payments you’ve been making. On the contrary, you get to own a unit and earn equity if you’ve actually bought your home. The caveat is that buying a condo unit can come with additional, and sometimes unexpected, costs. As mentioned earlier, you will have to pay for taxes and insurance, as well as the occasional emergency repairs. It is also important to note that although you won’t earn equity when renting, you do get what you pay for in terms of the convenience you get from condo living and the transportation savings you make from the accessibility to key locations condominiums provide.
It’s not easy to compute which one costs more in the long run. As it is, it will all boil down to your own personal preference. If you’d rather avoid the responsibilities and commitment homebuying entails, you’d be better off renting. But if you are willing to take a risk on equity investments and maintenance responsibilities, then you may be ready to buy a home.
Consider the upfront costs
Not everyone has rich folks to run to or wealthy friends who can give out generous wedding gifts. If you are such a couple, your options may be limited. The question of buying or renting may be more a matter of practicality than preference. Beyond just the down payment, buying a condo unit includes other upfront costs such as closing costs, bank fees, and title fees. If you don’t have the money to cover these expenses, your choice may be limited to renting, which entails only paying a month’s worth of advance rental payment and security deposit.
Check whether you qualify for financing
Unless you could afford to pay spot cash, you will need to apply for a home loan. To qualify for a loan, you need to have an attractive debt-to-income ratio, a veritable proof of income, certified documents, and many others. Many newlyweds have yet to be established enough to have such qualifications, leaving renting a home their only option.
Consider your personality and lifestyle
If you and your spouse are the type of people who do not like having anyone tell them what to do, then buying a condo may be your best bet. Renting a condo will have you living by the rules, not only of the property management but the condo’s owner as well. Also, owning the condo will let you renovate it to your liking. You can design the interiors to match your personal aesthetics and the kind of lifestyle you have.
Now that you’ve considered the renting vs. buying a condo debate, you are ready to mull things over and come up with the option that best works for you. And now it’s down to choosing the perfect DMCI condo for your married life ahead.