If you are still paying that high rent, it might be time to reconsider your position. No doubt it was painful as your rent was raised, or you had to bite the proverbial bullet to get someplace to live when you signed your lease at such a high rate. Not much one could do at the time when you needed shelter, and there really aren’t a lot of rentals available now, but you might reconsider your perspective. The rents rising as they did when they did is not unlike the interest rates going up today. The effect is the same, you have several hundred dollars of increased expense for the same item. In reality, you have more to gain when you are “overpaying” with an ownership status when you buy than paying the high rent to an investor and buying his home for him. If you can’t buy now, that is your plight, but it is amazing how many people don’t realize how easy it really is to own a home. Home ownership affords you stability, you don’t need to worry about the landlord raising the rent or kicking you out so his child can live in the unit. You own it and you call the shots. You can paint the rooms whatever color you want, change the flooring and kitchen fixtures, build a fort in the backyard, etc. It is yours to do with what you want. Renting, however, exposes you to unexpected and unwanted change with little warning. Another advantage to owning is the benefit of savings on your income tax. You can deduct the interest you pay on your loan, which is the bulk of your payment in the beginning of your loan period. You can also deduct the real property tax that you pay. You were paying all these things in your rent payment and the investor benefited from their ownership status. Another advantage to owning is the potential for appreciation. As the value goes up it creates equity for you, profit when you sell. Your return can be quite amazing if you are in your property with a low or no down loan. For instance, if you get a $0 down VA loan and you sell for a profit of $100,000 after owning for a period of time, that $100,000 is returned on a zero-dollar investment. Think about it. The same holds true if you have a 3.5 percent down FHA loan of course, you just have a little less spectacular ROI, Return on Investment. That scenario is what is known as a cash-on-cash return. Technically, you would measure the cash flow against the investment, but in this case, we’ll just say it is an emotional return on the investment until you sell. Call it literary license if your accountant questions you. Contact a reputable lender and find out what you can borrow today. The good news for you is that the housing inventory is increasing as sellers are entering the market not wanting to miss out on these high prices, and some of your competition is getting nervous and watching. It is a balanced market now, so you won’t have the frustration you experienced if you put your toe in the real estate pool anytime in the last year or so. Talk to your lender, get a good agent, and see what you can get done. You will likely find that your house payment isn’t going to be that much more than the high rent you are currently paying, and you could well be in a wonderful position to enjoy the wonderful feeling of home ownership. As usual, set your goals for what you want in a home, so you don’t compromise your wants and needs when you buy. At least you’ll “get what you need” in the immortal words of Jagger/Richards. Rent vs. Buy is always an interesting comparison. With rents as high as they are it is especially interesting today. Enjoy the process and the positive results of your engagement in it whether you buy, or not. When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, BS.3481, 775-781-3704. dpwtigers@hotmail.com
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