Always ensure that the rent or shortfall on the property you live in is well within your means. Avoid stretching your budget for the sake of living in a prestigious area or owning a home that’ s too large for your current needs.
AFFORDABLE HOUSING
When Renting Is Better Than Buying Not all properties are suitable for investment, and in some cases, renting the home you live in may be the better option. Here’ s why renting could make sense:
1. Cost Efficiency If you want to live in a location where property prices are exceptionally high— like an exclusive area near top schools or business districts— it may not make financial sense to buy. Renting in such areas can be far more affordable.
2. Capital Allocation Renting frees up capital that you can use to invest in high-yield properties elsewhere. Instead of tying up your funds in a home that doesn’ t generate income, you can focus on building a portfolio of investment properties with strong rental returns.
3. Reduced Responsibility As a tenant, you don’ t have to worry about maintenance, rates, or taxes. These costs are borne by the landlord, giving you greater financial predictability.
4. Flexibility Renting allows you to move easily if your needs change— whether it’ s a job relocation or a desire to upsize or downsize.
Avoid Overextending Yourself A common mistake people make is justifying expensive home purchases with the belief that“ my home is an investment.” While it’ s true that property can appreciate over time, the home you live in is often more of a liability than an asset, as it doesn’ t generate income.
Always ensure that the rent or shortfall on the property you live in is well within your means. Avoid stretching your budget for the sake of living in a prestigious area or owning a home that’ s too large for your current needs.
58 REI MAGAZINE DECEMBER 2024 / JANUARY 2025