San Luis Valley Colorado Board of Realtors
Four Tips on renting or buying a unit
SLVBOR understood that everybody wants to buy a condo or their dream house. People spend a lot of time and money just to be able to afford a roof they can call their own. As a corporation that sells plenty of property here in San Luis Valley, Colorado, nothing would please us better than to sell out all the properties we have on hand. SLVBOR knows the what are the most important factors to consider when thinking of buying or renting out a condominium.
Several factors are at play when deciding to rent or purchase a condo unit. There are pros and cons to renting, and also there are pros and cons to buying your very own unit. Speaking of which, here are some ways to find out which makes more sense financially.
1) Price Comparison of Condominium Units
Needless to say that in every purchase you want to make, it is only natural instinct to look for three or more other properties. Make a spreadsheet of all the list of properties, with their prices, and make a comparison based on what you prefer.
There is a condominium for sale that is on an installment basis. While many actually may want to consider this option, just remember that no one will let you get that best of a deal when it’s about business. It is like having a loan from a bank; interests never feels right to pay.
2) Calculate the price-to-rent ratio
Price-to-rent ratio refers to the measure of a property’s relative affordability based on the ratio of its price to the rate of annual rental. It’s not as complicated as you think it is.
In calculating the said ratio, find a condo for sale and condo for rent with the same features and unit size. You may also consider comparing the rate of a condo unit if you are going to buy or rent it.
3) Determine the household income
Household income is one crucial aspect of deciding whether to rent or buy. You must have a good grasp of what you will be earning in the next three years.
However, if the total price exceeds your earnings within the said period, it would be much better to rent or look for another location (probably a near-city neighborhood) if you want to own a condo.
4) Compare the long-term costs
Condo ownership starts to pay off through building equity. However, a condo owner may only reap the reward of owning a unit after five years of ownership. This is enough time to recoup the initial investment.
If you are planning to marry and start a family in a couple of years and if your income permits, consider purchasing a unit. A condo unit is an excellent option for a small family.
There are instances when buying makes more sense financially compared to renting.
Bottom-line, you need to consider your circumstances especially financially before you make a life-changing decision.
Here is a video presentation about the ups and downs of Renting and Buying a home