Tag Archives: upfront costs of renting

Should I Rent or Should I Buy Now?

The real estate market has been dynamic over the last few years to say the least. The dramatic highs and lows have left many wondering if they should rent an apartment or buy a home. Each option has its own merits and drawbacks and it is important to figure out what is the best option for you right now. Consider these arguments during your internal rent vs buy debate.

 

Should I Rent?

 

Renting is a great option for those that are still trying to figure out what their plan is. Many cities have wonderful neighborhoods with distinct flavors and personalities. Renting gives someone the option to try out different neighborhoods and find which is the best fit for his or her lifestyle. Buying is an investment synonymous with putting down roots and many people want to know their surroundings before choosing where to settle.

Renting offers short-term commitment. The most common lease contract is for a year-long commitment and there are also short-term leases that can be from 3 months to 6 months and Tenancy-at-Will contracts which are just month-to-month commitments.

The ability to test out an area with little commitment makes renting seem ideal until you realize renting also means you are throwing your money away. Renting does not build credit or equity. In fact, by paying your rent, you are paying someone else’s mortgage and building someone else’s equity and credit.

The tax breaks for renters are limited. In Massachusetts, renters can only deduct 50% of the rent they paid in a calendar year with the maximum deduction for rent being $3000. Meaning if your rent is more than $500, you are not going to see any difference.

Another drawback is rent is always going up! Especially in high demand cities with low vacancy rates. What you could spend to get a one bed in the suburbs could maybe get you a closet in the city. Then there are also the upfront costs.  Unless you are moving into a rental complex that only wants first month’s rent, most owners want at least first and last month’s rent. Some will ask for a security deposit and if you are using a broker you will need to pay for a fee. To rent an apartment, you need to have 2-4 months rent saved at lease signing. Then there is the expense of actually moving: the boxes, the moving truck, movers, etc.

After you have an apartment, the landlord can be an issue. With thousands of landlords and even more tenants, each with a unique personality, it’s not possible for every tenant to get along with every landlord. Some will be great and others not so great and there is no way to tell which one you are going to get until after you are already in your lease. In the worst case scenario, this can make for a very long year.

 

Rent vs Buy: Which Best Fits My Lifestyle?

 

Should I Buy?

 

Buying a home can be scary at first. With all the horror stories throughout the nation (foreclosures, short sales, underwater mortgages, money pits, the inability to sell, etc.), it is easy to think that renting is safer than buying. Buying can be scary because it brings responsibility and commitment. Basically, it means becoming a grown-up.

Fortunately there are more reasons to buy than there are not to!

Sales prices have fallen and mortgage rates are at an all time low. The combination makes housing affordability as low as we have seen in a decade and possibly as low as we will see for the next decade.

There are more tax deductions for homeowners than renters. Homeowners can deduct their mortgage interest, property taxes, and certain home improvements also qualify for deductions.

When you are paying for your own property, you are putting your money toward building your own equity and credit. You are paying off your own mortgage rather than seeing your money go to someone else’s pocket.

If you buy your property as a long term investment, it is like putting money into the bank. The more equity you build, the more you can borrow for future purchases, such as renovations  to your home or your child’s college tuition.

If it is the responsibility and commitment that is scary, then buy a condo. The size won’t be overwhelming. Plenty of condos are located in professionally-managed buildings or buildings that have property managers to handle repairs and maintenance. In a few years, if you decide to move onto something bigger, you can sell the property but you could also rent it out and have someone else pay the mortgage and build your equity.

To learn more about buying or renting property, contact the Realtors of Matthew and Alisa Group Real Estate.

Schedule a consultation with a Realtor

Posted in Apartments, Buy Property, Condo, First Home, House, Real Estate Sales Market, Real Estate Tips, Rent vs Buy, Rental Property | Tagged , , , , , , , , , , , , | 2 Comments

Buying a Home: How Do You Know If You Are Ready?

If you have been searching for rentals in Boston in the last couple years, you may have noticed that it is tough. Inventory is limited and prices keep rising. There are three things renters can do. One: pay the rising rates. Two: look farther outside the city than originally planned. Three: stop renting and purchase. Many people today feel that investing in real estate is safer than investing in stocks and with good reason. Real estate in Boston has not been hurt as much as the rest of the country and rentals in the city are consistently in high demand. If you are on the fence on buying real estate, here are a couple signs you may be ready.

Buying real estate in Boston may be a better option than rentingOne: you know what you want. If you have a realistic idea of the size you need and the location where you want to live for the next few years and you  haven’t found it on the rental market, take a look at what is on the sales market. The rental market in Boston favors landlords. The inventory is limited and owners can get not only their asking price but also first month’s rent, last month’s rent, and security deposit (each equal to one month) and not have to pay a broker’s fee.

Two: you have the finances. The upfront costs of renting an apartment in Boston are higher than most cities around the nation. Many people looking for quality rentals in Boston  are surprised how little they get for the money. With many banks loosening restrictions on who can get mortgages, it is worth your time to speak with a mortgage broker about types of loans and available rates.

If you are weary of buying because you do not want to be locked into a mortgage on the chance your career moves you to another city, keep in mind that you could hold onto your home as an investment property. With a tenant paying rent, you can build equity while someone pays your mortgage for you.

Contact the Realtors of Matthew and Alisa Group Real Estate if you are interested in learning more about purchasing a home.

Schedule a consultation with a realtor

Posted in Boston Property, Buy Property, First Home, Real Estate Sales Market, Real Estate Tips, Rent vs Buy, Rental Property | Tagged , , , , , , , , , , , , , , | Leave a comment

Relocating to Boston: How My Brain Had No Part in the Decision

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Deciding to leave your hometown for a new one is a big decision and takes a lot of planning, none of which I did when I relocated to Boston. I relocated without much thought of what I was getting myself into. For those of you about to relocate to Boston, I would like to share with you a few things I wish I knew when I uprooted my life and made the move across the country.

I’m originally from Los Angeles, CA and I was often asked, “Why did you relocate to Boston?” I would say it was for a new adventure, I wanted real seasons, or I was tired of driving everywhere and wanted to live car-free. But the real reason was a boy. Yes, I am a hopeless romantic and, yes, it was the best move I ever made. My boyfriend had to move back to Boston and I came with him, his dog, and cat. I was lucky that he already knew the city and I relied on him entirely for what Boston neighborhood to live in, how much we could spend, how to find apartments…everything.

Relocate to Boston with Dog

Now that I’ve lived here for 4 years, the first year in Beacon Hill and the last 3 years in the South End, I wish there were a few things I knew before I relocated to Boston. One thing in particular was that the majority of Boston rentals are on a September cycle. We were looking in July for an apartment in August that would accept both a dog and cat. So not only was there limited inventory, we added the extra hurdle of needing a pet-friendly apartment. Fortunately, we did do our research, set up appointments with both owners and brokers, and were able to find an apartment in Beacon Hill.

Another surprise was the upfront cost of renting an apartment in Boston. Legally owners cannot ask for more than first month, last month, one month security deposit, and cost for a new key and lock. With Boston being one of the top three most expensive cities to rent, most owners will ask for all of it. If you use a Realtor, expect to pay another month’s rent for their fee. Sometimes the fee can be split with the owner, but Boston is an owners’ market and most owners do not need to split the fee because they know another renter will be willing to pay the fee in order to get the apartment. Not much would have changed if I had known beforehand about the upfront costs but I would have liked to not been blindsided.

I was lucky when I relocated to Boston because I had someone with me that had an idea of what we needed to do. If I had done it alone, I know it would have been too overwhelming. Fortunately, since I became a Realtor, I am now in a position to help with relocating to Boston with the full understanding of how hard it really is.

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