Investing | The Kwak Brothers

Buy vs. Rent: Do You Know What's Better?

Buying a home has great benefits, but so does renting. In this article, we break down the financial pros and cons, and talk about common lifestyle differences to help you determine which is better; buying or renting.

Homeownership has long been considered an integral part of the American dream. However, deciding whether to buy or rent is not always an easy task. It largely depends on your lifestyle and financial ability. But both renting and home-buying demand a consistent source of income, and may also involve some effort to uphold. Which one is right for you?

We will cover the following topics:

  • Advantages of Homeownership
  • The Disadvantages of Homeownership
  • The Benefits of Renting
  • The Disadvantages of Renting
  • Buying a Property As An Investment
  • Conclusion

Of course, there are obvious differences between renting and owning property. There are benefits to each, and downsides to each. You may not have all of the responsibilities of homeownership when you rent a house, but you might find that you’ll have more free time since you are not tied with homeowner duties. On the flip side, owning a home allows for more freedom and customization, it also offers potential financial benefits, if done right.

Renting isn’t always a better option than owning a home, and owning a home isn’t always as simple as it appears. Let’s discuss some of the fundamental differences between renting and buying.

Advantages of Homeownership

While homeownership is costly, it comes with several benefits, here are the most common advantages of owning your own home. 

  1. Tax Advantages

Homeownership can qualify you for some tax benefits like the homestead exemption and federal tax deductions, which allow you to itemize your federal income taxes and deduct property taxes and mortgage interest, lowering your overall tax burden. When you own your home, you can deduct your property taxes and mortgage interest. However, the tax benefits are directed to your landlord when you rent.

  1. Increasing Your Investment Over Time

Buying a home, unlike renting, is an investment. That means you create equity as you pay off your loan; owning a little more of the house until it’s paid off in full. You also profit from the increase in value of your home over time. Home upgrades can enhance the overall value of your property, making it easier to refinance when you need more money and worth more in profit if you ever decide to sell.

  1. Potential Income Source

One of the most appealing aspects of owning a home is doing whatever you want with it, including using it for passive income. You can transform your home investment into a source of income by renting out rooms, floors, or even the entire house to renters if you’re comfortable with the idea. This creates additional cash which is great. Just make sure to pay attention to your local rental property requirements.

  1. Establish Your Roots in the Community

Because homeowners invest time and money in their property, they are more likely to stay longer than the average renter, establish roots in the neighborhood, start families, and participate in their communities than a temporary apartment renter. Owning a home will offer you a sense of belonging and motivate you to participate in community activities such as associations, clubs, volunteer organizations, businesses, and more.

  1. Your Home Can Be Customized To Suit Your Needs and Desires

Owning your own home opens up a world of creative and decorative possibilities, from painting and hanging art on your walls to DIY renovation projects. Your house is a blank canvas for you to paint on – it’s time to get creative with your home! In addition to this, you can finally get your “man cave” and garage the way you’ve always wanted, or a pool in your backyard.

The Disadvantages of Homeownership

Ok, so we’ve seen some pretty great aspects to owning a house, what could the drawbacks be?

  1. Maintenance and Repair Costs

Suppose you have a problem with plumbing, electricity, broken appliances, or other issues in your rental unit; you can contact your property manager responsible for handling and paying for maintenance and repairs. But as a homeowner, you are solely responsible for all expenses that come with repair and maintenance.

  1. High Upfront Costs

If you rent a house, you do not have to worry about high upfront costs, such as a down payment, earnest money, home assessment, and more, unlike if you buy a house. Although renting typically has a security deposit, a down payment on a house is much higher, and not everyone can afford right up front.

  1. The Risk of Financial Loss

The value of a home can rise over time. Or drop. While you have the opportunity to create equity and profit, you also face the danger of losing money on your investment if the value of your property drops, depreciating your assets according to the local or national market. Are you still paying off your mortgage? Check here to see if you can pay it off faster. 

  1. Financial Long-Term Commitment

When you buy a home, you’re signing up for a long-term commitment to care for and pay for it. The purchase of a home is a substantial financial commitment. You’ll have to keep putting in money over time, from mortgage payments to maintenance, repairs, and upgrades. But it can be possible to cut your mortgage payments down significantly, but can you really pay off your mortgage in 5-7 years? Sam doesn’t just think so, he’s seen hundreds of people become debt free! 

  1. Long-Term Responsibbility Commitment

You might want to think twice before buying a house if you aren’t ready to put down a long-term commitment. A move in the future will also require you to go through a complicated selling process. You’ll put time, money, and maintenance into your new home.

The Benefits of Renting

Modern apartments are appealing to many people for obvious reasons. They offer a lot of flexibility and ease of transition. If you’re already renting a single family home, or apartment unit, you’ll know most of these, but here are some benefits and drawbacks to consider if you’re considering renting:

  1. It’s Easier to Relocate

Apartments provide an easier move-in and move-out procedure, which offers your lifestyle some freedom. There is no lengthy sales process if you need or want to move away at any point. It’s as simple as waiting until your lease expires and then departing.

  1. There Are No Costs For Repairs or Maintenance

If you’ve ever rented, one of the greatest things about not owning the property you’re living in is  not having to manage repairs. The downside is if you don’t have an attentive landlord, you may have to live with a broken faucet for your entire lease. But typically, you won’t have to worry about scheduling repairs or budgeting for costs if a plumbing burst or an appliance breaks down. Your property manager handles all maintenance and repairs, so all you have to do is make a phone call when you need help.

  1. More Flexible Credit Terms

While purchasing a home necessitates higher credit scores and more thorough background checks, renting an apartment is less strict. You’re likely to be authorized for the lease you desire if your credit score is good and you don’t have any bankruptcies on your record.

  1. Most Fees Are Clumped Into One Rent Payment

Most apartment complexes and units include utilities in the monthly fee, saving you money and time, while homeowners can pay hundreds of dollars per month for utilities. Utilizing the included utilities will make your life easier, trust me.

  1. Location, Location, Location

Apartment complexes are more likely to be found in great locations near the best shopping, attractions, nightlife, and other entertainment. Yes, those apartment units can be pricier, but you can get an apartment in places that buying is not possible, for example, the apartments above the shopping centers.

  1. Up-Front Costs Are Lower

Like mentioned before, apartment rentals do not include the upfront costs associated with buying a home. Yes there are costs up front, but typically the only thing you need to pay is the security deposit and the first month’s rent.

The Disadvantages of Renting

Aside from the numerous advantages of renting an apartment or single-family home, there are disadvantages, too:

  1. There Are No Federal Tax Advantages

Because your apartment isn’t your property, you won’t be able to claim any tax exemptions as a tenant. 

  1. There Is No Long-Term Accumulation of Equity

Homeowners bear a greater share of the costs of purchasing and maintaining their homes, but they can also benefit from accumulating equity. In contrast, renting an apartment may be more convenient but it does not provide you with the opportunity to invest in your home’s value over time. Some people consider this like “dumping money down the drain”.

  1. Less Oversight of Ongoing Costs

Your rent is fixed for the duration of your lease, but can vary if you renew or sign a new lease. You’ll have little say over how much you pay each month in the future. If you pay your rent on time, are a good tenant, and keep good terms with your leasing agent, you could possibly avoid hefty increases, but it isn’t up to you.

  1. Your Landlord is Gaining WhileYou Are Losing Financially

When you pay your rent, your landlord earns the equity the property gains. If you own your home, the benefits of your investment go directly toward your net worth. Rent will continue to increase, as your landlord is entitled to increase the rent as he wishes.

Comparison of Buying & Owning

Buying Property As An Investment

When you pay your mortgage, you build equity that builds on your financial wealth. As with any investment, success depends on a variety of things like location, economy, maintenance, and environmental issues that can all impact the house’s overall value. If you’re new to property management or real estate investing, make sure you get connected to groups, individuals, or nearby events. 

If you haven’t heard, real estate investing is a second language to Daniel and Sam, they have plenty of experience, and have used their knowledge and experience to train, coach, and educate many people to become successful in many areas of real estate and raising capital. Check out their book on how they went from 0 to 75 units in just one year!

Conclusion

So which is it? Is renting or buying property better? After looking at buying and renting from different angles, here are our final thoughts to help you decide if you’re ready to own a home of your own.

First and foremost, this decision really depends on you. If you want to stay in once area for several years, and more freedom to do as you please with your property, buying a house is most likely the best choice. Along with the physical benefits of tax deductions and equity, homeownership provides intangible benefits such as a sense of stability and the joys of ownership. But, if you like the freedom of moving around more often, and don’t want to be bogged down by legalities and homeowner responsibilities, renting is going to be your “happy place”. It really boils down to your financial situation , lifestyle, and personal aspirations, this will help you decide whether you rent or buy a property. 

Both offer you a place to live, which is the main function of a home, but both require that you have a steady source of income to make the payments. All that said, ultimately, you’re the best one to make the decision because you know what you want.

What is your style, owning or renting?

Sam Kwak talks about the difference between renting and buying. Watch it now! Be sure to subscribe to the channel!

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Lydia Wanjiku

Lydia is one of our content writers. She has experience in sales, social media, and in marketing communications. Her interests range from photography to writing, and entrepreneurship to the great outdoors.

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May 14, 2022

Buy vs. Rent: Do You Know What’s Better?

/*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-image{text-align:center}.elementor-widget-image a{display:inline-block}.elementor-widget-image a img[src$=”.svg”]{width:48px}.elementor-widget-image img{vertical-align:middle;display:inline-block} /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px} Buy vs. Rent: Do You Know What’s Better? Buying a home has great benefits, but so does renting. In this article, we break down the financial pros and cons, and talk about common lifestyle differences to help you determine which is better; buying or renting. Homeownership has long been considered an integral part of the American dream. However, deciding whether to buy or rent is not always an easy task. It largely depends on your lifestyle and financial ability. But both renting and home-buying demand a consistent source of income, and may also involve some effort to uphold. Which one is right for you? We will cover the following topics: Advantages of Homeownership The Disadvantages of Homeownership The Benefits of Renting The Disadvantages of Renting Buying a Property As An Investment Conclusion Of course, there are obvious differences between renting and owning property. There are benefits to each, and downsides to each. You may not have all of the responsibilities of homeownership when you rent a house, but you might find that you’ll have more free time since you are not tied with homeowner duties. On the flip side, owning a home allows for more freedom and customization, it also offers potential financial benefits, if done right. Renting isn’t always a better option than owning a home, and owning a home isn’t always as simple as it appears. Let’s discuss some of the fundamental differences between renting and buying. /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-social-icons.elementor-grid-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-mobile-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-tablet-0 .elementor-widget-container{line-height:1;font-size:0}.elementor-widget-social-icons:not(.elementor-grid-0):not(.elementor-grid-tablet-0):not(.elementor-grid-mobile-0) .elementor-grid{display:inline-grid}.elementor-widget-social-icons 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.elementor-icon.elementor-social-icon{border-radius:10%}.elementor-shape-circle .elementor-icon.elementor-social-icon{border-radius:50%} Facebook Instagram Twitter Reddit Mail-bulk Advantages of Homeownership While homeownership is costly, it comes with several benefits, here are the most common advantages of owning your own home.  Tax Advantages Homeownership can qualify you for some tax benefits like the homestead exemption and federal tax deductions, which allow you to itemize your federal income taxes and deduct property taxes and mortgage interest, lowering your overall tax burden. When you own your home, you can deduct your property taxes and mortgage interest. However, the tax benefits are directed to your landlord when you rent. Increasing Your Investment Over Time Buying a home, unlike renting, is an investment. That means you create equity as you pay off your loan; owning a little more of the house until it’s paid off in full. You also profit from the increase in value of your home over time. Home upgrades can enhance the overall value of your property, making it easier to refinance when you need more money and worth more in profit if you ever decide to sell. Potential Income Source One of the most appealing aspects of owning a home is doing whatever you want with it, including using it for passive income. You can transform your home investment into a source of income by renting out rooms, floors, or even the entire house to renters if you’re comfortable with the idea. This creates additional cash which is great. Just make sure to pay attention to your local rental property requirements. Establish Your Roots in the Community Because homeowners invest time and money in their property, they are more likely to stay longer than the average renter, establish roots in the neighborhood, start families, and participate in their communities than a temporary apartment renter. Owning a home will offer you a sense of belonging and motivate you to participate […]
May 3, 2022

Pay Off Your Loan Or Invest? Know What’s Better For You

/*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-image{text-align:center}.elementor-widget-image a{display:inline-block}.elementor-widget-image a img[src$=”.svg”]{width:48px}.elementor-widget-image img{vertical-align:middle;display:inline-block} /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px} Pay Off Your Loan Or Invest? (Know What’s Better For You) Advantages Paying off your mortgage early is generally a good thing. Having debt is something none of us want to have on our “to-do” list. But if you’re trying to increase your financial peace of mind, maybe it’s not the right first step, but maybe it is. How would you know? It’s advised to pay at least slightly more per month on your mortgage, especially for individuals who have just received a raise in their income. This method will help you finish early. But, what are other benefits of paying off your mortgage early? Savings on your interest. You get to make potential interest savings on a reduced principal amount that could have accrued earlier You become debt-free! Paying off your mortgage early means no more interest payments, no more debt! It is very liberating to have a home that you can call 100% your own. You can invest the interest amount that you are making in the monthly payments on other projects You mature into financial independence. By becoming debt-free, you can prioritize your investments and channel your funds to other various projects You become creditworthy. By becoming debt-free your credit score definitely goes up, how great is that?! There are other methods, too. If you want to know how you can pay off your mortgage faster, The Kwak Brothers have developed a method, and many of their clients have benefited greatly from it. It’s called Accelerated Banking, and you can read more about how to pay off your mortgage faster here.   Disadvantages With that settled, paying off your mortgage is not always a walk in the park. Here are some of the disadvantages associated with early mortgage repayment. Reduces your savings. Speeding up clearing your loan may force you to cut back on the amount of savings you have. It means that you may lack some cash to cater to your financial emergencies at the end of it all You may be missing out on important tax deductions. Yep, that’s right! You may be forced to miss out on important tax deductions on your mortgage interest payments by making early payments. Such write-offs increase your capability of a refund and lower your taxable income for those paying a mortgage You cut back on other types of investment choices. You may risk cutting back on meaningful investment decisions that would ultimately reap better returns in the future. These include the stock market and other riskier investment choices but have better returns for you. You may be forced into making prepayment penalties. Depending on the type of lender, you may realize that you are making payments on your penalties for early payment. While this is usually dependent on your mortgage lender, it may compromise your pay since such payment may reduce the payment pegged on the outstanding balance so definetly ask your lender if this applies to you /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-social-icons.elementor-grid-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-mobile-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-tablet-0 .elementor-widget-container{line-height:1;font-size:0}.elementor-widget-social-icons:not(.elementor-grid-0):not(.elementor-grid-tablet-0):not(.elementor-grid-mobile-0) .elementor-grid{display:inline-grid}.elementor-widget-social-icons 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.elementor-icon.elementor-social-icon{border-radius:10%}.elementor-shape-circle .elementor-icon.elementor-social-icon{border-radius:50%} Facebook Instagram Twitter Reddit Mail-bulk Investing Before Paying Off Your Mortgage Investing extra cash in savings can lead to a better and more stable financial future. Savings can be in bonds or other forms of retirement funds. Monetary savings are an investment for your future or in case of any emergencies. We live in unprecedented times, […]
August 12, 2021

Eviction Moratorium: Hidden OPPORTUNITY For Investors

Eviction Moratorium: Hidden OPPORTUNITY For Investors. The eviction moratorium has been a major issue in the real estate investing world. It’s big enough to really drive away some current property owners, forcing them to sell their properties to avoid the headache that the eviction moratorium has introduced into their lives. “One man’s trash may be another man’s treasure”. And with that, there are currently and soon to be, A LOT of opportunity, especially with motivated landlords who are looking to sell ASAP, so in this video, we talk about what to look for when looking to get into real estate using the eviction moratorium to your advantage!
May 30, 2020

Real Estate Market – New Stimulus, the Foreclosure Wave, and Crash

Watch This Article In Our Video: https://youtu.be/QPbsT7sfaoE Here is the latest on the Real Estate Market update. We have a guest commentator joining us for the video. We have Al Curiel who has over 35 years in real estate and investing. Al is going to shed some of his expertise and experience in the current real estate market, where we’re headed, and are we going into another real estate market crash and recession? Many YouTubers and experts have predicted some kind of a real estate market crash or a recession for this year but no one has predicted the pandemic. We’ll give you the latest outlook on the real estate market and what the next 3-6 months could potentially look like. Our guest today shares his take on the current economic outlook, the real estate market, and how the new Stimulus programs are impacting the overall economic activity. Al believes that the real estate market could continue to take a nosedive and possibly a recession coming soon! This could also be mean a wave of distressed properties such as foreclosures, short sales, and loan modification. Here are couple of things as a summary that is happening in the economy: 1.) Quantitative Easing – the government is essentially printing more money. 2.) The GDP is dropping to -6.3% according to the JP Morgan Report. 3.) Unemployment is back to double digits which is something we haven’t seen since the Great Depression
May 16, 2020

HEROES Act Impact on Landlords… (FULL BREAKDOWN)

Canceling ALL Evictions Up to A Year, Additional $1200 Stimulus check for all, and automatic forbearance on all mortgages… We have A LOT to unpack on the HEROES Act (HR 6800), recently passed by the House. Hey what’s going everyone, this is Sam Kwak here with the Kwak Brothers! In this blog article, we have quite a bit to unpack and breakdown on the latest HEROES Act that was introduced on May 12th, and just yesterday, it was passed on the House Level. Remember, this isn’t law just yet. It has to be passed by the Senate and signed off by the president until it goes into full effect. Like I mentioned above, the HEROES Act contains provisions on canceling evictions up to a year, an additional $1200 stimulus check to all, automatic mortgage forbearance for all mortgages… Wait a minute… Why does all of this sound oh so familiar…. (Scratch Head) Well that’s right… this is just a proposal that pretty much combined all the little proposals that we’ve seen in the last few weeks. It’s like the Power Rangers where these robots combine together to form a bigger robot. So in the HEROES Act, we’re seeing a little bit of the Rent and Mortgage Cancellation Act, Emergency Money to the People’s Act, BOOST to Communities Act, It’s just a melting pot of different proposals that we’ve already seen. Additional $1200 Checks For All So the first point I want to break down in the HEROES ACt is the additional $1200 part. We’ve already seen this in the CARES Act but we’re seeing it again where individuals will receive another $1200 check like CARES Act 2.0 12 Month Eviction Ban The next MAJOR proposal that affects real estate and my landlords watching this is the EVICTION Ban of all rental properties for up to 12 months + 30 days of the expiration period. So really, let’s just call it 13 months. https://www.congress.gov/bill/116th-congress/house-bill/6800/text?r=48&s=1#H08F7433353DD4495A176F0F1EA246785 This provision covers all rental properties with a lease or without a lease. So even if your tenant is on a month-to-month lease, a non-payment of rent will not be a cause to filing an eviction. Now, I get that this is meant to protect the tenants from the worst of us but this provision would only cause the tenants NOT to pay the rent because there’s ZERO consequences of doing so. A perfectly awesome tenant whose been paying rent won’t face any eviction action if they choose to stop paying rent. Now, I think most of the tenants out there will be sensible about this and will try to be nice about it but we’ve all experienced tenants who (sigh) often take advantage… I mean I get a 2-3 month eviction ban but 12 months… I think that’s pushing it… Automatic Mortgage Forbearance That leads me to my next point where the HEROES Act also includes a provision for an automatic forbearance up to 60 days, and borrowers can request a forbearance of up to 12 months. https://www.congress.gov/bill/116th-congress/house-bill/6800/text?r=48&s=1#HF0A26A1A97EA45639C5B70528CFF9EA4 https://www.congress.gov/bill/116th-congress/house-bill/6800/text?r=48&s=1#H5F3A35D4EDD24FB5ACC3B6B4E1B7093A Now I did make a video about how mortgage forebearance can have a negative impact on the borrower’s ability to obtain future financing AND could lead to a massive wave of foreclosure because many banks may demand a lump sum payment at the end of the forbearance period. But the HEROES act decided to close that loop by specifically addressing those concerns by adding other provisions to stop the credit bureaus from reporting negative reporting on the credit report https://www.congress.gov/bill/116th-congress/house-bill/6800/text?r=48&s=1#H6F4CB18340AA472FA408B563D1264BB8 And also preventing lenders from collecting fees, charges, interest, and lump sum payments from the borrowers due […]