THE TOP REASONS "NOT" TO OWN A HOME
If you’re a renter, can you recall how many times you’ve been told: “Get in the game and buy yourself a property?” Or: “Wouldn’t you rather be paying down your own mortgage instead of someone else’s?”
Plenty, we’d bet.
Homeownership does indeed have many benefits, including equity building, asset appreciation, and having control over your own repairs and renovations. Buying a property, or multiple properties, can also be an excellent investment vehicle and can even help towards building long-term wealth for retirement.
However, the reality is that homeownership is a big step. When you buy a property, you have to deal with all the issues that go along with it. We thought we would offer up a list of reasons against purchasing a home, to help you make the final decision on whether homeownership is right for you.
Probably the most significant barrier to market entry is the down payment. The minimum amount required as cash-down on a principal residence is 5% of the house price with an insured mortgage. For a first-time buyer with a budget of $400,000, this equates to $20,000, and that doesn’t include the additional up-front costs that come with buying a home and that may comprise building inspections, land-transfer tax (the ironically-called “welcome” tax), notary fees, and more.
Interior Repairs and Maintenance
Any property will deteriorate if it’s not taken care of. If something like your furnace breaks down, you will either need to get it fixed by a professional, or replaced. You’re also responsible for dealing with issues like plumbing and electrical problems as they arise. If you don’t know how these things work or how much fixing or maintaining them can cost, you may be surprised by how quickly it can add up! Furthermore, if you want your home to appreciate in value to its maximum potential, you’ll have to ensure it remains attractive for potential buyers if ever you decide to sell.
Exterior Maintenance and Landscaping
All of the fall shutdown and spring cleaning chores that go with season changes can be extensive, especially if you have a large property, a pool or an impressive outdoor entertainment area. You will have to make sure the lawn is mowed and plants are watered in summer, and the driveway, decks and walkways are cleared in winter. If you decide to rent a home, you can negotiate that the cost of all these services is included.
Variable and Unpredictable Monthly Expenses
In addition to the ongoing repairs and maintenance associated with homeownership, there are also the unavoidable property taxes and home insurance premiums. As property values rise, so can the taxes. And because the largest monthly expense is the mortgage payment, it can also climb if interest rates increase.
Committing Yourself to Long-Term Responsibilities
Houses are not liquid assets and if you do need quick access to money, it may be tied up in your property. Some people might argue that they could just sell at any time in such a case, but real estate markets can be unpredictable, and in a slow market it can take months to sell a home, even if it’s competitively priced. This presents a challenge if you really need to cash out in a hurry. Therefore, if you are not ready to settle down, not in a stable situation in life or don’t have an established career with dependable income, owning a home could possibly make you feel trapped.
Less Responsibility, Reduced Liability
As a renter, you have far less responsibility than as an owner. If the roof leaks, it’s the landlord's responsibility to get it fixed. If the neighbour complains about a retaining wall, it’s not your problem. If things get really bad, you can move at pretty much any time. The majority of legal implications fall on the owner. As long as you pay your rent on time each month, you should have very little else to worry about.
There are many benefits to owning your own home, and it can be great to have something that's yours. However, if you decide that buying isn't right for you, don't worry! There are plenty of other ways to invest your money than through real estate acquisitions. At TEAM BROADY, we like to help you make informed decisions and understand the obligations of owning a home. If you or someone you know wants to buy or sell, don’t hesitate to contact us today. We can be reached at 514-613-2988 or by email at firstname.lastname@example.org.