4 Important Financial Facts For Renters

4 Important Financial Facts For Renters

Have you thought about how much you’ve spent on rent to pay off someone else’s mortgage? If not, you may want to think about this. Let’s say you’ve been renting for the last 5 years with an average rent of $900/month. That’s $54,000!

What have you gotten for your $54,000? A place to shower, eat and sleep. A place to have friends over. A place to store your things, such as furniture. If you moved to Austin from a different area, renting for a time is a good way to get to know the city and figure out where you belong. If you’re a recent graduate, you may need time to build credit and employment history.

What have you not gotten for your $54.000?

  • Pride of ownership. Owning a home can provide a sense of accomplishment, stability and security. When you own a home, the changes you make reflect who you are or who you want to become. Painting the walls, changing the flooring, adding new fixtures all reflect your personality. 

  • Freedom from helplessness. Contacting your landlord or management company and waiting for a repair to be fixed can be irritating, especially if it’s something you could correct on your own. Not to mention all the little things you pay for without reimbursement for your rental such as lightbulbs, carpet cleaning, cleaning supplies (I couldn’t move in somewhere without cleaning it first- ew!) and the time it takes to maintain your rental unit each month—how much is your free time worth? These little things add up. In the end all the time and money you’ve invested in your rental is gone, it’s an extra added value to your landlord and for the next occupant.

  • Is home ownership for everyone? The truthful answer is no. Many people, such as young professionals or single persons who are just starting their careers may move frequently to further their professions. Career professionals who travel frequently may not see the need to invest in home ownership when they’re not around to enjoy or maintain a residence. For some, renting is less expense than home ownership if they can find suitable housing for a reasonable value.

  • What is the biggest benefit to owning a residence? From a financial perspective, it makes good sense to own property. That $54,000+ you’ve spent on rent and the personal investment you’ve put in to your temporary housing could have been giving you financial gain. Home owners benefit financially by deducting interest paid on their taxes. The principal you pay each month to pay down your mortgage is like money in the bank in the form of equity. Sure, the market values fluctuate, but any profit you earn upon selling is tax free--$250,000 for single and $500,000 for married once you’ve lived in your residence for a total of two years out of five years! Priceless.

Did you know the Austin median home price has gone up by 9% from May 2014 to May2015*? That may not sound like much until you realize that $225,000 home will now cost you $245,250! According to Census Data from the City of Austin Demographer, Austin’s growth rate is expected to rise 150% over the next 35 years. What this translates to is housing in Austin area will most likely continue to rise in price. The question is how long you are willing to think about purchasing. Contact me to schedule a home buyer information appointment!

*ABOR May 2015 MLS Market Report

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Phone: 512-380-1823
Dated: July 24th 2015
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