Rent or Buy, House or Apartment – A Decision Aid

Real estate still counts as an investment in the future. But this equation doesn’t always work out. Also, high costs are often forgotten when planning to finance your own house or apartment, which later tore an unexpected hole in your wallet. Both renting and buying have their financial advantages, and owning property is not for everyone either.

Anyone who rents an apartment or a house does not have to fear expenses for maintenance, extensive repairs, or property tax because everything is part of the property as investment falls under the landlord’s obligations. As a tenant, you usually only have to leave a deposit, which the landlord often pays into an interest-bearing account. As a home buyer, you have to expect an equity investment of at least 10, better than 20 percent of the purchase price.

Also, tenants can generally expect lower ancillary costs and remain more flexible in choosing where they live.

The Advantages of Buying a House or Apartment

Buying an apartment or a house has advantages. Real estate is a good long-term investment, and detached homes, in particular, ensure a high level of privacy. On the other hand, it is often easier to sell or rent an apartment if you leave your residence for professional reasons.

When buying a property, you can count on fixed mortgage rates. When renting, there may be so-called graduated contracts that allow the landlord to increase the rent to a certain extent over a certain number of years. Contributions can rise with property tax or insurance for owners, but not as often as tiered rental agreements.

Last but not least, a purchased home naturally provides specific stability. Usually, you live longer in a house or apartment that you buy for your own use than in a rental property. If only because frequent buying, selling, and moving are simply complicated and expensive. However, this also means that buying a property is only worthwhile if you can plan at least a few years of location loyalty in advance.

Renting Also Has Advantages

By renting, you get rid of some of the disadvantages that come with buying a property. It is not for nothing that a common saying goes: property obliges. With a comparable living space, the rental rate can be lower than a loan rate would be. Above all, those who have a tight budget should not take on real estate financing.

Also, the responsibility for the property remains with the owner. Larger (mainly not self-inflicted) repairs fall into his area of responsibility and administration and maintenance. And if the landlord does not meet these obligations, the German tenancy law strengthens the tenant’s back.

Sure, the expenses for parts of the maintenance and administration can be passed on to the utility bill’s tenant. However, the landlord is obliged to show the operating costs and, above all, the allocation items transparently. Either way, a service charge settlement in the tenancy is usually lower than for owners. First, because the costs are shared by all tenants. And secondly, because only recurring or running costs that do not fall within the definition of the administration and maintenance of the property can be passed on to the tenant.

Above all, however, the tenancy is an ideal choice for comparatively restless people. You can change your place of residence at any time with a few months’ notice. Renting is definitely the more flexible alternative, especially in an increasingly fast-paced world of work. You sometimes have to be ready to move to another apartment at short notice.

Buy, Rent, Now, or Later?

Buying a property is a big decision. Before you meet them, you should definitely ask yourself three important questions:

1. Can you afford it?

2. How long can you plan your loyalty to your place of residence?

3. Why do you actually want to buy?

If a job change is intended or foreseeable, the budget is too tight, or the purchase is only an issue due to external pressure, you should perhaps postpone your decision for or against buying a property to a later date.

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