IS RENTING A WASTE OF MONEY?

There are many reasons due to which people prefer buying a home over renting one in the present times. People want to buy a home sometimes because of some restrictions or some factors that do not suit them from renting an apartment in general; others may just want to invest some money in real estate. People also sometimes want to diversify their assets beyond the general stock market. Sometimes people also believe that they are throwing their money away by renting a house in public when they can invest the same money in a home. They just assume that with owning a house, they can be building something. In real estate sector Pakistan, the scenario is quite different.

Homeowners build towards a goal

It is true that as a homeowner you are building towards something and investing in a place that will eventually be yours, however, due to the monthly payments of your mortgages and the loan payments, you may not be investing towards building something after all, and you can understand that renting is not that much of a waste of money. Equity can make people feel good, but it isn't money until that place is either sold in the market or worth something more than you've paid for it, its not as much equity as people expect it to be sometimes. If you buy property in Karachi, the goal will be different. On the other hand, renting will have a different scenario.

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Paying a large sum both ways

You are still paying a large sum of money every month to the mortgage like a homeowner as your monthly housing costs are much more than the principal payments usually can sometimes equal to the money someone would pay if they rent the same house. There is not that much of a difference. People sometimes have a perspective that buying a home is the best investment that they may have made in their lifetime, but it is not always the case. Renting is as good as home-owning because you end up paying the same amount of money monthly. As a tenant, your costs are fixed at a particular scale, but as a homeowner, you have to be prepared for any kind of values that may come up any time for repair or maintenance. Such needed repairs in your home may also lead you to do a lot of research and come up with solutions. You are off the hook to invest money whenever something breaks or needs mending in your home, from the water system to electric appliances, it all needs a fix now and then.

Transaction Costs

Another critical factor is that the transaction costs for buying a property seem to be very high, and those costs are not something that goes towards building your property either. Several expenses can add up to a certain percentage of your house payment that can sometimes throw you off the hook. Even top real estate companies in Karachi have transactional costs. When you sell your home, you even have to pay some closing costs too in terms of up to three to five percent of your home cost.

CONCLUSION

Home owning has its equity to it, but renting in such an economy is not the worst idea for people as we end up investing the same amount of money in renting a house as we do in buying one. Renting comes with its perks, too, such as not having to worry about broken home systems as they are not yours to fix at times. However, people still have their perspectives and sometimes prefer home ownership over renting.