Deciding to rent or buy in Maryland is a big decision. Especially when you consider just how hot the local market is right now. Also, you have to decide if you are going to rent or buy an apartment or a house, depending on your needs. Of course, it is of the utmost importance that you know if you are getting a good deal or not. In fact, this is very important if you are looking to invest in real estate. Given the fact that there are more renters now than at any point in the last five decades, it’s a big decision whether to rent or buy.
Also, this decision shouldn’t be made alone. You should always look to consult experienced local agents before you make the final decision. In this blog, we are going to give you a few facts that you ought to consider before deciding.
The price-to-rent ratio is crucial when deciding to rent or buy in Maryland
The key here is the price-to-rent ratio. This material way of making a decision is best summed up as follows: look for the cheaper option. So, if it’s cheaper in the long run to rent – then rent. On the other hand, if it’s cheaper to buy – go ahead! Regardless of what you decide, you can count on A2B Moving and Storage to help you with the move.
To make a good decision, you need to do some math. But, don’t worry, it’s nothing hard. So, to get the aforementioned price-to-rent ratio, you should divide the median home price by the median annual rent. For example, if the value of a home is $200k and the annual rent is $20k, you will get a ratio of 10. That means that you will pay off a home in 10 years easily. Also, this means that it is better to buy a home than to rent it.
Calculate your price-to-rent ratio!
When talking about Maryland specifically, the average yearly rent here is $19,2k whereas the median home price is $325k. The math says that you would pay off your home in 17 years. That is great for potential buyers. But, don’t leap just yet. There might be additional costs like the important home improvements. Moreover, you should consider the location, since it can make a huge difference in the money you will end up spending.
To rent or buy in Maryland depends on the city
Of course, the size of the city and the cost of living there can greatly influence the decision to rent or buy in Maryland. That is why you first need to decide where in Maryland you want to move. If the city has the best schools and amenities around, the cost is going to rise. Also, the higher the vacancy rate and lower demand, the cheaper it is to buy.
For example, in cities like Baltimore or Waldorf, the average price-to-rent ratio is around 15. That means that you will pay off your home in just 15 years. Maybe even less, if you decide to put aside a larger amount of money. Also, if you have some extra money that you can invest in building equity, the payoff process will go even faster.
Again, regardless of the area you choose, you want the best people to help you settle in. So, make a wise decision with that.
Consider the advantages of renting
So, if you are relatively young or trying to figure out where you want to spend the rest of your life, buying a home can be tough. One example of why is the fact that selling a home can be very stressful and could cost you more than the initial investment. A lot of the time, years can go by without your home showing a return on investment.
Another thing that is great when renting is the fact that you don’t have to worry about closing costs, property taxes, or the down payment. Also, you won’t be subject to issues with property value. And, while the property value can trickle down to renters, it is much easier to find and move to a cheaper place than to sell the property before it loses most of its value.
Renting is great in certain circumstances.
Moreover, as a renter, you don’t have to worry about home improvements. Renting means that you can pass off most of the damages, maintenance issues, and repairs to your landlord or the building supervisor. Isn’t that great? One less thing to worry about.
Lastly, as a renter, you get to be more adventurous with investing. While buying a home is a great investment, it can also tie up most of your assets into a building that is not worthwhile.
Think of the advantages of buying
Just as there are factors to consider when buying kitchen countertops, there are certain factors to consider when buying a home. Clearly, buying a home has many financial advantages. It helps to ensure that the money you pay every month in rent, goes into your mortgage and pays off something that will be yours in a dozen years. With rent, you are practically just putting money into your landlord’s pocket and making them a bigger income. Consequently, you are left with nothing.
Buying and owning a home also opens up a lot of other opportunities when it comes to finances. For example, when you have equity in a home, you get a line of credit. This line of credit is based on the amount you already put into it. Also, you can refinance your home. That is based on how much you have already paid into it. Consequently, you will be able to borrow against it.
When buying, you are making a long-term investment.
Additionally, once you own your home, you also hold a stake in the neighborhood. Buying your home can also increase the connectivity between you and your neighbors. Also, you get to discuss local problems with elected officials. This stems from the fact that you are a local homeowner.
Last but not least, with homeownership comes the opportunity to start creating generational wealth. From that point onward, your kids can have a good starting position. Additionally, they won’t have to worry about having a roof over their head. So, buying a home is a very smart investment if you are looking to start building a family.