Buying or renting real estate? Is renting throwing money away? These are questions that most people who are planning to move ask. However, the big question to ask before investing is: buy or rent, which is more advantageous?
In 2021, due to the pandemic of the new coronavirus, the interest rate fell sharply and directly impacted the real estate scenario, which led to an increase in the purchase and rental of real estate.
According to OLX, there was an increase in the search for properties in the second quarter of 2021 compared to 2021. The increase in the search was 21% for purchase and 7% for rent. In general, growth was 15%.
If you are that person who is planning to move, but you do not know if you should buy or rent property, in this article we will help you choose the best way. We'll talk about:
- Why buy or rent real estate ?;
- Advantages and disadvantages of the purchase or lease;
- What to consider when buying or renting real estate ?;
- How much can I commit to my income?
Before you start investing, go ahead with this article and make an assertive choice.
What to consider before buying or renting a property?
Whether buying or renting properties, it is important to consider rates, interest and increases over the years, this is because rent may increase rent, due to adjustments, and in the case of purchase, the initial installments can weigh in the budget of most companies. families.
So, before you commit to buying or renting properties, it is important to know about:
- Interest rate;
- Financing line;
- Payment deadlines;
- Rent adjustment, via IGP-M;
- Increase of the condominium;
- Value of IPTU;
- Expenses with (light, water, gas).
The main function of the General Market Price Index is to measure inflation in the country. It serves as a reference for adjustments to be made in contracts, such as rents, for example.
In February, the IGP-M hit 2.53%, according to Fundação Getulio Vargas (FGV). The increase in this case was 5.17% in the year 2021 and more than 28% in 12 months.
In other words, some rental contracts, due in March, ended up undergoing a readjustment higher than 28%.
Thus, it is very important to pay attention to the terms of the contract and this rate at the time of the lease, including assessing the market and forecasts for the year in which the contract expires.
Real estate financing line
One of the most important factors for those looking to buy a property is to evaluate the line of real estate financing. This is because depending on the financing location, there are advantages in relation to interest rates.
Caixa, for example, launched this year a real estate financing model that is linked to savings correction and which starts at 3.35% per year. There are also some options of fixed rates, fixed interest, SAC amortization, reference rate (TR) or Price.
Why rent a property?
Many people think that renting a property is like “throwing money away”, however, the real context is that everything depends on the financial situation of those who are looking for a new home to live in. In many cases, it is more advantageous to go for the lease instead of the purchase.
If you don't have enough money to even make an entry or assume higher installments on a purchase, without a doubt the best option for the moment is to rent. However, the lack of money style=”font-weight: 400;”> for the purchase is not the only question to be evaluated in a lease.
We can also highlight:
- Search for a temporary residence;
- Plans to move to another city in the coming years;
- Need to save resources to make an entry or pay a property in cash in the future;
- Avoid debt with financing;
- Interest in a short contract;
- I wish for less bureaucracy.
This means that when in doubt about buying or renting properties, it is important to consider leasing as an alternative, if you identify with any of the above points.
- Lack of freedom to make changes to the property;
- The owner can ask for the property back;
- Increase in rent, according to the IGP-M and the contract;
- Lack of autonomy in condominium decisions;
- Investment in something that is not yours;
Why buy a property?
Is it worth buying an apartment? “Buying is more advantageous”, this is the phrase that surrounds many people who question themselves about buying or renting real estate.
As we saw earlier, this statement is not 100% certain and everything will depend on the person's financial reality. We already talked on our blog about how to manage personal finances, Click here and check it out.
An important point today it is related to interest on real estate financing, which are at an all-time low, which can contribute to those who dream of home ownership.
Just as we talked about what weighs in favor of leasing, we have selected below some points that should be analyzed for anyone thinking of buying.
- Desire for a property of its own;
- Freedom to reform according to your own taste;
- It has financial planning over the years;
- An input value is available;
- Has professional and financial stability, especially if you are going to finance the property.
Buying has its good side, but if there is no planning it can become a snowball. That is why it is important to keep an eye on the disadvantages when buying a property.
- Delays in handing over the keys, if the property is new;
- Debt with financing;
- Financial commitment that can last for decades, if financed.
How much can I commit to my income on a purchase?
Is it worth financing property? Live rent or buy? How much can I spend? Before buying or renting real estate, it is essential to have knowledge about your own financial situation. That is to say, do not spend more than you can.
Another important point for those who want to buy is that the recommended is to have at least 20% of the total of the property on hand. Since, this is the minimum part that a good part of the banks accept in advance to approve the financing.
Not to mention that the bank also takes into account person's income. That is why it is recommended that the financing commits a maximum of 30% of your monthly income.
From that, you already have an idea of how to calculate the possibilities of acquiring a property.
How much can I commit to my rent when renting?
The rental process is no different and must be related to the family budget. So, if you are thinking of renting a property, put everything on the tip of the pencil. The total monthly spend should not exceed 30% of your net earnings.
Remember that you should not only consider the rent, but also the condominium, property tax and other fees such as surety bond, if applicable. Consider the location, condition of the property and search for the best option within your financial conditions.
It is also possible to consider the possibility of renting with a purchase option, thus, if you really adapt to the property it becomes easier to exercise the purchase at the end of the contract.
How to plan financially to buy or rent?
Regardless of whether you want to buy or rent property, the ideal thing is to plan financiallyafter all, a good part of your savings will be used for rent or for the portion of your property, if it is financed.
It is important to highlight the importance financial planning, regardless of your bank account digits. Everyone, with a high or low income, must maintain a balance in finance to escape debt and financial stress.
Knowing the high expense you will have, whether in a rented or own property, plan financially before making a decision. Carefully analyze the following points to buy or rent real estate.
- Get to know your financial life, earnings and expenses in depth;
- Assess the real estate market, interest rates and etc .;
- Choose the type of property (house or apartment);
- Avoid extra expenses in order not to compromise your monthly budget and the amount that will be destined for the rent or the portion of the property;
- Set goals and objectives, such as deadlines to save money and later for purchase or lease;
- Opt for the best form of payment when purchasing (cash or financing);
- Have an emergency fund;
- Count on the support of FGTS, in case of purchase of the property.
Assessing each of the above points makes it easier to control the budget, but more than that, the investment to finance or rent property will be more assertive.
Evaluate your reality to rent or buy a property
Buying or renting real estate? We started this article with this question. Coming to the end of this content, with all the comparisons and analyzes on the best alternative, and the answer is: it depends.
This is because to choose to live rent or buy it is necessary to first analyze the financial situation itself, and later, to plan financially for any of the situations.
Also assess your life situation, whether what you are looking for is temporary or permanent. And also if you want to make a smaller commitment, under a rental agreement, or a larger one, in the case of real estate financing.
The secret then, to define whether buying or renting real estate is more worthwhile, is to recognize its particularities and mainly to have a macro view of your financial life, so that your decision is planned and consequently more assertive, without being on impulse.
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