A recent headline from CNBC’s real estate correspondent, Diane Olick, stated: “Rents are rising at the fastest pace in almost two years.” And she’s not alone in letting everyone know the rental market is getting more expensive. A quick Google search brings a flurry of similar headlines. I’m going to skip what’s causing the recent acceleration in rental increases and instead, suggest a long-term solution to that problem. Yes, buying.
It is NOT surprising that rents rise due to supply and demand, and also to increases in interest rates and operating costs (Like insurance, property taxes, maintenance, and repairs). Whether you’re a renter or a homeowner, you know that operating costs can not be controlled. But, you can control increases in costs arising from interest rates and supply and demand. And that’s where the FINANCIAL STRATEGY to buy comes into play. When you buy, you lock in an interest rate and 75% of your monthly payment will be guaranteed for as long as you own your home. For example, if you start with a $1,000 monthly payment, $750 of it is never going to change. That’s opposed to a rental arrangement where the landlord can raise the rent every year if they want.
Another bonus to owning that renters miss out on is EQUITY BUILD-UP. This can occur in two ways. The most often discussed is the equity one gains when the value of one’s real estate increases due to inflation or supply/demand factors. That’s the one we hear about on the nightly news when they talk about “House prices rose X% in the past year”. That’s great, but there’s another way that homeowners increase their equity. With each monthly payment that gets made, a portion goes to pay the interest and the rest goes to pay down the principal owed. Eventually, that process pays off the mortgage loan and the homeowner then owns their home “FREE AND CLEAR”. Now, that’s cause for celebration 🙌 🎉. And that is what is implied when you hear people say “I’m sick and tired of paying someone else’s mortgage” or “I’m tired of throwing money away each month”. Now to stop that feeling, simply buy rather than rent. Give me a call at 317-625-0655 and I will show you what’s available.