When it comes to property occupancy there are only two options; renting and buying. Renting entails paying a pre-determined premium to the owner of the house on a regular basis. Buying property, on the other hand, involves paying for the property and acquiring full ownership of the property in question. There are two ways to go about this. If you are rich,then you can pay for the property in a one off payment. The other option would be to take a loan to buy the property and pay the loan in installments. When these two options of occupancy are compared from a financial point of view, buying property is better than renting. Let’s now take a look at why that is the case.
- Buying property is a good investment.
Property is known to appreciate in value over time and this makes buying property a good investment. The value of the property may not increase immediately but since property is a long term investment, you stand to gain substantially on the property down the line. When compared to other forms of investments such as stocks and treasury bonds, investing in property is much safer. The return on investment is much higher as well and these two factors combine to make investing in property a good option for individuals and corporate entities.
- You build equity with time.
Every time you pay your mortgage obligations, you build your equity on the property. When you are renting a property as opposed to buying, your monthly payment goes into the pocket of the property owner. You don’t gain equity when you rent and this makes renting a waste of money. This point is emphasized further when you rent for a long period of time such as a year. If you are paying $1000 as monthly rent for your property, then in one year you will pay $12000. This is money down the drain since you don’t gain any equity on the property you are renting. If you commit this amount to mortgage payment instead, you gain equity on the property equivalent to the premium in that period of time.
- You enjoy great tax deductions.
Another benefit of buying property is that you get to enjoy great tax reductions and incentives. The interest you pay on your mortgage as well as the property taxes may be deducted from annual tax bill and as a result, you end up paying less tax. Different states offer similar tax incentives and this lessens your tax obligation a great deal. Other costs that may be deducted from taxes include loan discount costs and loan closing costs. The interest that you pay for your mortgage is significant early on and these tax deductions put as much money back into your pocket as possible.
- You build your credit rating.
When you take up a loan to buy property and pay the installments on time as per your loan contract, you build your credit rating. This is the first thing that lenders look at before giving out loans and you should strive to keep your score as high as possible. A higher credit score makes you attractive to money lenders and other financial institutions and should you need a loan in future, you won’t have trouble securing one. Taking a loan, therefore, helps you accomplish two things; you get to own a property and it builds your credit rating. The latter will come in handy when you need funds for further development in your personal and business life.
- You can style your home as you like.
When you buy properties for sale in Turkey, you can style and modify the property as you like. Any modifications that you make on the property will not go to waste since you will be using the property for a long period of time. Should you decide to sell your property later on, you can factor in the cost of the modifications into the value of the property.
Renting may be cheaper in the short run but for long term financial benefits, you should buy a property outright. You can take up a loan or use your savings for this purpose.
August 30, 2017