Making choices: Rent or own?
Renting or owning a home are often difficult choices. They are even more complex choices to make for young adults, who lack extensive experience in appreciating the significance of renting and owning a home. This article will share the issues, advantages, and disadvantages of renting and homeownership for youths.
I recall a social meeting with a young cousin who is in her 20s. She is a banker who rents an apartment room and travels to work every weekday. Under (old) normal circumstances, due to traffic conditions in the Klang Valley, she spends an hour travelling in one direction to her workplace and another hour to travel back home.
She shared with me her intention of buying a new home from the primary market. Housing loan interest rates were meagre. A homeownership campaign, which had stamp duty exemptions and discounts from property prices, was ongoing.
I responded that the decision to rent or own was ultimately a choice she had to make independently. However, there were several issues to consider, which could help her to make an informed decision. Why did she want to buy a residential property? It was because she was already paying for rent and had the intention to settle down with her beloved and have a place where her parents could live with her. Therefore, the reason was related to life priorities.
How was her financial standing? She had saved quite a bit of money for the down payment. She had also taken the basic precautions of having a medical insurance plan and a life insurance plan. It was a good measure because we need to protect ourselves financially and accumulate enough savings before making any investment decisions.
What was her budget? Being a banker, she was prepared and had gone through a pre-qualification process. With her overall financial picture, which included her debt, assets, and income, she received an estimate of how much she could borrow.
What was her investment plan? She should consider looking at a residential property as an investment instrument. There were several investment instruments, such as cash, fixed deposits, insurance plans, equities, unit trusts, and real estate. Each of the investment instruments had its characteristics, such as liquidity, risks, and rewards. Homes, even for our use, should be considered an investment instrument because there will come a time when we will choose to upgrade or downgrade to a different home, depending on life priorities.
What were her investment priorities in the short-term and long-term? Homeownership is a long-term investment. In the short term, with major disruptions in the global economy, there were opportunities and challenges when investing. Therefore, it was important for her to determine her investment priorities.
When she decided to invest in a home, she should consider some issues, such as unit size, price per square foot, and location. The reputation of the developer is of great importance. Workmanship, after-sales service, quality of shared facilities, sustainability, and community engagement are essential factors to consider.
There are advantages to renting. Monthly rental payments are predictable. Income surpluses can be saved and invested. However, homeownership can be considered a form of forced savings. It is an asset that you own. It is also an asset that gives a sense of stability. In conclusion, there are several issues to consider in renting and homeownership. Among them are commuting distance and time, economic conditions, real estate policies, life priorities, financial standing, budget, investment plans, and investment priorities. When these factors are taken into consideration, making informed decisions on renting and homeownership becomes possible.
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Mak Academy principal Mak Kum Shi is a Master of English Studies and a trainer in English, Communications, and Real Estate. As an internationally renowned writer, he has an extensive cover story portfolio on property, entrepreneurship, information communications technology, lifestyle, architecture, and interior design. Learn about English, Communications, and Real Estate by visiting https://makacademy.asia/