August 27, 2022

Should I Rent or Buy a Home?

At some point, all of us find ourselves wondering if we should rent or buy a home. Both comes with their pros and cons, and we will help lay those out for you and tell you what we think are the top factors you should consider.

1. Lifestyle

The first aspect to consider is your lifestyle. Are you someone that moves around frequently, and is looking for more short term housing? Or, are you ready to set down some roots? One way to think about this is asking yourself, “Where do I see myself in five years?”


2. Finances

Once you’ve decided your lifestyle is geared more towards buying a home, it’s time to look at your finances. The best way to do this is to talk to a loan officer. If you find a local Realtor, they should be able to connect you to a reputable lender. This is the best and most concrete way to see what kind of loan you qualify for, and for how much. To do this, they look at your debt to income ratio, credit score, and bank statements. All you have to do is gather the required documents, send them to the loan officer, and they’ll get back to you with your options – it’s a straightforward process.

3. Pros and Cons

If you have decided you can afford a home and it fits your lifestyle, but you still aren’t 100% sure – here are some other pros and cons that might help you make this big decision.

Monthly Payment Comparison

Once you know what a comfortable monthly payment is for you, check out the rentals in the area and compare it to the monthly payments you would make on a similar home for sale. However, don’t be instantly discouraged if buying  means a slightly higher monthly payment…because you’re either paying your landlords mortgage or your own.  Additionally, monthly mortgage payments are essentially a forced saving. Instead of putting money into a regular savings account it grows equity without the risk of inflation.


One of the biggest reasons people choose to purchase a home, is to build equity. Even though it can take a lot out of your savings, your monthly payments you’re making are building you equity. In the long run, especially if you choose the right market, home ownership is the best investment. Paying a mortgage monthly is like having a certain amount of forced savings each month, with the bonuses of being stronger than sitting and doing nothing, as well as a hedge against inflation. Real Estate is truly the best long term investment – and the majority of high net worth individuals will tell you the same thing.

Flexibility v Stability

One of the biggest reasons people choose to rent a home, is the flexibility it gives you. You aren’t tied down to a home in your name. However, you can always sell your house, or rent it out – which both might be lucrative options, but definitely aren’t as easy as ending a lease.

However, with owning a home, there is a good amount of stability in it. It’s yours, and the only way you can lose your home is if you default on your mortgage payments. This home can even be passed down one day. Another way that owning gives you stability is your monthly payment won’t increase, where rent typically increases yearly, and in Los Angeles especially, we see steady increases year over year.

Cash on Hand

Purchasing a home isn’t cheap – it takes a large amount out of your savings. Typical down payments range from 3.5-20% of the purchase price, and your lender will go over those options with you. After your down payment, you pay closing costs, which are roughly 2-2.5% of the purchase price. Unless you are buying a completely turnkey home, you might need to make repairs or update the home. Lastly, furnishing can be an additional cost. In comparison, renting requires a security deposit in the amount of one or two months rent, and then you have your furnishing costs.

Overall, buying builds wealth. Owning a home is the largest hedge against inflation, allows for stability and forced savings. We are here to answer any questions you may have.


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Looking to buy or sell? Contact us to learn more about how Katz Group LA can assist with all your real estate needs.