If you thought renting property is better than buying... I've got news for you...
I've often argued the fact that renting property is the quickest way to throw your money away. Why would you rent, when you could buy?
When you buy a property, you're making a solid investment in your financial future. Not only do you have a place to live, your property value increases too. Once your bond is paid off, you could decide you keep your property or sell it for a pretty decent return.
At the end of the day, if you don't take the costs of owning a property into consideration then renting probably is better than buying.
A tenant’s costs are certainly lower than a home owner
All a tenant has to do is stick to the rules in the rental agreement which is usually for 6 to 12 months before the rent increases or the owner cancels the lease and the tenant has to move. Tenants don’t have to worry about fixing a burst pipe or replacing broken roof tiles.
These costs can eat into your home investment, especially if you don’t keep a close eye on your expenses. This includes replacing pipes, roof repairs, painting, gardening, general maintenance and even water, electricity and municipal taxes.
If these repairs to your property are not seen to, they turn into bigger, more costly problems and can drastically reduce the property value of your home.
Don’t forget about the bond repayment, rates, taxes and other costs
Most home buyers get a home loan that you need to pay off for about 20 or 30 years. Of course, how much you end up paying back depends on the cost of the property you buy, the loan term and interest rate fluctuations.
The good news for home owners is that annual bond costs accumulate equity over time. These costs are tax deductable and if managed correctly, can give you great savings and even reduce the amount you pay on your bond. This is something a tenant doesn’t get the benefit of.
But there’s one more reason why I prefer to be a home owner any day! And it has to do with making a lot of money.
Why I still prefer owning a property over renting any day – R24,000 extra a year
I stumbled on this opportunity to create a steady income stream by accident. I didn’t even realise how much cash I was making until I checked my savings account towards the end of last year.
Over the last 12 months, I had made R12,000. It’s the easiest R12,000 I have ever made. This year, I’m increasing that amount to R24,000 a year.
That’s enough money to pay for the maintenance on my property and even reduce the amount of years I still have to pay on my bond.
If I was renting a property, I could never do this... If you want to find out how I make all this extra cash from my home every month, then read the latest issue of Real Wealth.