Today we have a Guest Post from Boom Rizal. Boom is a Filipino Real Estate Blogger, and you can find her site, Better Joys by clicking on the link. Thank you for your article, Boom, and I appreciate the wisdom you shared in your article.
When choosing a home, it is deemed wiser to buy property than to rent, since renting has got nothing tangible to show for besides the accumulated receipts and the next pending bill. The reality of our current financial situation, though, prevents a lot of us from being able to buy our dream homes.
Renting is not a waste of money if we consider these factors:
When you buy, you’re not throwing away money, right? Not necessarily.
Nowadays, everything we spend on is a factor on whether we’re saving or not. If you work in Manila and buy a house in the nice new suburbs of Metro Manila, which are more likely to be somewhere North (Bulacan) or South (Cavite or Laguna), gas money, toll fees immediately becomes a big part of the daily expenditures as compared to renting a place closer to work, school and other basic considerations. (This is the same wisdom I follow when buying real estate property.) The worse part about toll fees and gas prices is that they fluctuate. The average increase of fuel is 8.67% in 2012 alone and toll fees are prone to increases regularly.
Money is not the only issue here. You will also have to consider the time you’d be spending traveling from home to the office, and back. Going around a city by car may take approximately 30 minutes to an hour. This is not the case during rush hours, Monday mornings and Friday afternoons. Renting property near your place of work will keep you from wasting so much time on the road and instead using the spare time to more productive activities like making more money, or simply spending quality time with family and friends.
So, unless you buy a piece of property within the proximity of your office, share the traveling expenses with someone else, and/or enjoy getting stuck in heavy traffic for hours, it is definitely more convenient to just rent a home somewhere near.
You’ll hear a lot of “for just an extra amount, you could own your home…” from real estate agents. This could be true and has been a good selling point to those who have a little more than extra money to spare. But for most Filipino professionals, owning a home may not be a good thing to prioritize. Money earned and extra money may be used for other more important things.
Wealth management seminars and books would tell you that buying property should be the least of your priorities. They said that achieving financial well-being is possible only if you manage your resources well. To manage your finances means paying off all of your debts, setting aside some money that could later on generate passive income, and building an emergency fund.
A lot of people rent because it’s practical. Sometimes the commitment involved in buying is something we have little understanding of. The numbers overwhelm and put a dent in our confidence. There are online tools like this mortgage calculator that can help discern if paying for the monthly lease is really more practical than paying for mortgage. (This particular mortgage calculator helped me arrive at a decision to rent from DMCI homes.) With this tool, young professionals, no matter how high their salaries are and how many jobs they keep, would realize that paying for the monthly mortgage is not a joke and can be very difficult to fulfill without financial well-being.
A lot of times, it’s the external factors that determine whether we should rent or buy. It depends on what appeals to us given our current situation and long term projections. Renting gives us flexibility and buying gives us better security. What do you think?
Renting vs. Buying, the Realities of Home-Ownership