by Russell Austin

Created on: September 12, 2007   Last Updated: October 23, 2009

Although the general real estate market can be fickle, it's generally in your advantage to buy your home rather than rent your home. Let's analyze the reasons why buying is preferable.

The primary reason to invest in general real estate is to create what's known as equity. The money that "goes into" your home actually pays down your mortgage, so that you can own the piece of property one day. This equity can be used to create a line of credit, to refinance at a later time, or simply to eat away at the balance of the mortgage. When you rent, on the other hand, you are quite literally putting all of your money into your landlord's pockets. This is far and way the biggest disadvantage to renting.

Homeowners can also belong to property associations to protect their rights and to participate in exclusive community activities. If you are a homeowner in a complex with a pool, for instance, your kids and their friends can share the pool together. Sure, some rental groups provide general real estate perks like community pools as well, but these are harder to find.

Renters must also deal with landlords. While it's possible to find great landlords, if you rent, you are dependent on a third party to take care of problems ranging from fire alarm malfunctions to ant infestations to leaks in the roof. While you can make improvements on your own, you can in no way benefit from them long-term, indeed, what you may see as a benefit may appear to a landlord to be a blemish. At the end of your tenancy, the landlord may even charge you for your "improvements."

On the other hand, when you own your own home, you can make improvements which increase the value of your home and make your dwelling more livable and comfortable according to your aesthetic. You don't have to answer to anybody. You can talk to general real estate experts to figure out what kinds of improvements will make the most difference in terms of your future sale price.

Finally, owning a home is an education unto itself. When you rent, you don't learn about the general real estate market. Unless you plan to rent forever, throwing away years of potential equity, you are eventually going to have to buy. Learn the ropes now, and you can create more equitable general real estate deals in the future.

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