Ask JoJo Spatafora: Differences Between Owning and Renting a Property on Staten Island
As many people do not realize, the monthly rent prices today are higher than in the past. Tenants are paying anywhere from $1,100 to $2,500 dollars a month in rent alone on Staten Island, all depending on how many bedrooms the apartment is. Now add in your utilities and you are paying far more than a monthly mortgage would be when owning a home, condo, or co-op.
Yes, as there are the advantages of not having to pay property taxes and having low maintenance when you are renting, there are also many disadvantages.
Unless you’re part of a rent-to-own agreement, every dollar you pay in rent is gone forever. No matter how long you remain in your rental unit, you can’t build equity in the property under a standard lease agreement. If you plan on staying in the same location for more than a few years, buying may be a smarter financial choice than renting. As, a renter, there is no return on investments.
Unless you live in a municipality with rent control laws, your landlord has the ability to raise your rent once your current lease expires. Rental property owners raise rents to match rent increases elsewhere in the market, to compel current tenants to vacate the premises rather than sign a new lease, and for many other reasons. If you maintain a good relationship with your landlord, you’re less likely to face rent increases from year to year. No matter what you do, though, you can’t exercise complete control over your rent. By contrast, homeowners with fixed-rate mortgages make fixed loan payments each month, regardless of what the local real estate market does.
As a homeowner, there is potential for rental income. Even if you don’t initially think of your home as an investment property, you can turn it into a source of income. This can partially or totally offset your mortgage, tax, and insurance payments on it. The easiest way to do this is by renting out part or all of the property, provided you follow all local rental property laws. You might rent out a basement bedroom to a friend, live in one unit of a duplex and rent out the other to potential qualified tenants. Another option would be to purchase and move into a second home, leaving your entire property free to rent.
As a renter, you have limited housing security. While most jurisdictions have generous renter protection laws that prohibit landlords from evicting without cause and require adequate notice (typically 30 or 60 days) that tenants won’t be given an option to renew their leases, no law entitles you to remain in your rental unit indefinitely. Homeowners don’t face such uncertainty. They can remain in their homes as long as they stay current on their mortgage payments.
Another benefit as a homeowner is you also have the creative freedom to do what you want with your home and generally not available to renters. For example, you can paint walls, add new bathroom fixtures, update your kitchen, finish your basement, build a patio or deck to your heart's desire just to name a few as long as you are not violating local building codes or homeowners association rules.
These are just a few pros and cons when it comes to the decision of owning vs. renting. Be sure to look forward to my next video where I will be discussing options for first-time homeowners, homeownership, and mortgages as well as more benefits of owning as opposed to renting.
