Leasing properties is a standard fixture in most people’s lives. While some people buy properties to lease to others, most people just lease a place for themselves to live in. However, one of the major considerations a person should consider when thinking about leasing versus buying is how long they intend to be in the area. If a person isn’t going to be in the area very long, they need to be careful about trying to buy because of the costs involved.
Leasing a property involves a very careful financial calculation that everyone needs to make. Simply put, how long will it take you to break even on buying versus leasing for your own home. Some people like to pretend they own when they are essentially renting from a bank due to gaining little or no equity. For many people, the rule of thumb is that if they intend to stay in the area five years or less they should just lease. Unfortunately, human nature isn’t always rational, ans people can make downright crazy decisions.
For instance, a lot of people will simply look at the monthly payments they’ll be expected to make. If the monthlies are fairly low, they consider that to be the main determinant of their cost basis. While it is always important to keep the fixed costs in mind, this is only the beginning when you own a property. Maintenance is always going to be a factor, and its very nature makes it unpredictable. When you consider whether to lease or buy, consider how handy you are and how effectively you save for emergencies. Weak savings usually lead to big problems.