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Owning Makes More Sense

Monday, July 16, 2018
by The Mike Parker Team

When comparing the cost of owning a home to renting, there is more than the difference in house payment against the rent currently being paid. It very well could be lower than the rent but when you consider the other benefits, owning could be much lower than renting.31066694-250.jpg

Each mortgage payment has an amount that is used to pay down the principal which is building equity for the owner. Similarly, the home appreciates over time which also benefits the owner by increasing their equity.

There are additional expenses for owning a home that renters don't have like repairs and possibly, a homeowner's association. To get a clear picture, look at the following example of a $300,000 home with a 3.5% down payment on a 4.5%, 30-year mortgage.

net cost of housing.jpg

The total payment is $2,264 including principal, interest, property taxes, property and mortgage insurance. However, when you consider the monthly principal reduction, appreciation, maintenance and HOA, the net cost of housing is $1,218. It costs $1,282 more to rent at $2,500 a month than to own. In a year's time, it would cost $15,000 more to rent than to own which is more than the down payment and closing costs to buy the home.

With normal amortization and 3% annual appreciation, the $10,500 down payment in this example turns into $112,00 in equity in seven years. Check out your own numbers using the Rent vs. Own or call me at (859) 647-0700. Owning a home makes sense and can be one of the best investments a person will ever make.


Four Reasons to Rent Your Retirement Property

Friday, July 16, 2010
by The Mike Parker Team



If you have a vacation home that you had hoped to retire to some day but have since changed your mind, don’t jump to sell it…consider renting it out instead.

For many, it seemed like a great idea to buy that vacation condo 20 years ago. The plan was to vacation there as often as possible, then some day sell your primary residence and retire there for your Golden Years. But lifestyle changes or financial situations might now be causing you to consider selling it instead.

However, as a member of the Top 5 in Real Estate Network®, I have seen many a client successfully rent a retirement home instead of selling it. Author Christine Karpinski, director of Owner Community for HomeAway.com (HomeAway.com), offers some good reasons to consider renting your second home:

1. Circumstances have changed. Maybe grandchildren have arrived on the scene and you can't bear the thought of moving hundreds of miles away from them. Or your parents are in poor health and need you nearby.

2. You've suddenly realized there's no place like home and you've simply changed your mind. You've decided you like being near your friends and you don't want to leave your church or synagogue. Renting your second home out during the time you are not staying there makes it financially feasible to keep both homes.

3. You've decided to "retire" from retirement. These days, it’s not unusual for people to test-drive retirement and find that it's just not for them. Work can provide many rich rewards—structure, social interaction, mental stimulation, a sense of purpose, and so forth—that people keenly miss when they retire. And, let's be honest—sometimes people simply can't afford to retire.

4. Your fixed income hasn't kept up with your lifestyle. Even when you're happy to give up the daily grind of your job, losing the paycheck that comes with it can be pretty painful. Factor in inflation, rising taxes, and unexpected "new" expenses, and you may find that what seemed like a manageable cost of living five years ago doesn't seem that way anymore. Your second home, even if it's paid for, may start looking like a liability due to property taxes, homeowner's association dues, and maintenance costs. Not if you rent it out, says Karpinski. Then it becomes a source of new income.


So don’t give up and seek to unload your second home just yet! There are still many ways to make this investment pay off. For more information on renting or buying a second, potential retirement home, please e-mail me. And please forward this email to any friends and family who could benefit from these insights.

Renting VS. Buying....The Pro's and Con's!!

Saturday, September 15, 2007
by Mike Parker

Submitted by Jill Kuchle:

Can't decide whether to buy or to rent???  Maybe this can help you make that decision!! 

BUYING

* You will have a GREAT tax write off.

* Your housing expense may never go up

* You can use, decorate, make physical changes to, and ENJOY your home as YOU see fit!

* You may increase your equity as your home appreciates in value.

* You are not at the mercy of your landlord.

* Your house will become "home," not a temporary living situation.

RENTING

* You will have NO tax write off.

* Your rent can go up each year, typically four to ten percent.

* You must get permission from your landlord to make ANY changes to your home.

* You have no equity built up - your money is gone for good.

* You can be evicted, lose your security deposit (attention pet owners!!!) and more!!!

* Your living situation is always temporary!!

Most people buy homes to have control over where they live.  Although investment features are important, the satisfaction of owning your own home and freedom from paying rent are VERY important as well!! 

In a survey done by the National Association of REALTORS of 6,000 homeowners and 2,000 renters - perhaps the largest ever of attitudes toward home ownership - showed that 76% of owners and 66% of renters considered pride of ownership a very important reason for buying.

Almost equal portions of owners and renters - close to 7 out of 10 - said a dislike of paying rent was an important reason to buy.  Sure renting offers a lifestyle that's nearly maintenance free, but writing a rent check is also like watching your hard earn money sail off into the sunset!!!

Believe me, sacrifices are WORTH it.....almost 7 in 10 renters in the National Association of REALTORS home ownership survey said they planned to buy a home in the future.  More than 3/4 of these people said they were willing to sacrifice to do that. 

Check out the chart below to see how the cost of renting based on a 6% rental increase each year can add up....

 
$300 per month for rent today You’ll Pay
$350 per month for rent today You’ll Pay
$400 per month for rent today You’ll Pay
$450 per month for rent today You’ll Pay
$500 per month for rent today You’ll Pay
$600 per month for rent today You’ll Pay
$700 per month for rent today You’ll Pay
This Year
$3,600
$4,200
$4,800
$5,400
$6,000
$7,200
$8,400
Next Year
$3,816
$4,452
$5,088
$5,724
$6,360
$7,632
$8,904
3rd Year
$4,045
$4,719
$5,393
$6,067
$6,742
$8,088
$9,438
4th Year
$4,288
$5,002
$5,717
$6,431
$7,147
$8,575
$10,005
5th Year
$4,545
$5,302
$6,060
$6,817
$7,576
$9,054
$10,605
6th Year
$4,818
$5,620
$6,424
$7,226
$8,031
$9,635
$11,241
7th Year
$5,107
$5,957
$6,809
$7,660
$8,513
$10,210
$11,916
8th Year
$5,413
$6,314
$7,218
$8,120
$9,023
$10,824
$12,630
9th Year
$5,738
$6,693
$7,651
$9,023
$9,564
$11,472
$13,388
10th Year
$6,082
$7,095
$8,110
$9,564
$10,138
$12,164
$14,192
TOTAL
$47,452
$55,354
$63,272
$71,175
$79,094
$94,856
$110,719

So let's get started on the purchase of your new home!!  Contact us if you would like to receive lisitngs as they hit the market via email or check out a hassle free website www.nkyhomesbyemail.com.

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Photo of Mike Parker - CRS Real Estate
Mike Parker - CRS
HUFF Realty
60 Cavalier Blvd.
Florence KY 41042
859-647-0700
859-486-3300
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