Your friends are uploading images or bragging about how they are building houses. Your coworkers continually argue that it is better to build rather than rent, while others prefer to rent rather than build.
You’re now stuck there, unable to decide.
Do you build a house or merely rent?
Your present financial status will play a major role in determining which alternative you select. Your living conditions are mostly determined by what you can afford.
If you have a long-term goal of settling down in a specific region, you can save money with a Sacco that would allow you to take out a loan- to buy a property and develop.
However, your financial status is not the only issue to consider when determining whether to buy or rent a home. Other factors are at play.
What’s The Cost Involved?
Seven Bedroom Villa To Let In Runda
The amount of money you can spend comfortably on rent is the most important factor in determining your living situation. This entirely depends on how much money you make per month, excluding essentials such as food, transportation, and some emergency funds.
Dave Ramsey, the author of The Total Money Makeover, recommends allocating 30% of your net income towards rent and purchasing a house after you pay off your debts like student loans—HELB.
It’s easier to budget for your monthly home costs when you rent. Unlike renting, owning a home comes with a slew of upfront costs.
If you decide to build your own house, you’ll need money to purchase land, building materials, pay contractors, and ensure that you have electricity and water.
If you take out a traditional loan to buy a house, you must also consider mortgage or Sacco/bank interest rates. That’s not all, though. You may face additional costs when you buy a home, such as a leaking roof that necessitates renovations. As a result, budgeting for monthly spending as a homeowner is challenging.
Read more: Factors that Influence a Home’s Value
How Long You Will Stay In One Place?
4 bedrooms for sale all en-suite with DSQ at Syokimau– Katani Rd
You can relate to how many times you have purchased something you had your eyes on only to discover that the happiness or sense of accomplishment you thought you could feel was only short-lived
Before purchasing a home, consider how long you intend to stay in that place. Although you can always rent it out or sell it later, purchasing a home means that it’s a long-term investment.
Real estate is the original illiquid asset. You might not sell when you want in case the housing market is down, and even if it’s up, there are significant transaction costs involved. Changing your mind about where you want to live is far more expensive than when you own.
What Are the Cons of Renting and Buying?
Apartment Building For Sale at Ngumba
Keep in mind that renting is not a waste of money while considering whether to buy or rent.
As long as you have to pay to live, your money is being well spent. However, there are certain downsides to renting, like:
- Even if you got a great deal in a great neighbourhood, rent costs will eventually rise. Due to inflation, competition, and rising property values, rent will rise year after year.
- There are no financial benefits, like tax deductions, equity, or rising property values, for you to take advantage of.
- You’re restricted in the amount of remodelling you can undertake. No matter how much money you put into renovations, you’ll still be wasting money by moving out and leaving everything behind.
Buying has a few drawbacks as well, such as:
- You end up incurring additional costs, such as property taxes, hefty electricity bills, mortgage, or loan interest rates. You won’t be able to contact the caretaker every time your sinks become blocked; instead, you’ll have to hire a plumber at your own expense.
- What if you wish to move to a different city in Kenya, assuming you live in Nairobi? You can always have us handle your home by finding tenants, but this may take some time.
What Are Your Options if You Settle On Buying?
2 bedroom Master ensuite for rent at Parklands
- Down-Payment Plan (DPP)
Stamp Duty and Registration Fees are included in this 10% down payment when you book the property. Within 60 days, 80% of the payment must be made, and 10% must be paid at the time of purchase.
- Construction-Linked Plan (CLP)
A booking fee of 12% of the purchase price is required up front, with the remaining 80% tied to construction milestones, such as 40% for each floor built.
- Flexi-Payment Plan (FLP)
You can pay in full upfront or pay a portion of the amount over time with the remaining balance due when you own the home with the FLP plan.
When Should You Rent or Buy?
This table explains when renting or purchasing is the best option for you.
| Rent | Buy |
| You can receive the extra money you need to pay off your HELB loans or other long-term debt by renting | If you have paid off any long-term debts, such as HELB |
| If your job or way of life requires you to be mobile | If you have an emergency fund in place, to cover your monthly expenses in case you lose your income for three to six months |
| If you’re thinking of buying a home but need some time to figure out what you want to do or check around the neighbourhood to see if you’ll like it | If you have enough funds to cover a down payment if you want to buy with a mortgage |
| If you can afford a down payment of at least 20% of the purchase price in case you purchase a home using mortgage | |
| You can rent it out or use it as an Air BnB as a long-term investment |
Read more: Why do you need a Property Manager?
Rent vs Buy: Make Your Best Choice With a Pro
In your search for a home, you need to use an agent who serves, not sells, an agent who cares about you more than their commission, an agent who can balance serving and selling.
These are some benefits of using our services at Continuum Favour Properties:
- We ensure you get to visit a couple of homes or apartments before you can settle on one.
- If you buy for-rent, we ensure you get a tenant, and your property is well taken care of.
- We conduct a market survey for you, keeping in mind that there is a perfect balance between maximising monthly income and maintaining a low vacancy rate.
- Timely collection and reconciliations of rent payments on time by putting in place measures that ensure the tenant pays on time.
- Handle your rental maintenance, take care of routine inspections, and manage conflict resolution situations.
- Ensure we abide by all laws and regulations, saving you any trouble or headache from the law.
- We help you negotiate prices for the property you buy, like land or homes, and do all the searches to confirm the sale is indeed legal.
The final decision of whether to buy or rent a house/home is ultimately upon you, and the above pointers will play a role in advising on the decision. Whatever option you choose, ensure your finances and comfortability are in check.