People often ask me: Should I rent or buy in Orlando? Which is the savvier financial move? While there are many pieces to the puzzle in determining this, many of which will surely be discussed in later blogs, let’s take a ‘basic’ approach for this post. I have ‘basic’ in quotes because, while this is the easiest way to figure out whether to rent or buy, it is by no means simple. But, since you asked…
- Determine the average for-sale and rental price for similar properties. You can use a number of websites to find this information, most notably Zillow and Trulia . It is important here to use properties that are similar (same neighborhood, size, etc. if possible). You can’t just take a snapshot of rental rates vs prices in a city or zip code; that would be misleading.
- Estimate the total monthly costs of both owning and renting. Typically, almost every expense you will have while renting (utilities, cable TV, etc.) you will have when you own, along with additional expenses. For owning, include your PITI costs (Principal, Interest, Taxes, and Insurance) along with HOA dues, lawn service, pest control, and estimated maintenance. Depending on the age of the house, I’d estimate $50-150 per month for maintenance.
- On the ‘owner’ side, throw in one-time costs, like loan origination and closing costs, as well as estimated appreciation of the property with the sale proceeds.
- Finally, estimating how long you will live in the home if you bought, calculate the net present value of each side to determine the better bargain.
Because of the amortization of most mortgages, interest rates play a huge role in determining if it is more affordable to rent or to buy. Even though rates have risen sharply over the past few months, they are still at historical lows, which is why many ‘experts’ believe it is still a good time to buy in nearly every major metropolitan real estate market.
Should I Rent or Buy in Orlando?
As I mentioned above, this formula is more of a starting point than a finish line, as many other factors go in to determining if it is wise to buy vs rent. But, if you need a place to start, this is as good a way as any.
If you are interested in buying a home, please contact me, Steve Simpson at Central Florida Property Management, (407)429-4834. Aside from owning and operating this fine management establishment, I am also a real estate agent with Re/Max Exclusive Collection in Orlando and would love to help you buy your first house (or your second, or your third,…)!
Now that I’ve discussed a mathematical way to determine whether it made more financial sense to buy or rent a home, in regards to rental rates and home prices, let’s move on. As I mentioned, there are much more that goes into determining a financial decision as large as home ownership. So, now I’m going to talk about a couple of those, as well as shed light on a few home-ownership myths that are prevalent in American culture. At Central Florida Property Managment we take these factors into consideration when working with our clients.
When you own a home, the buck stops with you.
Owning a home is sort of like owning a business in that you are financially responsible for nearly everything involved with it. When you rent, if your AC breaks, your roof leaks, or the dishwasher stops working, you call your landlord and (if they’re a good landlord) they pay to have it fixed within a reasonable amount of time. When you own a home, this is not the case. You and you alone are responsible for all of these and much more.
In case you didn’t know, air conditioning systems are expensive; as in, $3,500+ expensive. It gets pretty hot here in Florida and if the AC goes in June, July or August and you don’t have the financial means to repair or replace it, you are going to be in a world of hurt. When considering buying, think about the financial