Buy? or Rent?
when someone tells me about buying houses, i just throw a smile. but inside my head i keep on asking, why should buy, instead of rent? maybe because of the feeling of having something that's all yours. or maybe because of its appreciating value in nature over time.
either from old folks or the youths, the common advice is buy a house as soon as you can, renting is just a throwing-money device. i don't really agree with the suggestion and here's why:-
1. renting is flexible.
you can move out anytime with little penalty (if available). when you own a house, selling out can take a very long time. it's maybe suitable if you're 55year-old but if you are 25year-old, career might require mobility. isn't it? so why put your root down at a place you just stay for temporary; 5yrs? or most of 25yrs?
2. owning a house is more expensive.
renting a house will throw your money and you'd never gain the ownership of it. but, owning a house is also throwing your money in taxes, fee, etc- those would not go towards the equity of your home. even if you're no longer staying in the house, you still have to pay. if you rent out your house, you still have to pay the loan which is significantly higher than rental price if you owned landed properties; esp. true for landed properties.
3. you'll stranded for about 30 years.
when you buy a house (let say you take full loan), you have to commit your monthly salary for an additional of RM300-RM500/month compared to rental for the next 25-30 yrs . if extra rm500 been invested with return more than 10% p.a., you'll easily claim rm8724 by end of 30th yr.
4. someone else do the repairs
when you own a house, if something breaks down (-paip pecah la, toilet sumbat la, atap bocor la, etc), you have to fix it by yourself. but if you rent, hopefully your landlord will do all the repairs, no charge to u!!! again, you can use your money to invest in something else...
5. treat housing market as other markets.
housing price will also depreciate in value, just like any other market.
owning a house is not like investing in EPF, it is a life changing decision with 30yrs commitment. it may change your life significantly, but not now. you may think owning a house is a fun thing but when you come across financial planning concept, soon enough you'll reveal the true myth about buying or renting.
either from old folks or the youths, the common advice is buy a house as soon as you can, renting is just a throwing-money device. i don't really agree with the suggestion and here's why:-
1. renting is flexible.
you can move out anytime with little penalty (if available). when you own a house, selling out can take a very long time. it's maybe suitable if you're 55year-old but if you are 25year-old, career might require mobility. isn't it? so why put your root down at a place you just stay for temporary; 5yrs? or most of 25yrs?
2. owning a house is more expensive.
renting a house will throw your money and you'd never gain the ownership of it. but, owning a house is also throwing your money in taxes, fee, etc- those would not go towards the equity of your home. even if you're no longer staying in the house, you still have to pay. if you rent out your house, you still have to pay the loan which is significantly higher than rental price if you owned landed properties; esp. true for landed properties.
3. you'll stranded for about 30 years.
when you buy a house (let say you take full loan), you have to commit your monthly salary for an additional of RM300-RM500/month compared to rental for the next 25-30 yrs . if extra rm500 been invested with return more than 10% p.a., you'll easily claim rm8724 by end of 30th yr.
4. someone else do the repairs
when you own a house, if something breaks down (-paip pecah la, toilet sumbat la, atap bocor la, etc), you have to fix it by yourself. but if you rent, hopefully your landlord will do all the repairs, no charge to u!!! again, you can use your money to invest in something else...
5. treat housing market as other markets.
housing price will also depreciate in value, just like any other market.
owning a house is not like investing in EPF, it is a life changing decision with 30yrs commitment. it may change your life significantly, but not now. you may think owning a house is a fun thing but when you come across financial planning concept, soon enough you'll reveal the true myth about buying or renting.
