This is a difficult question to answer. Whether you should rent or purchase real estate depends on your individual situation. There are a number of factors that need to be taken into consideration, and they differ for each person. To help you with your decision, here are a few things to think about and questions to consider.
1. What is your monthly income?
If you have a set monthly income, then this should be a determining factor for whether or not you are able to purchase real estate. If you can make all the payments each month, then go for it! However, if your monthly income has been decreasing or fluctuates per month, this is something that will need to be taken into consideration as well. In fact, you may not even be able to afford the monthly payments each month.
2. What is your long-term financial situation?
If you are currently at risk for severe financial hardship, then you should be renting. Unless there is a significant chance that your income will increase in the near future, it is best to rent a property to keep money (and stress) away from you! If however, you have been keeping your finances healthy and everything is currently looking good, then purchasing real estate may be for you.
3. Where is the property?
It is important to think about where you want to invest in. If the area you are looking at is a high-risk area, then you may not want to purchase real estate. Remember that buying real estate means long-term commitments such as potential renovations, upkeep, and so on. If purchasing real estate in a high-risk area doesn't sound like something you would be willing or able to deal with, then don't do it!
4. How do you feel about maintenance and upkeep?
Another thing to think about when thinking about purchasing real estate is whether you have the time to keep up with the maintenance and upkeep of a property. If you are able to spend the time necessary but not know how long that will last, then it is also important to think about this in your decision. Depending on what kind of property you are looking at (e.g. detached houses vs. condos), this may make a difference in your decision as well.
5. Who would be the best person to handle the maintenance?
To help you with your decision, consider how you feel about your potential tenants. You don't want a tenant that is going to be difficult to deal with. If you are just getting started in real estate and this is the first time you are dealing with someone that may or may not have their act together, then it is best to stick with renting until you get more experience.
6. What kind of cash flow is your property generating?
Cash flow is another thing you may want to consider. If you are looking at a property that generates cash, this is better than one that doesn't. If it's not enough cash to cover expenses, then you are going to be struggling and potentially losing money overall.
7. Is there a chance of losing money?
There is always a chance of losing money when purchasing real estate. Whether it's due to renovations, interest rates, or any other number of factors, there is always a chance that you will have to take a loss. You should always try and account for these potential losses before you go into the venture.
8. How do you feel about being in debt?
If you don't like being in debt, then you should wait until you are more financially stable before purchasing real estate. This is not for everyone. It's important to know where you stand on this issue and do what brings you peace of mind!
