Updated April 5, 2024 . AmFam Team
Has the idea of owning a place of your own been a dream for a long time? Having the freedom to decorate the way you want, to live without worrying about the rent going up — or needing to find another place next year — those are all great reasons to buy. But what if you could save more money by renting?
If you’re wondering whether to buy a condo vs. rent one, the answer to that can be a bit tricky. Depending on where you live, how much you’re paying in rent and several other factors, one option may be the smarter way to play. That’s why we’ve put together these tips to help you figure out whether buying a condo vs. renting one is the better way to go.
Buying a condo seems like a great idea. It’s a real step up in many ways from renting but owning a condo vs. renting one may not be the smarter choice. How do you know when to do what? What about closing costs and extra expenses — do you have that money saved up?
If real estate prices are below the national average, you may be better off buying instead of renting. It all depends on where you’re looking to live. Try using a simple formula to figure out the price-to-rent ratio.
After you’ve narrowed down your options to one condo to potentially purchase and a similarly appointed one to rent, use the calculator on your smartphone to figure out which option is the right one for you. Here’s what you’ll need to do:
Although there’s no foolproof way to get the right answer every time, the price-to-rent ratio score is a great first step to help you plan.
There are a few key things to consider when exploring your options. Do you rent or own a condo to save more money or to settle down and focus on your financial goals? Try putting together a list of wants and needs as another step towards making a decision. Then, look at these tips to help narrow down your choices.
If you’ve always dreamed of owning, buying a condo can be a great way to start down that path. The same goes if you’re looking for a place to settle down and start a family. When answering the question of whether to rent or buy a condo, try putting together a five-year plan. If you see yourself staying in the same place for five or more years, buying may make more sense. Plus, buying has advantages over renting:
Ask yourself this question: “Is it smarter to rent or buy a condo if buying one is going to drain you of your savings?” Making a major purchase like this is something you need to take seriously. Although the idea may be appealing, there are many solid reasons to hold off on buying a home for a while:
If you’re feeling that the task of getting all those ducks in a row to buy a condo is a bit much, you’re not alone. It’s why more than a third of the U.S. chooses to rent. Landlords or property managers take on the task of making repairs and upgrades — and that can save you a lot of time and money. But you may also be facing annual rent increases. Figuring out if you should rent or buy a condo is sometimes about looking at both sides of renting one first.
Renting a condo can benefit you if you need time to save up for a down payment on a home and work on your credit before buying. Let’s look at some other reasons why people decide to rent a condo instead of buying:
As time goes on, you may find that the condo you’re renting is getting more and more expensive as rent prices continue to climb. That’s one of the biggest issues people complain about when it comes to buying a condo vs. renting. Here a few other key ways that renting may not be the right answer for you:
If you’re ready to take the next step and purchase a condo, congrats! Deciding to buy a condo vs. renting an apartment is a big step. While you're shopping for a new home, and working out financing, be sure to reach out to your American Family Insurance agent for a quote on condo insurance. They’re seasoned experts at customizing your coverage for your new condo and your budget.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.