Living the American Dream

by Bernhard Krieg

The Advantages of Renting

Buying a house is a great investment but it’s not the only option for a couple to consider. I believe the biggest and most unappreciated aspect of renting is the flexibility. You only sign a contract for a maximum of 12 months, and normally you can even get out of that commitment on shorter notice without too much financial damage. So, that means that you can change living quarters within your hometown and throughout the United States, and you can also adjust the amount of living space to fit your budget. If you have to relocate for your job or if your financial situation changes for better or for worse, you can adapt to the new circumstances in your life.

Selling a house is not only a lot of hassle, but a significantly more expensive venture. You can always pay a penalty to break a lease when necessary, but selling a house requires a lot of time and energy. If you need to find a buyer for your house, you’ll have to synchronize that with buying your new home. Right now the market is bountiful, but there will come a time when the sellers are plentiful and the buyers are scarce. This means that your residence could sit on the market for 6 months or longer. You’ll also have to pay for the real estate broker commission, which is 5% of the sales price.

The other advantage is convenience. How great is it to just call your landlord or your maintenance staff at the apartment complex and tell them to fix the fridge, air-conditioning, toilet, furnace or whatever else is not functioning? If you own your home or condo, you need to find the right service to fix it, make sure the price is not ridiculous and, likely take time off from work to be there when the repair people come over.

The Sum of it all

I hope this article will help you avoid some of the potential pitfalls when it comes to making one of your biggest purchasing decisions. If you can truly afford it, purchasing a home is not only a good investment choice but will also reward you with pride of ownership and a great sense of home. You have decided you want to spend the rest of your life together, but how and where will be something you two discover throughout your journey.

I will be exploring other topics of financial health for couples in this column in the future, so check back for more soon. If you have done the math and you are ready to shoulder the financial responsibility of home-ownership, enjoy shopping around for your piece of the American Dream!

Resources & Helpful Websites

Homes for sale:
Mortgage Rates & Payment calculator: www.bankrate.com
Taxes: www.irs.gov, www.wwwebtax.com

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Bernhard Krieg is a Chartered Financial Analyst. He believes in spending within your current means to avoid future financial stress. He works for a Chicago-based hedge fund and has been a senior real estate analyst for several years.

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