When OFWs finally decide to purchase a property, the next step is to decide whether you’ll keep it for yourself or rent it out.
As recommended by InCharge Debt Solutions and TransUnion, here’s a compilation of the list of benefits and drawbacks of both using and leasing the home you bought.
Advantages of owning a home:
• Homes often increase in value, generate wealth, and provide a savings account for the future.
• Homes often increase in value, generate wealth, and provide a savings account for the future.
• Better privacy.
• Because your costs are ideally based on a fixed-rate mortgage, they are predictable and more stable than renting.
• There’s pride in homeownership, which also binds you to your community.
• The interest and property tax portion of your mortgage payment is a tax deduction.
What are the drawbacks of home ownership?
• Buying a home is a long-term financial investment.
• You are responsible for all house maintenance. This can range from simple and affordable repairs such as mending a broken toilet to more intricate and expensive repairs such as replacing plumbing and other fixtures.
• Having a house binds you to your neighborhood, making it more difficult to pack up and go elsewhere.
• Mortgage payments are often costlier than rent payments, despite the fact that they usually have fixed prices
• Purchasing a property necessitates a down payment, closing charges, and relocation costs.
• Your home’s worth may not rise over time, especially in the first few years.
What are the benefits of renting your home?
• Renting can supplement your income if the rent is higher than the sum of your mortgage payments and other expenses.
• Holding a home until a depressed market rebounds might help you avoid the bad consequences of a short sale or foreclosure, and if property prices rise, you might even make a profit later.
• Real estate is physical, useable property having a value more than a monetary value: it can be lived in. (With a stock certificate or other intangible asset, you can’t do that.)
• Despite the current subprime mortgage crisis, real estate has always been a wealth creator when bought and handled carefully.
What are the downsides of leasing your home?
• As many people realized during the real estate crash, properties don’t always appreciate in value and might even fall “under water,” meaning you owe more on the property than what it’s worth.
• Market rents change, and your home may earn less rent than you expected or even lie unoccupied for several months, putting you in a financial bind.
• Dealing with tenants and property maintenance is something that not everyone can devote time and energy to.
With these factors in mind, you should be able to make an informed decision about whether to utilize your home or rent it out for passive income. Both have advantages and disadvantages, so weigh them carefully before making a decision you won’t regret.
The Philippine Property and Investment Exhibition (PPIE), the biggest, longest-running and most trusted Philippine business and investment forum in the Middle East, is now on its eighth edition, which will be held this November 5-6, 2022 at the Crowne Plaza – Sheikh Zayed Road.
The past seven PPIE editions made history in the UAE and the Gulf region by bringing in over 24,500 quality visitors.
