Many people question if buying a home or condo is better than renting. How do you decide? What are the actual benefits? Is the area of Germantown a good place to buy? Today, we’ll discuss why it makes more financial sense to buy vs. rent, and why Germantown in Louisville Kentucky is one of the BEST places to buy right now!
Why would you rent?
For most people, owning a home makes more sense financially and from a lifestyle perspective than renting a home. The reasons one would NOT want to buy would simply be due to lack of finances for down payment (although most lenders have low or 0% down options for many buyer), too busy to keep up with any maintenance, or unsure about how long you’ll be living in the city.
With a condo like East Kentucky Street Lofts, buying is the only thing that makes sense….
- With prices starting at just $119,900, finances won’t be a major issue. Your mortgage will likely be lower than any rent you’d pay.
- With a condo, you have very little maintenance or upkeep to take care of, and the fact that it’s a brand new development means things won’t be breaking down any time soon. It’s built to last.
- Louisville is a flourishing city as it is, but the neighborhood of Germantown is even more in demand and continues to see rapid growth. There are no other options that allow you to purchase in Germantown like EKSL. This means that most likely, you’ll stay and enjoy the community, and if you do sell, you’ll get a great ROI and have an easy time selling due to the limited number of options to purchase.
Now that we’ve established just how great East Kentucky Street Lofts will be, let’s go over why buying IS the better decision overall.
1. It’s yours, do what you want with it
Owning your home means you can do any updates you want without asking a landlord for permission. Some rental properties won’t even let you paint, meaning your personal style may be nowhere to be found. Often, making these home improvements will increase the value of your property, so it’s in your best interest to be able to make a change if you need it.
2. Appreciation and Leverage
Owning a home is an investment many people can understand better than something like the stock market, because they get the tangible daily benefit of living in the home. It’s a useable investment that allows you to also enjoy life to the fullest. But the financial benefits are also substantial, and can be even better than other forms of investing. As a home appreciates, it accrues even faster than a stock because you get the appreciation on the entire home’s value, not just the gain of your down payment.
For example, if you bought $30,000 in stock and it appreciated 3 percent per year for three years, you’ve gained $2,782 on top of your $30,000 invested — and if you sold, you’d pay taxes on that money gained. If you buy a $300,000 primary residence with a $30,000 down payment (representing 10 percent down) and it appreciated 3 percent per year for three years, you’ve gained $27,818 on top of your $30,000 invested — and if you sold, you’d be exempt from paying any taxes on that money gained due to capital gains tax laws. It’s a no brainer!
3. Tax Benefits
Homeowners can deduct mortgage interest and property taxes when they file tax returns. The tax deductions homeowners get for mortgage interest and property taxes are reduced, so subtract this from total monthly housing cost. This significant savings from tax benefits can often make owning the same as, or cheaper than, renting, along with all the other added benefits that you get when owning vs. renting.
4. Fixed Mortgage vs. Variable Rent
If you get a fixed-rate mortgage on a property you buy, your mortgage payment can never change. Unless a renter is in a rent-controlled building or neighborhood, their rent is at risk of rising every single year and in popular areas of the city, you’re at even more risk. This allows you to have stability in one of your biggest expenses each month. Without this, you could have to move due to the new rent not being affordable. Then, add on costs of moving, costs of a new security deposit, first and last month’s rent at a new place, and the costs really add up.
5. Equity – You’re Paying for an Asset
When a homeowner is making a mortgage payment, a portion of that payment is paying the loan down every month. This gives the homeowner equity in their home. Using the example of a $300,000 home purchase with 10 percent down, the average pay-down per month in the first year is $423, and the average in the second year is $438, and the average pay-down per month keeps rising each year. This loan pay-down each month is required as part of the mortgage payment, but it’s the owner being required to invest in their own home, so it’s like forced savings that benefits the owner — whereas the entire portion of a renter’s monthly payment is going to a landlord. If you ever need a loan, a home equity line of credit can be a great way to do it, because that money you’ve been paying down is actually YOURS in the form of a valuable asset.
So as you can see, it only makes sense in today’s day and age to buy over rent. It makes even more sense to buy if you’re looking in the Germantown or Downtown area, and it buying a brand new condo like East Kentucky Street Lofts makes more sense even still.
Long story short, purchasing a condo at East Kentucky Street Lofts is an all around long term great investment.
Interested in buying at East Kentucky Street Lofts? Click here to have us contact you about pre-sale!