I’m often asked whether people should rent a home or buy a home here on Oahu, but there’s no real one-size-fits-all answer—it depends on your specific situation. Generally speaking, it’s usually in your best interest to buy a home instead of rent one, but today we’ll be looking at the benefits of each.
How to find out if you should rent or buy:
1. How long do you plan to live in Hawaii? If you’re only going to be here for six months or a year or two, it may be better to rent. There are a lot of upfront costs for buying a home, and you likely won’t be able to recoup them if you leave after a short time.
2. Do you have a stable source of income? If your job situation or income is uncertain, it may be better to rent. It’s much easier to get out of a rental situation than a mortgage.
3. Do you have enough for a down payment? If you don’t have the money saved up, it may be best to rent for a year or two in order to save.
Why you should buy:
1. You have the opportunity for appreciation. Over the last 40 years here, appreciation has been around 4% a year. If you own a property for at least three years, it’ll appreciate by about 12%. Closing costs are about 8%, so you’d come out with a 4% profit if you sold after three years. At two years you’d be breaking even, and one year would mean a loss.
2. You’ll save on taxes. Price points for single-family homes are around $800,000 and condos are about $300,000. Buying a home usually means taking out a mortgage, and the higher the price point, the more interest you’ll pay. Fortunately, the government allows tax savings through mortgage interest deductions. You won’t get this by renting.
3. You can modify your home however you like. Landlords control rented property and decide what can and can’t be changed. If you own your own home, you can do with it as you please.
If you have any questions about your own situation or need further information, feel free to reach out to me. I look forward to hearing from you soon.