Renting versus buying is one of the most-asked and most-pondered lifestyle questions in Gaithersburg, as well as the rest of America. If you are weighing renting versus buying around Gaithersburg, or anywhere in Montgomery County, then this is for you. The internet is full of articles on how to calculate what to do and which way to go. But most of the articles seem to focus on the obvious. What I want to do for you is to dig deeper into the question so that you can make the best decision for you – and you alone.
My goal is for you to ask the question, “Is buying or renting in the Gaithersburg area right for me?” and to get valuable information and background. It’s important for you to know you are making the right decisions – for now, the next few years, and your long-term future. That is why this article is for you.
Should You Rent or Buy in Gaithersburg?
Renting versus buying around Gaithersburg is a decision you literally will have to live with. I understand that, and my many years of working with and advising my clients have given me insights I want to share. Yes, I am a successful realtor, and I am an experienced loan officer. Success, in my book, comes from mutual respect, trust, and working to the Golden Rule — an oath I took when I became a realtor. So, what you read here may guide you to do nothing, to rent your next home, or to buy or sell it as part of your overall plan. What matters is that the decisions you make are right for you, your family, your present circumstances, and your future aspirations.
The Basic Renting Versus Buying Decision
Benefits of Renting
Renting will give you greater flexibility if your personal or career future will be fluid. If you want to learn more about possible neighborhoods before settling down, then renting makes sense. The initial costs of renting are much lower than buying, as is renter’s insurance compared to homeowner and private mortgage insurance. Repairs and maintenance costs usually fall to the landlord and not the tenant, and a tenant’s free time goes into what they want, not into maintaining the property.
Costs of Renting
On the other side of the coin, your landlord is in control. This year’s maintenance costs become next year’s rent increase. Your landlord may sell the property, and the new landlord may not renew the lease, leaving you with an unexpected move.
There is a rent increase limit in Montgomery County because of COVID-19, but it expires in February. The current average rent in Gaithersburg for an apartment is $1,720 per month. In Rockville, for example, the average is $1,968, with an average-sized apartment being 968 square feet. Also, note that 42% of tenants pay more than $2,000 monthly rent.
Money saved on renting versus buying can be invested to offset not benefiting from our real estate market’s increasing values. But investment profits are taxable at some point. Home-selling profits do not get taxed until the profits for a couple’s home exceed $500,000.
Carefully considering the question of buying versus renting delivers many benefits. We will look at those shortly. One way to decide on renting versus buying around Gaithersburg is to look at these ideas and compare them to you and your own circumstances.
What Do You Aspire To, and Where Are You Now?
- Are you just starting out and want somewhere comfortable and convenient to live in for a year or two? If so, then renting in the Gaithersburg area may be the best decision. The cost of buying and then selling in 12 to 24 months may be too expensive, despite our strong market.
- Have you decided you want to be your own boss and invest your savings in starting your own business? If your focus is on your new venture, then perhaps growing your business and leaving repairs and maintenance to a landlord may be the best way forward.
- Is a promotion or a job move on the horizon? Again, if you are renting now, it may pay you to stay where you are. Then move on without incurring seller’s expenses.
- Do you see yourself living where you are now for several years, and for your family to live and grow in the neighborhood of your choice? This is a powerful reason to buy.
- Is your retirement just on the horizon, and you intend to downsize and live your golden years in a pleasant, small-town community like Laytonsville or Damascus? Let us explore the best time to sell and buy and how best to manage the financial aspects. Depending on where you want to move to and the local trends, you may decide to sell now, rent for a short time to really get to know the locale, and then buy when the time is exactly right.
More Considerations for Renting Versus Buying Around Gaithersburg
When you know your future, you make the right decisions. Renting versus buying around Gaithersburg or the surrounding area? Yes, it depends. Let’s keep thinking about it. Do you…
…See yourself selling and moving in a couple of years?
Let’s look at your home’s current equity and its likely future valuation based on current trends. Then we can make a plan that works for you.
…Intend investing your savings in a different kind of life-changing venture?
If you rent now, it may pay to keep renting. If you own, then let’s discuss whether selling or taking out a HELOC makes the most sense.
…Not have enough savings to make a down payment on the right home?
Do you lack ready money to cover the closing costs unless you empty your 401(k)? If so, let us work together and agree on a plan of action. That way you can buy as soon as you are able. I can also keep you informed of market changes as your plan develops.
…Reckon you could handle the initial costs of buying, but you are not sure about the rest?
Let’s talk, so I can explain the typical costs of owning the kind of home you want in the area you want. That way, you will know you are putting together a sensible housing budget.
…Want to discuss where to live in Montgomery County that will satisfy your family and home life while still having less than an hour’s commute to DC?
Check out this link and explore some neighborhoods. We can discuss the details at any time.
…Just want to bounce ideas off an expert to help you get a safe perspective so that you can plan ahead safely?
This summary gives you January’s residential sales data. You may also want to know that in Q4 2020, residential home sales saw a median price of $490,000. Also, home values increased 8% (11.1% since January 2020). Every month I can give you up-to-date reports and discuss the implications of what is happening in each town and neighborhood so that you can make the right decision at the right time.
Buying Versus Renting in Gaithersburg
Deciding to rent is often a matter of future plans and finances. Deciding to buy is also about those things. Buyers are experiencing historically low mortgage interest rates, which should stay low. The value of homeownership becomes even more clear when you add in:
- The low cost of borrowing
- The tax benefits of itemizing your interest costs (up to $10,000) when you submit your taxes
- The investment advantages of owning real estate in our very positive market
Less Obvious But Major Benefits of Home Ownership
There are other powerful forces at work directly associated with homeownership. I believe everyone should consider them. A NAR report was published a few years ago, and another published by HUD two years ago, reviewed a lot of academic literature on the values associated with owning your home. The reports covered:
- The improved educational achievement of children who live in a stable community and in a home where pride of ownership shows
- How increased civic participation, typical with homeowners, leads to a friendlier, safer community in which to live and raise a family
- The hidden health benefits of stability compared to frequent moving at each lease-end
- The dollar impact of maintenance and home improvements
The Takeaway on Renting Versus Buying Around Gaithersburg
Deciding on renting versus buying around Gaithersburg and our surrounding communities is a complex decision. Basically, it does boil down to:
- Personal aspirations
- Current personal and professional circumstances
- Of course, immediate access to funds for the front-end costs
We have covered a lot of ground in this article because I want to demonstrate both my background knowledge and also my intentions. I do not approach real estate as simply helping you to buy or sell with the best terms. Instead, I want to help you make the best decisions for yourself and your family. If you would like to discuss your future goals and current circumstances, let me know. If you would like me to help you create a plan to help you buy or sell at some point so you do make the perfect decision, please feel free to call me at (301) 452 9319 or message me, and I will get right back to you.