Should You Buy or Rent a Home if You're a Young Professional? Lamudi Gives Expert Advice!

Transitioning to Adulthood or "Adulting" - as millennials call it - goes beyond just paying bills on time, doing the grocery, cooking your own meals, and skipping Friday night-outs in favor of a quiet, peaceful Netflix marathon at home. For many young professionals, Adulting involves making decisions that could be life-changing or life-altering such as choosing between renting and buying a home.

While making that decision might sound easy, you'd soon realize that your considerations go beyond just looking at your bank account. You might eventually find yourself comparing property listings on Lamudi such as the affordable townhouses in Sentosa Punta Calamba, condominiums in Makati City that come with big discounts, or even just vacant lots near the place where you grew up. 

As with other important things in life, when you're trying to make the right choice that will benefit you in the long run, you truly need to reflect and contemplate. So going back to our topic: Should you buy or rent a home?

Well, to help you answer that question, I'd like to share with you Lamudi's pieces of expert advice. As you may already know, Lamudi is the Philippines' leading online real estate marketplace.

Assessing Financial Capability and Doing Computations

Of course, cost should be your primary consideration. Both buying and renting require spending big money or taking a chunk out of your budget. You need to ask yourself: How much am I willing to spend on these home costs? With the money I have to spend, what type of home can I afford? 

It's understandable that many young professionals settle on renting given that they’re just starting out in their careers and their income has yet to grow to a level that's big enough for buying a home. This makes financial sense. However, in some instances, the cost of buying a home becomes more beneficial than the cost of renting. Here are some of those:

1. When your rental fees become comparable to staggered down payments on a property - An average rent of PHP 10,000 a month will amount to more than PHP 200,000 in two years, which is already the average duration for staggered down payments. The figure is 10% to 20% of the total contract price of an affordable property for sale.

For example, Micara Estates - which is a rising neighborhood in Tanza, Cavite, offers affordable homes with prices starting at PHP 1.9 million. Their townhouses are currently pre-selling and you can pay for the down payment in a period of 15 months.

2. When your rental fees become comparable to monthly mortgage payments - This is the case when the amount of rental fees every month is relatively close to the amount of loan payments for an affordable property every month. The only difference is that when you buy a home, you’re paying for your own.

Going back to our example, the Felicia House model of Micara Estates, which features a 50 sqm lot and floor area, has a total contract price of PHP 1.9 million. The estimated monthly amortization for 20 years is PHP 15,000 under bank financing. 

It’s important to note that apart from the mentioned, there are other costs associated with buying, including taxes and homeowner’s insurance. On the flip side, renting comes with expenses such as security deposit, parking fee, appliance fees, and move-out fees. Given all these cost considerations, go back to the question, how much are you willing to spend on home costs?

Creating Future Plans

Where do you see yourself in five years? It’s a question you often hear from your parents at home or your human resources manager in your workplace. It also applies to adulting and property-related decisions. You should use this same question when weighing these two lifestyle aspects:

1. Career - Your career determines your financial stability. If you’re unsure about staying in the company you’re in right now, it might affect your finances in the near future, which then makes renting a far less risky option. However, if you see yourself growing in the company and striving to climb up the corporate ladder, it may be good to think about buying a property, which can physically represent where your hard-earned money goes. 

2. Family - Another consideration is your plan to start your own family. If you envision having a spouse and children in the future, investing in a home now makes more sense, as it will give you and your future family security and stability in the long run.

If you find yourself leaning more towards buying a home for your career and family, then it's a good idea to choose one in an area with great potential for development in the next few years as its value will continue increasing sharply. A good sign that a property will greatly grow in value is if popular businesses or franchises are being built in nearby areas, such as restaurants or malls.

If you have more questions about this topic, feel free to talk to a Lamudi representative via their website or Lamudi's official social media accounts on Facebook, Twitter, and LinkedIn.