Rent A House or Buy Your Own Property?

Which one is the better option … economically?

Everyone of us would dream of owning a nice and comfortable house for the family. Be it just a small apartment, a luxurious condominium or just simply a place to call home. But, have you ever ponder for a moment whether to purchase your own house or just renting a home?


Well, there are certainly a whole lot more aspects to consider when buying a property. Location, pricing, amenities, accessibility and perhaps the most important of all is affordability.Many of us would like to stay in an uptown area with great addresses but ended up choosing other cheaper options due to money matters. All the more reasons why you need to punch your calculator even harder before deciding.


One good example will be buying an apartment-condo in an outskirt area. We bought this 1000 sqft condo way back in 2002. It was selling around RM138,000 at that time, which was quite affordable for a young couple like us.


And now, when we decided to upgrade to a landed property, we made a detail calculation on our home loan payments and was shocked by the findings. As of January 2008, we have paid about RM37,000 on interest alone! Plus all the lawyer fees, yearly quit rent, fire insurance etc, we had paid a total of about RM50,000 already!


Price appreciation for this area is slow and the market price for our condo now is at RM150,000 only. This means that, if we are to sell our property now in order for us to upgrade, we will incur losses of RM38,000! (Just over a 5-year period)

• Initial purchase price = RM138,000
• Interest & misc fees = RM50,000
• Selling price now = RM150,000
• Losses = (RM138,000 + RM50,000) – (RM150,000) = RM38,000

If we were to rent the same condo at market rate of about RM600 per month for 5 years, we only need to pay RM600 x 5 yrs x 12 mth = RM36,000 without having to endure all the hassles of buying your own.


So, the next time when you are buying your own property, think about this factor too. Are you planning to upgrade in the short term? If so, we would advise you to choose your property location very carefully. Make sure there are plenty of rooms for price appreciation. Otherwise, wouldn't it be much easier just to rent a house?



*It would be different if you are staying for longer term.