Buying or renting - advantages and disadvantages compared

Numerous Germans ask themselves whether it still makes sense to live for rent or to buy a home instead. Buy or rent? In the past ten years, more and more German citizens have opted for home ownership, so that the so-called ownership rate in Germany has increased by several percentage points. The financial aspect is often decisive. In addition, there are other advantages and disadvantages of the respective form of living, as the experienced broker from Wiesbaden, Paul & Partner knows.

Financial aspect: economy and lower expenses

In fact, the decision between living for rent and acquiring property (buying a house in Wiesbaden or elsewhere) is often made on the basis of the financial aspect. There are two questions, namely:

What is more economical, rent, or property?

In which case are the monthly costs lower?

In terms of economy, the answer is clear: it is always more economical to own a home than to rent it. The reasoning is relatively simple. With homeownership, you pay interest to the bank, but a large part of the monthly loan payment goes to your own pocket in the form of repayments. In the end, you are the owner of a debt-free property and therefore have the intrinsic value as assets on your credit side. However, as a tenant, you pay the landlord in full, month after month. The money paid from the account is simply gone. So home ownership is always more economical than paying rent.

In the second aspect, when it comes to the lowest possible monthly costs, the answer is by no means so clear. It depends on many factors, whether the real estate financing or the rental payment ultimately causes lower costs for you. The following aspects play a role here:

Purchase price of the property

Loan amount

Loan interest

Rental costs

Location of the property

Equity

Creditworthiness

It also depends on which objects you compare. For example, if you are currently paying rent for a 65 square meter apartment in a mediocre district and might want to buy a home in Wiesbaden in a preferred location with a living space of 120 square meters in the future, it is very likely that the financing costs will be higher than the current rent will. However, there may be major differences in individual cases. It is therefore advisable to carry out an individual comparison calculation with the corresponding components. A professional real estate agent from Wiesbaden, such as Paul and Partner, helps here.

What are the advantages of renting a home?

Now we come to the advantages and disadvantages of the respective form of living, which has nothing directly to do with financial aspects. It is no coincidence that Germany, with a rental rate of around 50 percent, is one of the countries in which very few people own their own homes. Paying rent is popular, despite rents that have risen significantly in the past. This is due in particular to the following advantages that arise when renting an apartment or house:

Greater flexibility (relocation)

No greater responsibility with regard to renovations or refurbishments

Living with direct neighbors

No need to build up reserves

Little responsibility

Because of these advantages, there are so-called rental types for which homeownership is simply not the most suitable type of living. This is also taken into account by experienced real estate agents such as Paul & Partner as agents from Wiesbaden when advising customers in this regard.

What are the disadvantages of renting?

Whether buying the house in Wiesbaden or somewhere else is advantageous for you depends on the disadvantages of paying rent that apply to your personal situation. We have already mentioned one major disadvantage, namely that you pay the rent to the landlord and, figuratively speaking, the money is lost. In addition, there are other disadvantages associated with renting an apartment or house:

Little design freedom in the apartment or in the house

Dependence on the landlord (possible termination, etc.)

Rental prices can go up

No home ownership as a possible pension

Relatively little freedom

As a so-called rental type, you should not necessarily have the urge to wish for as many design options as possible regarding your living. With every major measure, you have to ask the landlord for permission and are also dependent on his goodwill. Protection against dismissal exists. Nevertheless, it is often possible under certain conditions that the landlord cancels the apartment.

The advantages of owning a home

The fact that homeownership has had even more advantages than in the past few years can be seen from the increased income rate in Germany. This is now around 50 percent, while in the 1990s it was just over 42 percent. One of the factors that contributed to this was the low building interest so that in recent years more people in Germany have been able to afford their own four walls than before. Real estate agents such as Paul and Partner confirm that good service is increasingly important to buyers when looking for their own four walls.

There are some advantages that buy, for example, with the house in Wiesbaden and are generally associated with your own home, namely:

A lot of creative freedom

independence

Living without a direct neighborhood (single-family house)

Ownership and contact with neighbors in combination (condominium)

Economically very reasonable

Real estate property as private pension

These and other advantages make homeownership popular, especially if one is the so-called type of property in terms of character and living situation. Brokers from Wiesbaden such as Paul & Partner deal with such customers on a daily basis and can also advise them on the advantages of homeownership.

What are the disadvantages of private home ownership?

As with renting, there are not only advantages to private homeownership, but some potential disadvantages. Many tenants see a disadvantage in particular in the fact that one gets heavily in debt at the beginning by buying or building a property. Most of the loan amounts range between 150,000 and 300,000 euros. This is also associated with an additional risk, because those who become disabled or unemployed, for example, often lose their homeownership due to the fact that the loan installments can no longer be paid.

Other disadvantages of property ownership include:

Reserves must be created

A lot of personal responsibility

Risks in the form of possible damage to the property

Not very flexible, for example with a view to moving quickly

Conclusion: living or renting - an individual decision

In conclusion, it should be noted that it depends on several factors whether renting or living is the better form of living for you. A good and experienced real estate agent from Wiesbaden like Paul & Partner advises his customers on whether renting or living is the better alternative. For example, if you want to buy a property in Wiesbaden, you should at least know beforehand whether the advantages of property ownership outweigh renting. If you are not yet sure about this, a little time to consider is certainly advisable.