Tough choice: buy or rent?

Many of us are often faced with the choice of buying or renting. And even if you already own a home, the choice to upscale might end up with you rather considering to rent a larger home than to sell and purchase another.

“There are pros and cons to both,” says Craig Hutchison, CEOof Engel & Völkers Southern Africa. “The eternal truth remains, though,that property continues to be the most solid investment in today's economy, and if you are prepared to hold onto a well located property for a couple of years,you are virtually guaranteed a significant return on your investment.

“It is true that property has become significantly more expensive in the last few years – both as a result of market pressures and interest rate fluctuations, but there is something out there for everyone.Buyers should review their set of minimum requirements when contemplating a purchase – this way, they are sure to find something within their price range.”

There are a number of factors that you need to consider when buying a property, especially the various hidden costs. “In a rented property,you don't have to worry about maintenance and even some utility bills that are included in your rent, whereas you need to set aside money each month for ongoing repairs and maintenance to a property you own. However, owning your own property means that you are putting money into your own investment each month,rather than paying someone else's off – in itself one of the best retirement strategies around – even for those in their 20s and 30s,” Hutchison says.

You will probably need a much smaller deposit when deciding to rent a home, and you will have more freedom to move around the country, or indeed the world, if you're renting your home, but it's also worth remembering that when your contract with your landlord ends, you have nothing to show for all the money that you've paid across. The Landlord, on the other hand, does!

Buying your own property also brings with it a feeling of pride and accomplishment – at last, tangible evidence of the money that you work so hard to earn! Apart from the simple emotional satisfaction, you are able to express your own personality in your own property – rented homes often come with restrictions on any home improvements, and you are also likely to be reluctant to spend your own money on improving someone else's property.

However, the reality of our market at present is that there will be an increased demand for rentals, opening up opportunities for investors to purchase properties to lease out to tenants. “If you're considering purchasing property to rent out, make sure that you can afford it, as the notion that you could cover your monthly mortgage payment with the rental income is no longer necessarily true,” says Hutchison. “Investors that will do well in this market are the ones that can put down a considerable deposit on a property, if they're not buying it for cash.”

It's also important to be able to set aside part of your rental income every month to allow for unexpected maintenance costs, and a buffer to allow for further interest rate increases is important – even though opinion seems to be that the Monetary Policy Committee will not increase the prime lending rate for a while.

“Every individual has different property requirements,whether it's for renting or purchasing a property. The best route to follow is to consult an experienced real estate professional who will be able to advise you on all your options, and their cost implications,” says Hutchison.