Having to choose between buying and renting is a hard thing to do, and for a good reason. Making the wrong choice could be detrimental to your financial situation. That’s why arming yourself with all the necessary information is key in a situation like this. And one of the options you might not have even considered getting informed about is buying from your landlord.
The pros of buying from your landlord
You might get the home at a better price
If you were a good tenant, you probably would have already developed a relatively good relationship with your landlord. This good relationship can sometimes result in your landlord being more open to offering a lower price for buying their property. Additionally, if they sell to you, your landlord can save a lot of money on real estate agent services. This is because they won’t need help finding new buyers. All of the money they save this way may make them more susceptible to giving you some leeway during the price negotiation. Although you’ll still need to enlist the help of professional agents, the savings you make will probably heavily outweigh the costs.
You already know what the traffic is like in the area
A common regret that homebuyers face after buying a brand-new home is discovering that commute times and traffic are really bad. If you’ve lived in the home you’re renting for a while now; you’re probably already pretty familiar with these things. This means no surprises like a two-hour long drive to work or common traffic jams during the hours when you commute to work.
You’re already familiar with the general condition of the property
One of the biggest pros of buying from your landlord is that you can avoid unwelcome surprises regarding the home’s condition. Since you’re already living here, you’re probably pretty familiar with how well the home was taken care of. You probably already know the state of your home’s plumbing and the heating/cooling system situation. Do keep in mind that you still have to conduct a home inspection before buying (especially if you plan on getting a mortgage loan). However, even with that responsibility, you’re still at a huge advantage when it comes to this.
You know what your landlord is like
A big risk when buying from a random person you don’t know is that you’re also unfamiliar with their goals and how they might try to achieve them. When you’re buying from your landlord, you at least know how they treated you as a tenant. If they were fair and kind landlords, they’ll also probably treat you that way as sellers. However, if they were on the other end of the kindness spectrum, you at least know that you have to be extra careful and make sure that they don’t try to take advantage of you.
You know the neighborhood
Moving to a new neighborhood can be very stressful and bring a lot of problems. When buying your home from your landlord, you already know the most important things about the neighborhood you’ll be living in. For example, you’re already familiar with how much noise the neighborhood gets from things like nearby schools and streets. However, if you move to a new neighborhood, you might be unpleasantly surprised by loud evenings because of a nearby club you didn’t notice before buying or another similar problem.
You also know the neighbors
Another issue that comes with moving into a new neighborhood is the fact that it brings new neighbors. When it comes to the home that you would buy from your landlord, you already know whether there are any problematic neighbors and how to avoid them. However, in a new neighborhood, you might realize too late that your neighbors have a dog that’s constantly barking or that they are too stuck up.
If you do decide to buy a new home and move away, experts from Zapt Movers advise you to get in touch with local movers and real estate agents. You can ask whether they have any stories or complaints to share from previous customers so you can at least know which neighborhoods to focus your search on.
Owning can sometimes be cheaper than renting
This depends on many different factors. However, it is also usually the most extensive process of buying a home this way. It’s important that you properly crunch the numbers, but a fixed monthly mortgage may cost you less than your rent. And while this might apply to any other home you would buy, in this scenario, you at least have all of the advantages we have listed before. Let’s put it this way. Renting your home before buying is like trying it out for a bit before taking the plunge.
The cons of buying like this
You’re limiting your choices by a lot
One of the biggest cons of buying from your landlord is the fact that it limits your choices. If you just decide to buy the home you’re already living in; you might not be giving yourself a chance to realize that you can afford a lot more house than you currently have. For example, when buying a new home, you have the opportunity to upsize or downsize. The home you’ve been renting simply might not be the right size property. But, if you spend some time looking around, you may find the perfect size home at an even better price.
You may not realize that you’re not ready to buy yet
This issue can come up in two ways. Firstly, after doing some calculations, you may realize that a monthly mortgage payment would cost more than your current rent. In that case, you must do your best to be objective and consider whether you can afford that. Secondly, if your landlord is motivated, they might try to speed up the process by offering a great bargain. While this might sound good at first, it can sometimes drive you to make quick and poor decisions.
You might be surprised by the hidden costs of homeownership
A very common mistake that first-time homebuyers make is not thoroughly calculating the total cost of owning a home. You may have been able to cover everything when you knew that your landlord would handle maintenance issues. However, when you own a home, all of those responsibilities transfer to you. This means that you may be surprised by some of the hidden costs of owning a home. Especially if you are not much of a handyperson.
You’ll have to live there a lot longer than you might anticipate
If this is your first time buying a house, you may not realize how big of an investment it is. Building wealth through homeownership is not a get-rich-quick scheme. If you want to just break even when selling your home, you’ll have to live there for at least 2 to 3 years (best case scenario). This means that any bargain you get from buying like this may be worthless if you move too fast. Make sure to look a bit further ahead than just the lower price.
As you can see, buying from your landlord isn’t as black and white as it may seem at first. There are many things you have to consider when making this decision. You have to be sure about your priorities and see whether the pros we listed outweigh the cons for you.