Many of Global Mobility Solutions’ clients have transferees relocating to a new destination who must decide on renting versus buying. There may be several reasons why a transferee would choose one option over the other. GMS recommends companies encourage transferees to buy instead of renting. When transferees choose to buy, there are several benefits for both the client and the transferee.
GMS spoke with Anthony Hughes, Relocation Account Manager at Quicken Loans. Anthony agreed to share his advice and guidance on this topic, along with some examples.
What is New in the Renting Versus Buying Concept for 2020?
According to Anthony, this concept has been a hot topic for the past few years. However, it is even hotter in 2020 with interest rate averages being in the upper-2’s to low-3’s depending on the client profile. With both options, the choice depends on what the client is most comfortable doing.
However, in several markets across the country, clients who buy are able to save money and “invest in themselves” for less than they are paying in rent. As Anthony states, “Wouldn’t it be great if everyone could ‘live the American dream’ of owning their own home?”
Pros and Cons of Renting Versus Buying
Anthony believes transferees should look at both the pros and the cons of renting versus buying before they make any decision.
The Renting Side of the Question
Renting Pros:
- Mobility/freedom to move around
- Landlord pays for maintenance
- Does not require expensive closing costs
- No fluctuation in monthly housing expenses
- Allows you to test-drive different living spaces
Renting Cons:
- You don’t build any equity if you choose renting versus buying
- Limited ability to customize your living space
- Rent could go up over time
- Landlord might sell or decide to stop renting
- Limited sense of home stability/permanence
The Buying Side of the Question
Buying Pros:
- You build equity over time
- Home value may increase over time
- You may reap tax benefits
- Unlimited freedom to customize your living space
- Sense of home stability/permanence
Buying Cons:
- Closing costs can be prohibitive
- Responsibility for maintenance and repairs that require time and effort
- Less flexibility to move (at greater difficulty/expense)
- Home value may decrease
- Recent tax laws could hamper tax benefits
Renting Versus Buying: Real World Examples
On the concept of renting versus buying, the proof is in the numbers. Looking at some of the hottest markets/states that GMS serves, below are three examples that do not include taxes or homeowner’s insurance. In all scenarios, there are huge opportunities for savings. Anthony shared these three real world examples to help illustrate the concept:
Texas Renting Versus Buying
Average 3-bedroom rental: $1,550
Average Purchase Price: $211,199
- 20% Down Payment
- Avg. 3.25% interest rate
- 30 year fixed conventional mortgage
*Total Monthly Payment: $919.15
*Does not include HOI or Taxes as these are based on property specific
Arizona Renting Versus Buying
Average 3-bedroom rental: $1,600
Average Purchase Price: $277,574
- 20% Down Payment
- Avg. 3.25% interest rate
- 30 year fixed conventional mortgage
*Total Monthly Payment: $1,208.02
*Does not include HOI or Taxes as these are based on property specific
North Carolina Renting Versus Buying
Average 3-bedroom rental: $1,360
Average Purchase Price: $174,380
- 20% Down Payment
- Avg. 3.25% interest rate
- 30 year fixed conventional mortgage
*Total Monthly Payment: $758.91
*Does not include HOI or Taxes as these are based on property specific
What Does This Mean for Renting Versus Buying Decisions?
2020’s record low interest rates help transferees understand renting versus buying decisions with more clarity on the financial side of things. Transferees should consider the pros and cons of renting versus buying and weigh the importance of each factor in their decision-making process. Anthony notes that Quicken Loans offers complimentary mortgage reviews. If a GMS client’s transferee was ever unsure or just wanted to see what it looked like, the team at Quicken Loans would be glad to have a conversation.
What Should Employers do to Assist Transferees with Renting Versus Buying Decisions?
Employers with transferees looking to buy a home should direct them to speak with qualified lenders and financial advisors for guidance. Employers should also review their relocation policies to determine if enhancements can be made to further promote homeownership.
Conclusion
Global Mobility Solutions’ team of corporate relocation experts has helped thousands of our clients understand how to communicate the important points of renting versus buying to their transferees. Our team can help your company understand how to proceed by providing guidance to transferees on obtaining information from qualified lenders and financial advisors.
GMS was the first relocation company to register as a “.com.” The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.
Contact our experts online to discuss how to assist your company’s transferees with understanding the concept of renting versus buying, or give us a call at 800.617.1904 or 480.922.0700 today.
GMS is not a CPA firm or a lender, and is not giving financial advice. Everyone’s financial situation is different; individuals and employers should consult their lenders and financial advisors prior to making any decisions.
Jules Matz | AHWD, ABR, CNE, CRP, GRI
Vice President, Real Estate Services Jules has over 21 years of experience as a licensed Real Estate Agent and Broker with operational experience gained from areas throughout the United States. She has held leadership positions such as Broker of Record and Real Estate Specialist, Team Leader, and Branch Manager, and as well as owned her own real estate company, working on U.S. Domestic and Government accounts. As a Team Leader, Jules taught monthly classes in contract writing, and contract negotiating to hundreds of Real Estate Agents.
