When to Rent vs. Buy

Determining whether to buy or rent your home involves a complex decision-making process. The SmartAsset rent vs. buy calculatorhelps you see when you’ll reach your break-even point and integrates some of the following questions to help you make an informed choice:

  • How long do you plan on staying in an area?

  • How much flexibility do you enjoy?

  • Are you prepared for the responsibility of homeownership?

Perhaps the most important factor to consider when making this buy or rent decision is how long you plan to stay in your home. If you’ll only be in town a year, renting will almost always be your best choice. In that scenario, if you’re planning to pack up and leave in the short term, you probably don’t want to spend the time and money necessary to buy a house, with a down paymentclosing costs, loan charges, appraisal fees and so on.

All told, the upfront costs of finding a house and taking out a mortgage can be in the tens of thousands of dollars (or higher). As a renter, by contrast, you’ll likely just have to pay an application fee, fork over a broker’s fee and make a refundable security deposit of a few months’ rent.

On the other hand, if you plan on staying put for 50 years, renting could be more expensive than buying over that time frame. In the long run, there are significant advantages to homeownership. You’ll own property, which you can later sell, rent out or pass on to family members down the line. Another possible advantage is mortgage interest deduction, a tax benefit that allows you to deduct mortgage interest payments from your taxable income. This requires filing itemized taxes and is only beneficial if the interest deduction totals more than the standard deduction.

Rental payments, by contrast, have no such advantages. While a portion of each mortgage payment goes toward raising your stake in your home by increasing your equity, rental payments go entirely to your landlord and tend to grow over time as rental prices increase. In the long run, the costs of renting can be much higher than buying.

Of course, renters don’t have to pay property taxes, homeowners insurance or maintenance costs. Those costs can really add up. In some areas of the country, like New Jersey and Westchester County, New York, property taxes are so high they cost the same as at least one or two extra mortgage payments per year.

The problems with Real Estate

The real estate industry is a €200 trillion-plus global asset class, yet it has been largely untouched by technology. Buying and selling decisions are among the most important a person can make in life, but today, the majority of those decisions are based on gut instincts or outdated information.

Every deal required piles of paperwork, arbitrarily large transaction costs, and unexpected delays. We believe that people deserve more. We’re building a vertically integrated real estate platform to empower buyers and sellers from start to finish with innovative digital tools and deep analytics. We delivering a sophisticated, intelligent and seamless real estate experience.

Find your home with a dedicated team you can trust. RealInsights has a network of Financial Advisors, Solicitors, Structural Surveyors, Engineers, Builders, Electricians, Auctioneers and Advisors available to support you. Real Estate deserves RealInsight.


Establishing market value

The market value of your property is determined by what a buyer is willing to pay for it in today’s market. Despite the price you paid originally, or the value of any improvements you may have made, the value is determined by market forces. Typical buyers look at about a dozen properties on average before making an offer on a property. As a result, they have a good overview of the market and will compare your property against the competition. If it’s not in line with similar properties that are available, buyers won’t consider it good value for money.

There are certain factors that are within our control and some factors beyond our control when it comes to setting the price. Those factors within our control are: the appearance of the property, how aggressively we market the property and the price. Factors outside our control are: location of property, size and local amenities. It's important to accept those factors that are beyond our control and focus on the pricing and preparation.

Comparative Market Analytics will help to identify the optimal selling price of your home. This analysis should cover three core areas;1. Comparable homes that are currently for sale, 2. Comparable homes that were recently sold, 3. Comparable homes that failed to sell. Looking at similar homes that are currently offered for sale, we can assess the alternatives that a serious buyer has from which to choose. We can also be sure that we are not under pricing your home. Looking at similar homes that were sold in the past few months, we can see a clear picture of how the market has valued homes that are comparable to yours. Banks and other lending institutions also analyze these sales to determine how much they can lend to qualified buyers. Looking at similar homes that failed to sell, we can avoid pricing at a level that would not attract buyers. The output of effective market analysis is to achieve the maximum selling price for your home, while being able to sell your home within a relatively short period of time.

The opportunity to modernize real estate 

Before diving in, it’s worth reflecting on the size of the opportunity at stake. Real estate is the largest asset class in the world – worth more than all stocks and bonds combined – yet it is one of the last to adopt technology. This industry contributes $3.5 trillion to the US GDP, of which $836 billion is construction spend. On the residential side, about $1.3 trillion worth of existing homes transact every year, and these deals generate about $66 billion in commissions for real estate brokers.

The opportunity for tech-enabled companies to compete in this space is driven not only by the sheer size of the market, but also by the limited amount of innovation to-date. US construction labor productivity has lagged overall labor productivity. Buildings are still constructed with the same processes employed a century ago. From the small mom-and-pop property owners to sophisticated real estate investment firms, Excel is the most commonly used tool for data management 30 years after its introduction. 

As the urban population continues to grow in the coming decades, the world’s building stock is expected to double by 2060—the equivalent of adding another New York City monthly between now and then. That’s a lot of cement and steel. We need to find a way to make it all without worsening climate change.

Buoyed by remarkable advancements in data processing, storage, and ingestion, the last ten years of PropTech ushered in companies with large ambitions and even larger treasure chests. Consumer preference for access over ownership propelled companies like WeWork and Airbnb into the mainstream. These companies leveraged the shared economy to make physical spaces more fungible – including homes, offices, retail shops, to storage space. 

sought to improve the user experience of renting, buying, selling, and building physical spaces. In many cases, companies believe that vertical integration is critical to achieving massive efficiency gains. 

Katerra is vertically integrating the entire construction supply chain end-to-end, while Opendoor is acting as the buyer, renovator, seller, and agent for their residential transactions.

Venture Funding in PropTech

While these large ambitions will no doubt require significant (and patient) investment to scale, they have benefited tremendously from the last decade’s massive influx of tech capital. However, venture capitalists haven’t always been interested in this real estate. Looking back at 2008, only $20m was invested in PropTech. Fast forward to 2018, that figure increased to ~$4B. While this represents only 5% of total VC funding and 20% of fintech funding, interest in PropTech has grown considerably over the last decade.

Since many players within the industry benefit from the current market failures, there has been minimal incentive, and even resistance, to change the status quo. The product of these entrenched workflows and incentives is significant time and cost overruns.

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Market Cycle Analysis — Explanation

Supply and demand interaction is important to understand. Starting in Recovery Phase I at the bottom of a cycle (see chart below), the marketplace is in a state of oversupply from either previous new construction or negative demand growth. At this bottom point, occupancy is at its lowest. Typically, the market bottom occurs when the excess construction from the previous cycle stops. As the cycle bottom is passed, demand growth begins to slowly absorb the existing oversupply and supply growth is nonexistent or very low. As excess space is absorbed, occupancies rise, allowing rental rates in the market to stabilize and even begin to increase. As this recovery phase continues, positive expectations about the market allow landlords to increase rents at a slow pace (typically at or below inflation). Eventually, each local market reaches its long-term occupancy average, whereby rental growth is equal to inflation.

In Expansion Phase II, demand growth continues at increasing levels, creating a need for additional space. As occupancy rates rise above the long-term occupancy average, signaling that supply is tight in the marketplace, rents begin to rise rapidly until they reach a cost-feasible level (point #8) that allows new construction to commence. In this period of tight supply, rapid rental growth happens, which some observers call “rent spikes.” (Some developers may also begin speculative construction in anticipation of cost-feasible rents if they are able to obtain financing). Once cost-feasible rents are achieved in the marketplace, demand growth is still ahead of supply growth — a lag in providing new space due to the time to construct. Long expansionary periods are possible and many historical real estate cycles show that the overall up-cycle is a slow, long-term uphill climb. As-long-as demand growth rates are higher than supply growth rates, occupancies increase. Equilibrium cycle point #11 is where demand and supply grow at the same rate, which could last for a long time. Before equilibrium, demand grows faster than supply; after equilibrium, supply grows faster than demand.

Hypersupply Phase III of the real estate cycle starts AFTER equilibrium point #11 — where demand growth equals supply growth.

Most real estate participants do not recognize that equilibrium’s passing, as occupancy rates are at their highest (well above long- term averages), a strong and tight market. During Phase III, supply growth is higher than demand growth (hypersupply), causing occupancies to decline back toward the long-term occupancy average. While there is no painful oversupply during this period, new completions compete for tenants in the marketplace. As more space is delivered to the market, rental growth decelerates. Eventually, market participants realize that the market has turned down and commitments to new construction should slow or stop. If new supply grows faster than demand once the long-term occupancy average is passed, the market falls into Phase IV.

Recession Phase IV begins as the market moves below the long-term occupancy average with high supply growth and low or negative demand growth. The extent of the market down-cycle is determined by the difference (excess) between the market supply growth and demandgrowth. Massiveoversupply,coupledwithnegativedemandgrowth(thatstartedwhenthemarketpassedthroughlong-term occupancy average in 1984), sent most U.S. office markets into the largest down-cycle ever experienced. During Phase IV, landlords lose market share if their rental rates are not competitive. As a result, they lower rents to capture tenants, even if only to cover a buildings’ fixed expenses. Market liquidity is also low or nonexistent in this phase, as the bid–ask spread in property prices is too wide. The cycle eventually reaches bottom as new construction and completions cease, or as demand begins to grow at rates higher than that of new supply added to the marketplace.

Apartment Lifecycle Analysis

Apartment Cycle.png

Market Analysis

The national apartment occupancy levels increased 0.1% in 2Q18 and were up 0.1 year-over-year. Job growth averaging near 200,000 per month continues to create robust demand for apartments. Increasing construction costs and construction labor shortages in many markets caused starts to finally decelerate slightly in May and if this continues the market could come back into equilibrium by 2020. Rising mortgage interest rates are also helping to slow purchases and price increases that justify new construction. Note that 22 markets are at point #11 where markets are in equilibrium. Average national apartment rent growth increased 1.6% in 2Q18 and 3.1% year-over-year.

Note: The 10-largest apartment markets make up 50% of the total square footage of multifamily space we monitor. Thus, the 10-largest apartment markets are in bold italic type to help distinguish how the weighted national average is affected.

Markets that have moved since the previous quarter are now shown with a + or - symbol next to the market name and the number of positions the market has moved is also shown, i.e., +1, +2 or -1, -2. Markets do not always go through smooth forward-cycle movements and can regress, or move backward in their cycle position when occupancy levels reverse their usual direction. This can happen when the marginal rate of change in demand increases (or declines) faster than originally estimated or if supply growth is stronger (or weaker) than originally estimated.

Steps to a Positive Showing

This page describes the key steps to making for a positive showing of your property.

You only get one opportunity to make a good first impression, so you want to make it count. By following these guidelines, you’ll enhance the attractiveness of your property and reduce the time it takes to generate serious offers.

First Impressions

How your property appears from the outside is important. To make a good first impression on a buyer, a clean driveway, a freshly mown lawn or a trimmed hedge will work wonders.

Do a critical inspection of the exterior of your property, paying special attention to the condition of your windows, shutters, screens and gutters. One of the first things a buyer will notice is the need for painting. If your property looks like it needs painting, many buyers will form an unfavorable impression. Elsewhere, little things count. Make sure the front door is spotless, including the doorknob, and that the windows gleam.

Cleanliness Counts

Once inside your property, one of the key factors that influences its appeal to a buyer is cleanliness. Most important is front hallway, the kitchen and the bathrooms. Do a room-by-room cleaning, and don’t forget any out-of-sight areas because that’s often where a discriminating buyer will look first.

The state of the carpets can also be a determining factor. At the very least, have your carpets cleaned, and if they are worn, it’s wise to replace them, or remove them if there is hardwood underneath.

Less is More

Clutter makes a poor impression. In closets, cabinets, kitchen countertops and other storage areas like basements, remove anything not needed for daily housekeeping. To make each room in your property look larger, get rid of or donate unnecessary furniture. Walk through your property and think: “Less is more.”


Make sure everything is in good working order. Dripping faucets, squeaky steps and loose doorknobs can easily create a bad impression and reduce the value of your property. A few hours spent on repairs, whether by yourself or a tradesman, can pay big dividends when an offer is made.

Little Things Count

It’s easy to improve the appearance of any room. You may want to replace worn rugs or small pillows, put new towels in the bathroom or brighten up a room with a vase of flowers.

Pull Together

Get all the members of your household to pull together when it comes to getting – and keeping – your property ready to view. By getting everyone into the habit of spending a few minutes tidying up every morning for an afternoon showing, you improve your chances considerably.

Porters 5 Forces

Thirty-year mortgage rates have a strong effect on the housing market as more consumers are willing and able to purchase homes when rates are low. Mortgage rates fell to historic lows following the recession because of the Fed’s monetary policy. The end of this policy will begin to push mortgage rates up, but the exact affect that it will have is unknown.

As a result of falling unemployment rates and rising incomes, both home sales volume and prices are projected to rise over the next 5 years. Here lies the risk that this will be offset by the rising interest rates, but in the very near future, home sales are expected to rise as people attempt to take advantage of low mortgage rates before the projected increase.

I believe that tech-enabled real estate companies will capture majority market share over the next 10 years. The next crop of companies will introduce solutions to digitize workflows and elevate transparency for every stakeholder in the ecosystem so that better decisions can be made at a fraction of the cost. There is every indication that technological progress will continue to shape the future of this industry.

11 Reasons You Should Take Rental Income Investing Seriously

1.growing number of Millennials entering their family starting and home buying years

2.mortgage rates not forecast to rise much

3.rental prices can stay high because employment is good and renters have no options

4.stories of renters destroying the place almost never happen (renter screening process)

5.you can deduct mortgage interest and real estate taxes on rental properties

6.you can write off utilities, insurance, repairs and maintenance, yard care, association fees

7.write off upgrades such as decks, pools, tankless water heaters, and even landscaping

8.write off depreciation of assets/home

9.write off solar power generation unit

10.the income won’t become taxable until you run out of upgrades/repair costs

11.the renters will have to cover any cost of living or mortgage rate growth

Top Tips for buying a rental property

1.decide which city has the best potential for rent prices and purchase price

2.decide what kind of property will work for you

3.decide whether you’ll be living in the property

4.determine how much capital you have to work with and how much you can sink into improvements

5.don’t buy a fixer upper

6.buy a home with the best likelihood of being rented:

7.buy a home in  a lower price range to begin with (first time investor)

8.consider a property management firm that can handle maintenance and renter screening

Blockchain X Real Estate


The current real estate market has three main problems: inaccessibility, transaction costs, and poor liquidity. Real estate ownership and investment has been historically reserved for the wealthy because of the capital reserves and credit rating required to put money down and take out a mortgage on a new home. For those who manage to swim upstream to ownership, purchasing a home involves up to eight middlemen (brokers, legal counsel, inspector, appraiser, etc.), who altogether siphon off up to 5% of a home’s value. For investors, REIT brokers usually take 9–10% in commissions and fees. Finally, getting in and out of real estate assets is slow and arduous. Renters face lock-in periods, sellers have limited options for selling a fraction of a property, and investors who can buy into a REIT are still subject to a portfolio manager’s personal investment strategy and fee structures.


Ethereum’s decentralized architecture and smart contract functionality would obviate the need for multiple intermediaries in a real estate transaction and enable automated payouts of rental income. Particularly exciting is the opportunity to “tokenize” properties. By issuing real estate-backed tokens on the Ethereum blockchain, asset owners can fractionalize previously monolithic properties into almost infinite slices and unlock additional capital and a diverse pool of investors.


ConsenSys partnered with Dubai Properties to build a blockchain platform for tracking the provenance of real estate from planning and construction to customer sale using cryptographically secure digital signatures. Meridio, a ConsenSys venture that spun out of the engagement with Dubai Properties, converts individual properties into digital shares on the Ethereum blockchain. Accredited investors can purchase tokens on the Meridio platform — which represent fractional shares of properties — and reap a proportionate amount of rental income. Meridio’s Ethereum-based real estate marketplace exposes asset owners to a diverse pool of investors so owners can access capital, streamline transaction processing, and analyze asset-specific data in real time. Investors benefit from low capital requirements, reduced transaction fees, and increased portfolio liquidity.