Miami is a beautiful city known for its warm climate, turquoise waters, and beautiful beaches. Thanks to its exciting features like 20 parks, sizzling restaurants, museums, cultural attractions, and endless shopping opportunities, living in Miami has many perks. However, you need to be aware of the cost of living here.
Even though employment is at an all-time high, it is still hard to get by and save money compared to other cities in the USA. Homeownership holds great financial benefits because it helps you build your assets and prevent your monthly payments from increasing year after year. Nonetheless, the benefits of owning a home are not without costs and limitations.
This leaves many Miami residents wondering what’s better – buying a house with a mortgage or renting one. This article will look at both the benefits and drawbacks of owning a home or renting one in Miami to help you make an informed decision.
The Benefits and Disadvantages of Buying a House in Miami
Purchasing a home in Miami comes with its pros and cons. Here is what you need to know before deciding whether buying a home is the most suitable option for you.
Benefits of Buying a House in Miami
You know that when you buy something, you own it permanently. But have you thought about other benefits that you will get by purchasing a house? Let’s find out.
1. Cheap in the Long Run
There are many benefits of buying a house in Miami, one of them being that it makes financial sense in the long run. Generally, you can save a lot in the long run when you purchase a home compared to renting one in Miami.
For example, if you buy a house that costs $300,000 and sells it ten years later for $450,000, your profit would be $150,000. What’s more, the amount of rent you would have paid in rent in 10 years will be higher than buying one. Also, owning a house will save you the money spent when relocating from one place to another.
2. Eases Security and Safety Concerns
Buying a house gives you control of everything that happens on the property. You can hire a 24/7 security guard to keep the place secure for you and your family. In addition, the safety concerns of the house, such as repair, will be easily managed by the owner.
On the contrary, renting leaves you at the mercy of your landlord. The owner will decide how they want the apartment guarded depending on security expenditure. If there is an issue with the property, you have to rely on them to get it fixed.
3. Freedom
There is so much creative freedom that comes with buying a home over renting. First, you have the freedom to choose your neighborhood that fits well within your preference and budget.
Plus, you can get creative and do with your house as you please. You can customize the space according to your liking and fix other areas the way you want. If you buy a home, you are more likely to enjoy privacy and a quiet environment.
4. An Excellent Investment
As soon as you buy a home, its value starts increasing steadily, which means you will get equity at the end of the day. Miami is an expensive real estate market and one of the most popular metropolitan areas for young professionals who want to live in a fun city with lots of nightlife and great weather year-round.
For this reason, the demand for homes in Miami is high compared to other markets. Consequently, your property value will go up faster than if you had bought it anywhere else. If you sell after only a year or two of living there, your return on investment could be very high.
For homeowners that stay in their homes long enough, their equity builds up, and they can borrow against it for larger purchases such as college tuition or a vacation home. This has made homeownership a popular choice than renting.
5. Great Control Over Costs
A rented house is controlled by the landlord, who dictates what tenants should do at particular times. In addition, the landlord can choose to increase the rent without consulting the occupants.
However, you can decide on different expenses such as repair and mortgage rates if you own the house. You can also choose to apply for other types of loans that you might consider cheaper, depending on the kind that will work for you.
6. Offers More Stability
The other benefit of owning a home is that it gives you more excellent stability and peace of mind. Knowing that you will stay there for years will provide you with a sense of stability, and you can start accumulating valuable assets in your portfolio. You will also enjoy peace of mind, and you won’t need to worry about unpredictable increases in the annual rent.
The Challenges of Buying a House in Miami
Although buying a home comes with its advantages, homeowners can encounter various challenges. Below are some cons of buying a house in Miami.
1. Daunting Inspection Process
Buying a house in Miami can be tedious because of the inspection process involved. It requires a lot of paperwork and has a lot of legal documentation involved. Hence, you may need to hire a reputable real estate attorney to help you with the legalities of purchasing your new home.
Usually, the seller will pay for the inspection. The inspection may involve inspecting everything from the roof, foundation, electrical, plumbing, insect infestation, etc. Once they are done inspecting, they will tell you what needs to be fixed on the property.
2. Tax Implications
After you buy the house, it will be subjected to tax. It involves calculating the taxable value for real estate property. This is the amount that determines your property taxes each year. For example, if you bought your house for $200,000, your taxable value would be $200,000.
You must be aware of the taxation rules in the state of Florida. First, you have to pay a 6% state transfer tax when you buy your home. If your down payment is less than 20%, you must pay 0.5% federal transfer tax. The local government may also charge you a 2% transfer tax if the value of your property is higher than $200,000. However, if you are buying a house for rental purposes, there is no need to pay any taxes whatsoever.
Also, if you buy a house and sell it after a short time, you might not accumulate the full benefits of acquiring one. Constant buying and selling will only dig deep into your pockets as you will incur more costs like tax and property management.
3. High Maintenance Costs
Because of the tropical climate and sandy soil, properties in Miami need to be maintained regularly. What’s more, the sea breeze can damage exterior paint jobs, the salty air can rust metal, and hurricanes can cause havoc on the entire home.
Consequently, prospective homeowners are advised to set aside at least 10% of their home’s value every year for maintenance costs. Generally, the cost of hiring contractors, plumbers, electricians, and other skilled workers is higher in Miami than in other cities.
4. High Mortgage Costs
While many people dream about buying a house in Miami, the hefty prices for a mortgage and other fees can be discouraging. Buying a home in Miami is expensive and may require you to take a loan or make some savings.
The median price for a home in Miami is $305,000, and the average list price is $372,500. What’s more, buying a home in Miami may need a down payment of 20 to 30% of the sale, depending on the property’s market value, condition, and location.
Therefore, you must secure your finances first before you can start searching for the house of your choice. To avoid the financial pitfalls, assess whether or not the home you are planning to buy is worth the price.
You will also need to review your budget and see how much money you can allot for the monthly mortgage payments to avoid straining your finances. Don’t forget to include taxes, utility bills, and other essential expenses.
The Benefits and Challenges of Renting a House in Miami
To rent or not to rent property in Miami will depend on various factors. Read on to know the pros and cons of each option.
Benefits of Renting a House in Miami
While buying a home has its advantages, it may not be a viable option for everyone. Here are some of the benefits of renting a home in Miami over buying one.
1. Affordable
The minimum wage in Florida is only $8.05 an hour, so it’s impossible to work your way up to that income level and buy a home in the short run. A general rule of thumb is that renting should cost no more than 30 percent of your income. So, it is almost impossible to save significant amounts of money to buy a house. However, you can use this income to rent a home every month.
Therefore, if the mortgage is higher than you can afford at a certain point in your life, then it makes more sense to rent than buy a home. Better yet, this will prevent you from being financially indebted.
2. Convenient for People That Like New Experiences
Renting a house comes with more flexibility and convenience than buying one. You can move quickly from one location to another if you rent a house and enjoy the new experience. While moving might interfere with your social life, learning how people live in a new setting and making new friends each time is quite an adventure.
In some instances, the landlord may want to change something about your rental unit or even decide to sell the house. In this case, you will have no problem moving to another apartment or buying a new place.
3. You Won’t be Responsible for Home Maintenance
Unlike buying a house, the repairs will not be your responsibility but that of the property owner. You won’t need to pay for repairs out of your pocket, which can help you save in the long run.
Disadvantages of Renting a House in Miami
Some cons might overrun the perceived benefit of the low cost of renting. Let’s discuss the challenges of renting a house here.
1. Expensive in the Long Run
Renting a house in Miami is not cheap. According to the latest Census Bureau figures, the median monthly rent for a two-bedroom apartment in Miami is $1,650. That’s higher than the national average of $1,160 per month.
Most rental leases last for a year or two before their time. This gives you the option to stick around, start paying higher rent, or move out and hope to find another good deal. Renting a house in Miami is expensive in the long run because you don’t own it completely. Furthermore, there’s no incentive or financial reward to keep your rental property in great shape.
If you live somewhere for three years and then move, you’ve just incurred a total of three moves’ worth of expenses: deposits, first and last month’s rent, moving truck costs, etc. Those expenses will approach $10,000 if you’re renting a house in Miami that’s well over $1,000 per month. And that doesn’t include the actual cost of your new place: closing costs, credit checks, and other fees may add thousands more to the total cost of moving.
2. Space Limitations
Space is always valuable, and this is no exception for renting a house in Miami. Many renters are surprised by how quickly they can fill up their new homes. It’s easy to accumulate more stuff than you realize, especially if you’re not used to living in a small space.
If you rent a small space that can’t accommodate your belongings, you might be forced to sell off some items at a loss, and this may fail to give you the perceived value. Thus, space limitation in rented houses might cause massive losses, primarily if the relocation occurs more often.
3. Less Freedom
Lack of privacy, landlord control, and less freedom are some of the negatives of renting a house. If you rent a house, you will have less privacy than owning a home. Your landlord has the right to enter your home at any time. They can even enter without notice if there is an emergency.
Additionally, the landlord can sue or even evict you if you fail to follow the rules or lease agreement. By purchasing your own home, you do not have to worry about disrespecting the lease agreement because it is yours, and no one else can change it except yourself.
Another challenge of renting is the lack of freedom over what you want to do with your space. When you purchase a home, you can customize and decorate it as needed, something that is impossible when you rent a house unless approved by your landlord or property management company.
A tenant is bound by the rental contract that requires you to pay a security deposit or a one-month rent in advance. This contract can prohibit you from owning pets, which can be discouraging for pet owners. The rental agreements are majorly made to benefit the landlord but not the tenant.
4. Difficult to Find a Good Rental Agent
Renting a home or condo in Miami is a hectic process. This is especially true if you try to get the best deal possible on your own. While there are many rental agents in Miami to help you choose the right rental home, you need to do extensive research to find the one that will provide you with the best services. If you want to live peacefully and comfortably, then you part with a fee to pay a rental agency that will deliver expectations as promised.
Final Verdict
Weighing out your future goals in life and comfort are critical elements that should not be ignored at any given point. Time is a vital element to consider when weighing out your options. For instance, getting a mortgage to buy a house might be cheaper today but expensive tomorrow.
The length of time that you plan to stay in a particular house will also influence your choice. For instance, if you keep on being transferred from one job location to another, renting will be a flexible option.
Nonetheless, the overall benefit of having a place where you can always call home is fulfilling. Although buying a house might prove expensive, it is the best decision you can make in a lifetime.
You will have a place to stay even when the economic tides loom, and you won’t need to be stressed out by rent, allowing you to focus on other essential aspects of life such as school fees and food. For those on a budget, renting a house in Miami is a better option than buying a home, but the ultimate goal should be to own a house.
