Bus 640 Week 6
Abstract
One of the biggest decisions that many people will have to make is whether they should rent or purchase their next residence. There are many advantages and disadvantages in each individual decision. Explicit costs, “monetary opportunity costs of using market-supplied resources,” (Thomas & Maurice, 2011) and implicit costs, “nonmonetary opportunity costs of using owner supplied resources,” (Thomas & Maurice, 2011) are important opportunity costs that each household should dissect before making their decision. This is not a decision to be taken lightly and should be reviewed as an individual household decision because each household has different needs and wants along with different economic stability to help sway a decision one way or another.
Rent or Purchase Rent or buy, this was a question that I had to ponder over two years ago. For the needs of my growing family the answer for me was to purchase a new home that would give them the room indoors and outdoors that they required to enjoy themselves. This question is one that many individuals have to think about when they move to either a new location or just need to expand or downsize. Is the purchase of a new home, townhouse, or condo worth the long term investment or is renting a more economical choice. For me, purchasing was the economical choice but for many others renting may be the most obvious decision. Within this paper I will be discussing the topic of renting or purchasing. When it comes to the decision of renting or purchasing there are many factors that an individual should consider, such as how long do I plan on living in this community, is my household size going to increase or decrease within the next few years, and am I economically stable enough to purchase a new residence. There are many pros and cons to renting or purchasing a new residence. Some reasons one would consider renting are:
• Save money – “Add up the monthly mortgage bill,
One of the biggest decisions that many people will have to make is whether they should rent or purchase their next residence. There are many advantages and disadvantages in each individual decision. Explicit costs, “monetary opportunity costs of using market-supplied resources,” (Thomas & Maurice, 2011) and implicit costs, “nonmonetary opportunity costs of using owner supplied resources,” (Thomas & Maurice, 2011) are important opportunity costs that each household should dissect before making their decision. This is not a decision to be taken lightly and should be reviewed as an individual household decision because each household has different needs and wants along with different economic stability to help sway a decision one way or another.
Rent or Purchase Rent or buy, this was a question that I had to ponder over two years ago. For the needs of my growing family the answer for me was to purchase a new home that would give them the room indoors and outdoors that they required to enjoy themselves. This question is one that many individuals have to think about when they move to either a new location or just need to expand or downsize. Is the purchase of a new home, townhouse, or condo worth the long term investment or is renting a more economical choice. For me, purchasing was the economical choice but for many others renting may be the most obvious decision. Within this paper I will be discussing the topic of renting or purchasing. When it comes to the decision of renting or purchasing there are many factors that an individual should consider, such as how long do I plan on living in this community, is my household size going to increase or decrease within the next few years, and am I economically stable enough to purchase a new residence. There are many pros and cons to renting or purchasing a new residence. Some reasons one would consider renting are:
• Save money – “Add up the monthly mortgage bill,
References: Baltimore city, Maryland (MD). (2010). Retrieved from City Data: http://www.city-data.com/county/Baltimore_city-MD.html Lexington Park, Maryland. (2010). Retrieved from City-Data: http://www.city-data.com/city/Lexington-Park-Maryland.html Even After The Housing Crisis, You 're Still Better Off Renting . (2012, June 5). Retrieved from Business Insider: http://www.businessinsider.com/should-you-buy-or-rent-a-house-2012-6 Opportunity Cost. (NA). Retrieved from Business Dictionary: http://www.businessdictionary.com/definition/opportunity-cost.html Tax Savings for Homeowners. (NA). Retrieved from Realtor : http://www.realtor.com/home-finance/homebuyer-information/tax-savings-for-homeowners.aspx?source=web The Tax Benefits of Home Ownership. (NA). Retrieved from All Law: http://www.alllaw.com/articles/tax/article3.asp Thomas, & Maurice. (2011). Managerial Economic, 10th Edition. New York: The McGraw-Hill Companies.