Many foreigners living in or deciding to live in Costa Rica are faced with that simple question of renting or buying, but the answer is not always that simple. The choice between buying home or renting one is among the biggest financial decision no matter where you live or are thinking of living.
In Costa Rica, as in anywhere else, buying a home comes with more complex and varied costs than renting, making it hard to tell which is a better deal.
The New York Times has created an online calculator that enables prospective buyers and renters to analyze their own particular decision. The calculator can be applied in any country, provided you have relatively good and real numbers to plug into the model.
The calculator asks for factors like home price. A very important one, but not the only one. How long do you plan to stay? Buying tends to be better the longer you stay because up front fees spread out over years and appreciation in real estate values.
Mortgage details, the change in home prices and rents, hard to predict, have an impact on the outcome. The model takes into account costs like closing fees and commissions, and maintenance and fees and property taxes, expenses that renters don’t pay directly |Renters, however, are faced with additional rental costs such the opportunity cost on the security deposit.
The Math Is Changing. Use the calculator to help you in the decision between renting and buying. The results may surprise you.
There are important caveats, of course. As Neil Irwin writes in his article, the wisdom of buying versus renting depends heavily on each person’s financial situation, plans and preferences. And the cliché about all real estate being local holds; each neighborhood can have its own unique dynamics in the for-sale and for-rent housing sectors that must be considered.
Sources:
- New York Times
- Plurkmania (photo of house)
