Rent vs. Ownership: An investment in Studio City, CA

Renting an apartment is a viable way to exert your independence when you are barely starting out. It allows you to gain a real world perspective on finances and forges habits that allow you to balance your financial responsibilities with your recreational endeavors. This real world lesson can’t be taught; it must be learned individually on your own. It builds character and allows you to grow as a responsible individual. Sadly, here is where most stagnate.

The fact is that renting should be the first step to learning the habits that would allow you to own property. The responsibilities that you learn when keeping up with rent and bills is something that should be carried onto a property of your own, but most believe that such a step is not for them.

Let us look past the fact that as a renter, you can’t save money when doing your laundry because you must pay to use an outdated washer and an occasionally broken dryer. Also, let us look past the fact that your children will not have a grassy backyard to play in, but rather a parking lot accented with potholes. And let us look past the fact that your neighbors can hear you just as well as you can hear them. Let us look at both in terms of their possible investment qualities.

Investment in Studio City real estate can save money immediately, which increases over a lifetime for a first time homebuyer. The opportunities to save money in an economy that fluctuates and still gain the possibility of tax deductions, outweighs the cost that renting for cheap can possibly gain anyone. The money you invest in a property in Studio City can, in the long run, increase in value due to location and due to an ever increasing population. The fact is people need homes and livable land areas are harder and harder to come by.

Unlike renting, ownership of property in Studio City allows the owner to invest money that doesn’t depreciate due to inflation, which strips the purchasing strength of the dollar. An investment in Studio City real estate allows the homeowner to save money that would just be ravished by taxation and inflation. In other words, if an individual where to invest in a CD, they would end up either paying more than they had originally invested, or gained little in interest. As for rent payments, the money that one hands over disappears into the pocket of the landowner who has already invested in real estate: the apartment building you reside in.

The payments toward real estate in Studio City are also fixed within a loan. Saving money is therefore easy since the lenders cannot rapidly jump to a higher price because the lender wants you to leave in order to attract a “better class of tenants”. A renter does not have this opportunity to save money because unscrupulous landlords decide to raise the rent at the dismay of its renters.

The ability to borrow against the equity, which increases in value over time as you pay off your mortgage, of your home is a huge benefit over renting. An individual is able to use this money to help with repairs, family emergencies, or to finance a child’s education. Interest in these loans is tax deductable.

Saving money due to an investment in Studio City property can, if you decide to keep the property and rent it out, give you the ability to bring in tax-free rent. Thereby taking you from renter to owner to landlord. But speaking of tax deductions, owning a home allows the homeowner a few tax breaks.

The interest on mortgages and property taxes are for the most part tax deductable. Most of the federal tax laws benefit the homeowner. Furthermore, when homeowners sell their property, they are allowed to profit from the sale without having to worry about paying taxes.

Although, as a renter, you may pay less each month than a person who has invested in a Studio City property, in the long run it stagnates your progress in truly becoming independent.

Tammy Jerome & Associates
Phone: 818-903-5854
Coldwell Banker
12930 Ventura Blvd #202
Studio City, CA 91604
DRE #00978772