The Decision to Rent vs Buy in Los Angeles

When deciding whether to rent or buy in the City of Angels, the face-palm answer "it depends" is actually the most accurate response. 

Choosing to continue renting or committing to a significant financial decision like buying a house comes down to specific circumstances in your life. It means gauging your financial situation, career, family, or lifestyle and whether they are leading you towards renting or buying. 

But even if your new promotion has sent you skimming luxury condo listings for sale in Santa Monica, taking a step back and calmly evaluating every aspect of the decision will have you counting your blessings afterward.

Below, the team from Prevu Real Estate has outlined the top questions you should consider before deciding to rent or buy in Los Angeles. 

What is your financial situation?

A sizable bonus or a promotion can make it tempting to stop sending rent checks every month with no growing equity. It might have you thinking about tossing aside doubts and going for a home purchase. But before you do, consider every aspect of what is involved in buying a home.

Buying a home is a complicated process, and the buyer usually ends up hefting a lengthy list of expenses before and after closing the deal. The down payment alone usually requires a huge chunk of savings. That could be followed up with loan origination fees, broker fees, escrow fees, and various other expenses that go hand in hand with purchasing real estate.

An aspiring buyer should be mentally prepared to get their finances in order, search for a home, speak with agents, and handle the purchase. If those things seem like a lot to manage, then renting may be the best option. After all, renting comes with its own perks. 

The freedom of not being committed to one neighborhood or property continues to be an attractive bonus to many renters weighing a home purchase. There is also the question of maintenance and upkeep. Renters don’t need to worry about replacing the HVAC system, but homeowners will have to be financially ready to handle that expense. 

Ultimately, your financial situation should give you the confidence to handle all the demanding costs of purchasing a home before choosing to buy.

Where are you in your life?

Financials are important, but depending on your life situation, you might be willing to overlook not having a backup savings account to handle renovations. 

Most renters might decide to buy when their lifestyle undergoes a radical change. This new chapter can range from adding new members to the family, to getting a pet, to having your in-laws move in. As crucial as it is to rationally calculate possible expenses involved in buying a new home, such as closing costs, ensuring you are enjoying your living space is essential. 

Apartments can get cramped when kids are running around or when you have elderly parents to take care of. Though it is possible to upgrade to a larger apartment, the amount you could shell out for rent may not be cost effective compared to buying a home with more space.  

What responsibilities come with buying?

As bitter as one might be to write out the rent check every month, it is worth considering what daunting task would replace it if they owned a home instead. 

One of the most significant factors in deciding whether you should rent or buy in Los Angeles is the maintenance of your home. Rent makes upkeep easy, and although you don’t grow equity, your mind is free from worrying about the condition of the roof or the planning of lawn maintenance. The tasks surrounding the care of the home may be charming at first, but it is worth considering whether you are ready to commit to these responsibilities and the costs that come with them. 

If you consider buying a condo in a building that offers amenities and a property management company that handles upkeep, it may be a seamless transition. However, those looking for a private piece of land in Culver City will have to think about the amount of work to keep a home in top shape. 

What are the pros and cons of renting vs buying?

If you have a firm grasp of your finances and have come to terms with the responsibilities of homeownership, the next best step is to evaluate the pros and cons of both options. 

A home in LA is a real estate investment. Owning a home gives you a chance to grow equity and potentially sell it for profit after potential appreciation. It is one of the biggest practical advantages of owning a home over renting. And in the current real estate market, where rent prices and home prices are rising, a fixed-rate monthly mortgage payment may seem attractive.

On the other hand, renting gives an unparalleled sense of freedom. There are no long-term commitments, you can move from area to area at a whim, and there is no involved financial preparation that comes with buying a home. Renting is also an easy way out in case of an unexpected shift in your career, or a sudden need to change locations. 

Does your career lend itself to renting or buying?

Where you are in your career is a crucial factor during decision time. So as bad as you might want to pull into your own private driveway finally and head to the backyard for some meditative gardening, if your job involves constantly moving around, it might not be the best choice to buy a home just yet.

You might have to invest in property management when you are away, or the financial burden of owning a home might become overwhelming, especially if you don’t find yourself spending much time there. 

But for those with careers on the go, renting and exploring Los Angeles may be the best option. If you are relatively new to the area, it can be the perfect way to scout out locations, understand the pace and flow of the city, and decide on what the best neighborhood to buy a home might be. 

Once you are more comfortable with the city, a steady career can be a good sign of committing to buying your first home here. Owning a vacation home in Los Angeles has also become a popular option for many professionals making the switch to working from home post-pandemic. 

Interested in buying a home? Browse listings in your favorite Los Angeles neighborhoods and see how much you can save with Prevu’s Smart Buyer Rebate.

Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.