What to choose: buying or renting property abroad?

Many people wonder what is better: to buy an apartment abroad or to rent one. This is especially relevant for those who frequently visit resorts or travel for work. While purchasing real estate requires significant financial investment and effort, it pays off in the form of permanent ownership. After the deal is completed, you become the owner of the property for a long time. On the other hand, renters are forced to pay for services every month and do not become owners at the end of the rental period. So, what is the optimal solution?

Purchase or rent: what to choose?

When it comes to permanent residence, most people choose to buy, while for temporary vacations, many lean towards renting. Families with young children often prefer to vacation at the same resort, allowing them to enjoy a familiar and safe place for their summer holidays. Elderly couples also often choose calm and stable regions that create a sense of a comfortable environment. Health issues can influence the choice of residence, as a special climate is necessary for recovery. For example, many people buy apartments in Egypt due to its warm and dry climate.

How do businessmen operate?

Businesspeople who are required to frequently be in certain locations for work usually prefer the same places to stay. However, if business trips are not that frequent, renting an apartment for a short term can be a more sensible solution. Young people, eager for new experiences, most often choose to rent in order to explore unusual countries and cities.

Financial aspects of real estate

If you plan to use the property for only a month a year, the maintenance costs can significantly match the rent for a similar period, says Yulia Titova, head of the real estateagency. She emphasizes that purchasing an apartment makes sense only if you intend to use it for more than two months a year; otherwise, renting would be a more reasonable option.

Risks and challenges in sales

When it comes to housing intended for permanent residence, many still choose their own space. However, it is important to consider that over time, there may be a need to change locations. For example, if you bought an apartment with a mortgage, selling it can create certain difficulties, as banks sometimes restrict early repayment of the loan, which can range from 1% to 3% of the remaining amount.

Time and costs of sales

In addition, selling an apartment requires time and personal financial investment. The process of preparing all the necessary documents and registering the property can take up to six months or more, so this should also be taken into account when making a decision. For many people, it is important to carefully consider all the pros and cons to avoid unexpected difficulties in the future.

The tenant has a significant advantage when it comes to changing their place of residence — they only need to notify the landlord of their intentions in advance.

The purchase of real estate and its feasibility

Christian Schmitt-Burgk from Verbraucherzentrale Hamburg claims that buying a home is justified only if a person is sure they won't have to move in the near future. It is not recommended to sell a property that is under mortgage within the first ten years after purchase. The total costs associated with buying, including various fees, often reach 10-11%. Therefore, the best option is to sell the property only after the full loan term, which is about 15-20 years. During this period, the value of the property usually increases significantly, allowing at least some of the incurred costs to be recovered.

The real estate market and its dynamics

This expectation is related to the fact that in most cities, housing prices are rising quite slowly. For example, even in the most economically successful and non-tourist regions of Europe, the increase in real estate prices rarely exceeds 2-3% per year.

Advantages of buying an apartment

Buying an apartment is becoming a reliable step towards financial stability in the future. Rented housing cannot offer the same level of security and is often seen only as a temporary solution for people who are on vacation or on business trips.

Popular vacation destinations

When it comes to attractive vacation spots, some of the most popular destinations include France with its famous Côte d'Azur and romantic Paris, Italy known for its picturesqueTuscany and resorts in Forte dei Marmi and along the Ligurian coast, as well as Lake Como and Lake Maggiore. The United Kingdom, represented by London with its vibrant cultural life and prestigious districts, along with the United States, where you can find vibrant metropolises like New York and Miami, also makes this list. Additionally, we cannot overlook St. Barts — a popular winter destination among Russian businessmen, as mentioned by Vadim Orishak, director of Pleiada International.

Renting and buying housing

When it comes to renting housing, it turns out that sometimes buying an apartment becomes a more profitable option. This trend is especially noticeable in large cities like New York, London, and Madrid, where rental rates often exceed mortgage payments. In some cases, despite the fact that the initial costs of purchasing may seem significant, buyers realize their savings as rental prices in megacities rise faster than the cost of living space.

Comparison of expenses

Although at first glance, buying your own home may seem like a financial burden, in reality, mortgage expenses often turn out to be more reasonable compared to renting. Homeowners paying a mortgage face certain ongoing costs:

• down payment;
• systematic loan payments;
• property taxes;
• utility bills;
• costs for maintenance and insurance.

In contrast, tenants only make an initial payment and then handle the monthly rent, sometimes adding a line for insurance.

Example of a comparison in New York

For example, let's take two identical apartments in New York: one can be purchased for500,000 dollarswith a down payment of 20% and an interest rate of 5.5% for a term of 30 years. At the same time, a similar apartment is being offered for rent for3,200 dollarsper month. After six years, the expenses for owning a home will amount to227,678 dollarsthen the rent will cost273,974 dollarsSo the rent turns out to be almost more expensive by46,000 dollars...which allows the apartment owner to save about...7,700 dollars a year.

The situation in Europe

But in some Italian and German cities, as well as in Paris, mortgage payments can exceed the cost of rent. For example, let's imagine that a mortgage was taken out for an apartment in one of the Italian towns.80 square metersIn such conditions, rent is often significantly cheaper, sometimes up to twice as low as the monthly payments for20-year loanwith a fixed interest rate. Using variable rates, renting becomes even more attractive: inMilan, such savings can reach74%, and inRome —79%.

With a loan term of30 yearsthe rent will almost equal mortgage payments, fully covering costs inRome and97%inMilan.

Advantages of owning real estate

It is important to note that if you decide to purchase real estate and take out a mortgage, you will ultimately become the full owner of your home once all payments are completed. In contrast, tenants at the end of their lease term are left without any assets, which continues to highlight the advantages of property ownership.

Conclusion

In conclusion of my article, I want to summarize that buying or renting property abroad is not a simple decision; it requires careful analysis and consideration of expert opinions. The dilemma between purchasing and renting property becomes especially significant in today's realities, where time and financial capabilities play a crucial role.

Advantages of buying and renting

I understand that for families with children and elderly people, consistency and comfort in choosing a vacation spot are of utmost importance. This helps create a safe and familiar environment for young children and benefits the health of older individuals.

On the other hand, young and dynamic people, eager for novelty, may potentially seek temporary solutions in the form of rentals, allowing them not to be tied to one place. And this makes perfect sense. The real estate market is constantly changing, and it’s not guaranteed that in a few years your desires or opportunities will align with what they are today.

The financial aspect of the issue

Buying real estateIt can indeed be a good investment, especially if you are confident that you won't be moving in the near future. However, in the case of unexpected changes in life, the costs and hassles associated with real estate can turn out to be quite significant.

It's important not to forget about the elements of financial planning and additional expenses, such as:

• Mortgage loan interest rates;
• Resale expenses.

Conclusions about the future

Thinking about the future, I am confident that owning real estate can become an important aspect of your financial stability and confidence in tomorrow. It can provide you with a steady income and serve as a reliable asset for retirement savings.

At the same time, it is important to remember that joy comes not only from acquiring real estate but also from how we use it and the emotions we experience in the places we choose for relaxation or living. Each of us is unique, and understanding our needs will help make a choice that becomes a turning point in our lives.