How to solve the dilemma of whether to buy or rent an apartment? One trick will help you make your decision.

Buying or renting real estate is a perennial dilemma that affects your long-term financial health. While we have a prevailing belief that buying a home is always better than renting, there is no definitive answer as to which is more profitable. Owning a home is not always better than renting, and renting is not always as easy as it seems. Owning real estate carries many risks, including the fact that its value will not always increase. Buying real estate on credit can be a favorable decision, but can turn into "debt slavery" if your income drops or you lose your job. Also, keep in mind that the total cost of owning a home is usually higher than renting because of the additional costs of buying and''maintenance, even if the mortgage payment is lower than rent. Renting provides more flexibility.

When you rent, you know exactly your housing costs each month and don't face the risk of unexpected costs.

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On the other hand, as a renter, you may face a price increase every time you enter into a new lease. One practical formula that is used when evaluating whether buying or renting is currently more advantageous is the "5 Percent Rule." It assumes that the total annual cost of capital to buy and maintain a property is five percent of its value. Therefore, multiply the market value of the property by five percent and divide by 12 to''get the break-even point. If the monthly rent for a comparable property is below the break-even point, financially it makes more sense to rent. If the monthly rent is above the payback point, it makes financial sense to buy the property.

The profitability of buying versus renting depends largely on changes in three key parameters - real estate prices, rental prices and mortgage interest rates. During periods of rising interest rates and high real estate prices, the profitability of buying usually decreases, while during periods of low interest rates and moderate real estate prices, the profitability of buying increases. In such circumstances, many people purchase apartments, os