When living outside your home country, there are a number of things to consider when you are deciding whether you should buy or rent your home. As we pointed out in an earlier blog post, "Considering Buying a Home Overseas? Five Reasons Why Renting May Be a Better Option for Expats," some of the things to think about include a relatively short time horizon (often expats only expect to be in a given location for a few years), maintaining flexibility, avoiding hassles, and the fact that financially, it's often cheaper to rent.
Although we've long been of the opinion that renting often makes more sense than buying for many expats, we recognize that there are always exceptions. It was therefore interesting to read about a recent study done by Rich Arzaga, an adjunct professor of personal finance at the University of California, Berkeley, in which he analyzed 250 different U.S. properties and concluded that "100% of the time it was better to rent, rather than own."
While his study was U.S.-centric and may have flaws, Arzaga does make at least one point that expats should consider. Owning a home―no matter where it is located―comes with often-overlooked costs that renting does not. Any potential home buyer should research those costs in advance to make sure they can afford both the initial purchase as well as the cost of maintaining ownership over time.
Before buying a home, expats should also consider if they have adequate funding for other financial goals, such as retirement. Owning a home is not, in and of itself, a retirement plan. Understand the numbers behind a buy versus rent comparison. While many people initially consider home ownership to be an important goal personally and financially, after doing a rational analysis, some expats may conclude that far from "throwing money away," renting could actually be their best choice.
Creveling & Creveling is a private wealth advisory firm specializing in helping expatriates living in Thailand and throughout Southeast Asia build and preserve their wealth. Through a unique, integrated consulting approach, Creveling & Creveling is dedicated to helping clients cut through the financial intricacies of expat life, make better decisions with their money, and take the steps necessary to provide a more secure future. For more information visit http://crevelingandcreveling.com/.
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