5 Reasons to Keep Renting

renting

You should read this post if you are wondering whether to buy a house or spend your days living in a rented house. You could also be a person who is staying in a rented house and wants some reassurance on your decision to do so.

Renting a house can be a better option for someone who has a limited budget and doesn’t want to take big financial risks. Don’t worry, it doesn’t put you in the category of financially unstable people. In fact, your decision to live in a rented house shows greater financial awareness.

Here are 5 reasons to keep renting.

1) You can change locations when needed

Gone are the days when people use to spend their entire life in a single city or a town. Since the last ten years, there has been a massive change in the way people make financial decisions. And I am talking about both new and older generation. People want more flexibility and control over their lives.

They prefer having an option to move to a new city or a country whenever they want. This is one of the biggest reasons you should consider renting a house. Even if you don’t agree with me right now. It’s better to be open-minded and keep the options open. Never get locked down to a single place.

2) You want better infrastructure

infrastructure

Let’s be honest. Who doesn’t want a swimming pool, a golf simulator and a basketball court close to their apartment? All this is possible by renting a house in an apartment building that has all these amenities. You can enjoy every service and feature these fancy apartments have to provide. That too at a nominal monthly fee or sometimes they are included in the rent itself.

3) Saves a lot of money

Generally speaking, renting is always cheaper than buying a home. Also, you don’t have to worry about mortgage payments per month. By living in a rented house, you can save money on maintenance, repairs and HOA fees. 

But, it should be noted that the amount you will save will depend on the city, the size of the house and locality around your house. I can present to you many cases in which renting a house will be expensive in the long run compared to buying the same house. So, to get a good deal you have to get your calculations right.

4) You don’t have the time for maintenance

Real estate agents hire property managers who take care of the house and are responsible to solve any issue that might arise in a rented house. The tenants don’t have to lose their sleep if any problem like leakage in the plumbing, power-cut, or theft takes place in the rented property. The real estate agent takes care of everything and you can relax and live your life without having to deal with such petty issues.

5) Low initial investment

You could be a fresh graduate and still afford to rent a house. No one is going to care about how you will be paying your rent. Moreover, the owner makes himself secure by taking a security deposit– one or two months rent in advance– from you.

Conclusion

Before investing your money in a real estate property, it’s imperative to consult a trusted real estate agent who has a good reputation. Renting can be more expensive than buying if you don’t do your due diligence.

How can Renting or Buying an Office Space Affect your Balance Sheet?

Key

Before we start discussing about the effects that purchasing an office space has on the balance sheet, it is important to understand what the balance sheet and the accounting equation is and its importance for a business.

The accounting equation, which is the most significant equation in the universe of accounting, is quite simple:

Assets – Liabilities + Shareholder’s Equity

Assets are the things or objects that a company owns which have an economic value. These are generally things which the company can use to gain money. Assets are considered a resource for the business.

Liabilities are claims on the assets that are given upon by people other than the owner of the business. These are the debts that the owner owes to his suppliers from whom he has taken the assets. These suppliers have a claim on their cash.

Renting or buying space office space

When the liabilities have been paid, the thing that is left by is the shareholders’ equity. This is what the owner can call his own or claim to in his business. If the business if solely made by one person, then the equity goes to the owner. If the business is incorporated, then it goes to the shareholders in terms of shares.

The assets are what the company can use which include things like cash, inventory, relievable accounts, etc.

All of the three elements ultimately go on to the balance sheet made by the company. This shows the financial position in terms of business.

The liabilities are taxes and such things. The shareholder’s equity is both the money that the owners put in the business in the start and any gains or losses that have happened in the business since.

How is office space accounted for? Do you consider it as expenses or assets? If you happen to buy an office area, then it can be used for a long period of time, hence when it exceeds its accounting period, it can be counted as an asset.

On the other hand, if you rent an office area, you are likely to keep paying for it for a long time till it expires its expiry date. It involves a risk of liability from the suppliers if you aren’t able to pay off the debt.

There is a matter of how you use the office area that you have purchased. If you paid the money on cash, it is likely that it will be used for more than the accounting period. This reduces your cash asset and the office purchase account increases in the current assets. There is a balance in the accounting sheet and the purchase is recorded in the cash accounts.

On the other hand, if you buy the office with credit, and if it is a large amount, which an office space generally is, and you are likely to use it for more than one accounting period, then your liabilities increase as well as your current assets. As a result, there is a balance in your accounting equation. A purchase of supplies on the account is recorded in the liabilities and supplies accounts. In both the ways the assets will stay the same because the decrease in one asset matches with the increase of another.