Renting vs. Purchasing

ArtBlock in the South End of Boston has 26 Affordable Artist Live/work units in it.

Should you rent or buy? It’s a tough decision without an easy answer. While ownership can stabilize an artist’s life, it may not be affordable. Purchasing space only makes sense if you are committed to a particular city for an extended period of time. Renting allows you more flexibility and immediate access to space.

Even in this volatile market, ownership might be a more viable option than you expect.

Looking at the price of a space might be daunting, but remember there are lots of programs to help you figure out what you can afford. Please check out the area on purchasing a home/space. There are other things to keep in mind when thinking about whether you should buy or not:

1. Control and stability and a Legal space

As a tenant you are protected by the terms of your lease. In a sense, leases give tenants more privileges than ownership. A lease typically survives the landlord’s bankruptcy, and sometimes even provides space at less than the landlord’s cost. But you are also part of a system in which property owners try to maximize their profits. A landlord has the right to raise your rent when your lease expires, although a good lease would cap the increase. Changes in supply and demand often catch renters unawares and commercial rents may rise (or fall) very quickly. At some point in time, you may need to move because you can no longer afford to pay rent. Owning your own studio, while perhaps initially more costly than renting, often will give you long term stability and control of your space. Owning a legal artist space also relieves the worry of many artists who are in situations where their space is not sanctioned for the use they want it for.

2. Tax Breaks

Ownership might not cost you as much as you think! Interest on mortgage payments and real estate tax on the residential portion of your studio are deductible on your taxes. In other words you will get some money back on your payments at the end of the year. You need to look closely at your tax bracket (talk to an accountant) to see the benefit.  You can also get a general idea of whether to rent or buy using this calculator.

3. Downpayment

Getting a downpayment for a studio or live/work space can be very difficult for many 1^st time homebuyers especially artists with variable incomes , college loans to pay, and big space needs. Many methods exist to get the money you need to purchase. While raising the money may seem impossible, many artists have used their creativity to generate enough cash.  To get a general idea of home affordability, try either of these two calculators: Fannie Mae and Move.com.

Also, many new mortgage options exits for future owners which don’t require you to put as much money down.Be extremely careful as monthly payments can be larger than you can really afford, and with no money down, your mortgage might exceed the value of your space if prices fall even the slightest amount. Please consult our section on mortgage products.  Many artists prefer to keep their monthly costs down by putting as much down as they possibly can, and by continuing to use occasional windfalls or savings to further pay down their mortgage debt.

4. Appreciation

Homeownership is so popular in America because it is the #1 way in which citizens increase their total value monetarily. Most spaces have increased in value over time, but there are no guarantees.