Are you thinking of living in Northwest Arkansas but aren’t sure whether you should rent or buy? In this episode of Naturally NWA, I’m going to show you the difference in cost between renting and buying. We’ll crunch the numbers for a few different property types so you can decide whether renting or buying is the best choice for you.
Should You Rent Or Own?
When deciding whether to rent or buy, it usually comes down to affordability. To help you sort it out, I’m going to provide numbers based on the cost per number of bedrooms, not necessarily the property type. Each example that I give is going to have a mix of single-family homes, duplexes, townhouses, condos, and apartments.
It’s also important to consider the length of the lease term if you’re thinking about renting. If you want to rent for less than a year to get a feel for the area before you purchase a home, you’re likely going to pay a premium for a shorter term or a month-to-month lease. In some cases, you might see the rent price increase by $300 or $400 a month for any short-term options—which is something you’ll want to keep in mind.
Let’s first start by talking about what it’s like to purchase a property here in Northwest Arkansas, beginning with three-bedroom properties. The average three-bed, two-bath home in Northwest Arkansas is going to cost you around $265,000. The closer you get to Bentonville or Fayetteville, the higher the cost will be. The more you move towards Springdale or Bella Vista, you’re going to start getting a little bit more bang for your buck.
Assuming you put down 5% on a conventional loan at today’s interest rate of 4%, your mortgage on a $265,000 purchase is going to run around $1,680. If you were to rent a comparable home, you could expect to pay anywhere from around $1,475 a month on the low end to $1,600 or so on the higher end in the same areas.
From a monthly cost perspective, it is currently a little bit less expensive to rent than it is to own. Of course, these numbers can differ based on the final sales price and down payment. However, this is a good baseline to follow.
Now let’s talk about two-bedroom properties. The average two-bedroom home in Northwest Arkansas is going to run roughly $215,000. Once again, as you get closer to Bentonville or Fayetteville, those numbers are going to go up a little bit. If you stay towards Springdale, Siloam Springs, and Bella Vista, those numbers can be a little bit lower; you’ll get a little bit more value in those smaller areas.
Again assuming that you put 5% down at today’s interest rates—which is currently around 4%—your mortgage is going to run roughly $1,380 on a $215,000 purchase. If you compare that to what you’re going to pay in rent on a similar two-bedroom property, you can plan to pay anywhere from around $1,000 a month all the way up to $2,500 on the higher end in the same areas.
From a monthly cost perspective, once again, it’s a little bit less to rent than it is to own here in Northwest Arkansas for a two-bedroom property. This will also depend on the amenities that you desire. Those numbers will also differ based on the final selling price and down payment, though this is a good baseline to follow.
Lastly, we’re going to talk about one-bedroom properties. There are not many one-bedroom homes in Northwest Arkansas. Most of the one-bedrooms available will be townhouses, apartments, condos, or duplexes, although we do have some single-family homes that are one-bedroom.
The average one-bedroom property in Northwest Arkansas is going to run around $200,000, assuming once again that you put down 5% on a conventional loan at today’s interest rates of about 4%. Your mortgage is going to run roughly around $1,300 on a $200,000 purchase. Now we’re going to compare that again to the cost to rent a one-bedroom.
You can find one-bedroom properties for rent, on the low end, for around $600 a month. On the high end, you can rent a one-bedroom for around $1,300 or $1,400 in the same area. Depending on the amenities that you desire and the location, you may pay on the higher end. If you’re away from everything and not looking for anything fancy, you can get one bedroom property for around $600 a month. Once again, it’s a little bit cheaper to rent a one-bedroom than it is to purchase one.
I’m Here To Help
I hope this gave you some things to think about if you’re debating between buying or renting a home in Northwest Arkansas. Keep in mind that I personally do not handle any rental properties. However, I do have good contacts for property managers that I would be happy to refer you to if you’re looking to rent.
If you’re looking to buy, please reach out to me with any questions about our local real estate market. I help people like you relocate to Northwest Arkansas every day, and I’d be happy to help you, too. I can give you more detailed information on certain areas, as the numbers will vary based on exactly what you are looking for. I’m also happy to provide more information about Northwest Arkansas in general if you want to get to know the area.
Don’t forget to subscribe to my channel so you never miss an episode of Naturally NWA, my show all about Northwest Arkansas. I can’t wait to tell you more about our beautiful area on the next episode of Naturally NWA, so stay tuned to see what I feature next!