- Both renting and buying have their financial advantages, and owning a home isn’t right for everyone.
- Unlike homeowners, renters have no maintenance costs or repair bills and they don’t have to pay property taxes.
- Amenities that are generally free for renters aren’t for homeowners, who have to pay for installation and maintenance.
- Both renting and buying have their financial advantages, and owning a home isn’t right for everyone.
- Unlike homeowners, renters have no maintenance costs or repair bills and they don’t have to pay property taxes.
- Amenities that are generally free for renters aren’t for homeowners, who have to pay for installation and maintenance.
- Renting usually requires a security deposit equal to one month’s rent, whereas a homebuyer is required to have a sizable down payment when purchasing a home with a mortgage.
- Renters have lower utility bills, greater flexibility in where they live, and access to amenities, such as a pool or fitness room, that might otherwise be prohibitively expensive.
APARTMENT BENEFITS:
No maintenance costs or repair bills, no real estate taxes
Access to amenities, no down payment
More flexibility as to where to live
Fixed rent amount, lower insurance costs
Often a gym and or pool
Lower utility costs
Predictable monthly expenses
HOME OWNERSHIP BENEFITS:
Buying Pros
- Every payment brings you closer to owning the house. When you pay your rent, that money is spent. Gone. Bye. Not returning. But when you pay your mortgage, you work toward full ownership.
- You can cash in on appreciation. Your home will most likely increase in value over time depending on the market and how well you take care of it. What you buy for $200,000 today could sell for $260,000 down the road.
- You have tax advantages. Many of the costs of owning a home—like property taxes—are tax deductible. And if you’re paying off a mortgage, you’ll get to count your mortgage interest as a deduction when you file your tax return.
- You have the freedom to renovate your house. As the owner of your house, you can do whatever you’d like to it. If you want to paint it hot pink from top to bottom, no landlord can stop you—but your spouse might have something to say about it.
- You have more privacy. Ricky and Lucy are fighting again—and because the drywall is as thin as a playing card, every tenant can hear them. But having your own house means no Ricky, no Lucy, and no cramped apartment. Just you and peaceful silence. Of course, if your dream home is a beautiful condo in the middle of bright lights and city life, this wouldn’t apply.
- It’s yours! You have a house! You have the satisfaction of knowing you made the American Dream your reality.
Buying Cons
- It’s more difficult to travel and relocate. Want to go to Southeast Asia for half a year on a whim? Selling your house isn’t as easy as getting out of your lease, packing your backpack, and getting a one-way ticket to who-knows-where. Same goes for work-related relocations.
- You have more expenses. Remember how little renter’s insurance cost you? Well, hate to break it to you, but homeowner’s insurance will be a lot more. Combine that with a flood policy, HOA fees, property taxes and higher utility bills, and you’re looking at more monthly expenses.
- Who’s going to fix the leaky pipe? You are. Or a plumber who you pay. As a homeowner, you’re responsible for the upkeep of your home.
Is buying a house the grown-up thing to do?
Not quite. Taking control of your money is the grown-up thing to do. If you’re 25 and feel like you’re behind the curve because you haven’t bought a house yet, stop worrying.
There’s no reason to rush into a big purchase just because everyone keeps telling you that’s what you’re supposed to do. Real grown-ups know homeownership isn’t the money-smart choice in every situation.
Should I Rent?
First off, let’s get something straight. Renting is not a waste of money. Sure, giving your money to the landlord may mean you’re not investing in homeownership. But you’re paying to live somewhere! And as long as you’re paying to live, your money is being well spent.
Though renting as a way of life is not something we recommend, there are a few situations in which renting is the better option.
When should I rent?
1. You’re paying off debt.
If you have student loans or credit card debt to stomp out, consider your apartment your stomping ground. Unless your rent is devouring too much of your paycheck—in which case you should probably find a cheaper apartment—renting can offer you the opportunity to get out of debt and save.
2. Your job requires you to move around.
If you’re in the military or if you don’t plan to stay long in an area, then you should rent. In most areas, you’ll need to stay in a house for two to three years to make buying worth the investment.
3. You need time to make a plan.
Buying a house is a long-term commitment. As is the case with any relationship, you should think through your decision—acting impulsively is never a smart real estate move. So, if you just got married, graduated from college, or aren’t sure which neighborhood you want to live in, don’t feel guilty about renting until you have a solid plan.
Renting Pros and Cons
Just as home buyers face upsides and downsides to buying, renters have their own set of pros and cons. Here are the most important ones.
Renting Pros
- You can move with ease. Tired of the city you’re living in? Thinking about taking a year to travel the world? When you rent, you don’t have to stay in the same location. Plus, it’s much easier to get out of a lease than a mortgage.
- You don’t have to pay for maintenance. If the stove goes kaput and the faucet pipes burst, you don’t have to call the plumber or make a trip to the appliance store. You call the landlord. One of the biggest perks of renting is that you never have to worry about surprise repair costs. And if you have renter’s insurance, you’ll have more peace of mind than a monk.
Renting Cons
- Rent rates will go up. Even if you found a killer deal in a hot area, inflation, competition and rising property values will cause your rent to go up year after year.
- You have no financial incentives. No tax deductions. No equity. No rising property value. You’ll never see the money you pay again.
- You have less freedom to renovate. Even though you think hardwood floors would look great in the bathroom, your landlord may not approve of your renovation idea, especially since they’ll be the one to pay. You have little say in what your place looks like.
Is renting always cheaper?
Whether or not you should rent or buy a house may seem like an apples-to-apples comparison if you look at monthly costs alone. In that case, homeownership often tips the money scale because you pay for maintenance, taxes and homeowner’s insurance on top of your mortgage payment. Long-term costs, however, paint a different picture.
If you’re moving every few years or you’re in a super expensive market (like San Francisco), renting is probably the cheaper option. But if you’re going to stay put for the long haul, you’ll likely make out better buying—especially when you pay off your home.
Rent vs. Buy: Make Your Best Choice With a Pro
Deciding whether or not to buy a house isn’t an easy choice. That’s why it’s smart to partner with a pro who can help you navigate your options.
If you’re looking for a local real estate agent who will offer you trustworthy advice no matter your budget, give our real estate Endorsed Local Providers (ELPs) a try. Our ELPs understand the financial path you’re on and won’t push you to overspend on a house just so they can bring home a bigger commission check.
We only endorse the top agents in your area, so you can trust your ELP to negotiate the best deal on the house that’s right for you.
