It’s possible that renting might be better than buying. I recently read an article that said many millennials and older generations are ditching their mortgages and choosing to rent. Not because they can’t afford a mortgage, but because they like the freedom and flexibility that comes with renting. I’ve been a homeowner for about eight years, and although I’m enjoying the benefits of ownership, I also like the idea of renting.
The truth is, renting isn’t for everyone, and depending on how you look at the situation, renting can be way more awesome and convenient than owning your own place.
1. Renting Might Be Better Than Buying – It Isn’t Always a Waste of Money
Anyone who’s pro-buying will likely say renters are flushing their money down the toilet because they get nothing in return. But at the same time, buying doesn’t guarantee you’ll make money. Home prices can decline in some housing markets and it can take years to regain value. For example, we bought our place in 2006 — in the middle of the housing boom. Eight years later, we can realistically only sell our house for about $15,000 under our original purchase price. Fortunately, we’re in a position where we can sell, but we’ll just break even. We put about $8,000 into this house since moving in — money we won’t get back. So while homeownership can provide a nice cash cushion, it might not. There are no guarantees.
2. You Don’t Have to Empty Your Savings Account When You Rent
This is one case where in the short term, renting might be better than buying. Buying a house is expensive — period. You’ll need a down payment, which can be as low as 3.5% or as high as 10%, depending on the lender and your credit score. Plus you’re responsible for closing costs which can be anywhere from 2% to 5% of the sale price. On the low-end, you can spend a minimum of 6% of the sale price out-of-pocket to purchase a property. For many people, buying a home involves wiping out a savings account that took years to grow. I don’t know about you, but if it takes me five years to save $10,000, I don’t want to spend this money all in one place. If you rent, you might only spend a percentage of your savings. Some landlords only require one month’s rent as a security deposit, and other places only require a $200 or $250 security deposit if you have excellent credit. You can rent, live in a nice place, and keep your money.
3. You’ll Enjoy More Amenities Than Buying
Some apartment complexes provide their tenants with a variety of cool amenities. These might include a swimming pool, hot tub, workout room, game room, as well as an on-site recreational/party room center. I’ve been checking out some of the luxury apartments in my area. They offer so many attractive amenities, and living in these complexes is comparable to living on a four-star resort — plus the rent can be cheaper than buying a single-family home.
4. Renting Might Be Better Than Buying if You’re Not Tied Down to a House
Depending on your personality and lifestyle, you might like the freedom of being able to pick up and move every three, five or seven years. This is how you experience new things, meet new people and travel the world. In this case, buying a house may not make financial sense. When you own a home, moving is an unpredictable process. You have to meet with a real estate agent, list the house for sale, and then pray you’re able to find a buyer fast. There’s no guarantee how long it’ll take for your home to sell. It might sell in two weeks or it might sell in two years — you never know. But if you’re a renter, all you have to do is wait for your rental lease to expire, and after giving your landlord a 30-day notice, you’re free to move on with your life. In this case, renting really might be better than buying.
5. You Have an On-Call Maintenance Man
If your water heater breaks in the middle of the night, or you hear knocking sounds coming from inside your wall — it’s not your problem. When you’re a renter, you’re off the hook for many of the repairs and required maintenance on the unit. Call up the landlord and he’ll send somebody over to take care of any issue with no out-of-pocket expense on your part. But when you own a home, something can always go wrong. Even if your house is newer and in relatively good condition, the air conditioning unit might break, you might have a plumbing leak, or another problem can catch you off guard. It takes money to keep your home in good condition.
6. Renting Might Be Better than Buying if You Get Increased Safety
Some apartment complexes are extremely safe to live in. These include gated communities that required a code to enter the property, and many buildings feature keypads or locks on the entrance doors to prevent intruders from coming inside. You can move into a new apartment and immediately feel safe. But if you move into a new home, you have to call a security system company and have a unit installed, which might cost a couple of hundred dollars out-of-pocket, plus the monthly cost of monitoring your system. You can purchase a system like the Ring Alarm 8-Piece Kit and install it yourself and save some money. Check out the Ring Alarm system on Amazon.
7. You Might Save Money
I’ve heard people say buying is cheaper than renting, but this isn’t always the case. Sometimes, home prices can rise higher than the average cost of rent — to the point where renting becomes less expensive than buying. Not only because you’re saving money on the monthly payment, but also because you might have cheaper utilities, zero maintenance costs, and lower out-of-pocket costs to get the place. The money you save can go toward increasing your rainy-day fund, paying off debt, or simply enjoying life without a mortgage hanging over your head.
Bottomline: Renting Might Be Better Than Buying
Personally, I think there are benefits of renting and buying. On one hand, I like writing off mortgage interest to save money on taxes, and I enjoy having complete decorating control over my place. On the other hand, there’s something about the freedom of being able to come and go and being able to enjoy certain amenities that makes renting attractive. Ultimately, you have to decide what works for you. But if you don’t want the responsibility and the headaches of ownership, renting might be the better choice.
What are your thoughts?