The Financial Benefits of Renting
Everyone focuses on homeownership, but renting never gets any love. The fact is that sometimes renting can better fit your lifestyle. Find out the benefits to renting an apartment.
Everyone talks about the benefits of buying your own home. It's one of those bigger milestones most people work towards.
Yet, there are few conversations about how homeownership may not suit everyone's lifestyle.
Homeownership rates decreased 1.7% this past year. Economists are further predicting that these rates will continue to drop until 2023. So, by looking at these numbers, it's apparent that many people are living in rentals.
Renting isn't always an active choice someone makes. Nonetheless, many people rent as it's more financially beneficial or offers more leniency.
Let's open up this discussion to talk about the benefits of renting an apartment. You might find out that renting is a better choice for you, as well!
You get more flexibility as to where you live.
A home and mortgage tie you down to whichever place you buy. However, renting is a temporary home. This means that you're free to move whenever you'd like.
And no, we haven't forgotten that renters are bound to their apartments once they sign a rental lease. However, you can always sublet your unit or get out of a lease if you're looking to move out.
It's the perfect option for travelers, students, or our regular movers out there!
About 94,000 more people moved in 2021 vs. 2019- showing that people are moving more frequently. Renting makes it a lot easier for them to pack up and go. They don't have to stage rooms, hire a realtor, and go through the process of selling their home.
You'll have no maintenance or renovation costs.
Owning a home is expensive- that's just the reality of it.
The general rule of thumb is that homeowners follow the 1% Rule. The 1% Rule recommends budgeting around 1% of the home's purchase value for maintenance costs.
Let's set up a scenario here. Someone buys a home for $500,000. 1% percent of that value would be $5,000. So, under this rule, this person should save 5 thousand dollars for general home upkeep every year.
When renting, you don't have to stress over saving this kind of money. Your landlord will be responsible for any repair bills or maintenance costs.
Additionally, you don't have to worry about renovation costs. It won't be your job to upgrade your bathroom when the pipes get so old they keep bursting. 😅
Renters don't pay as much for utilities.
Most people rent out apartments, which are significantly smaller than houses. As such, a renter will spend a lot less on their utility bill.
Renters pay about 50% less in utilities versus homeowners.
This makes a lot of sense when you compare floor plans between homes and apartments. Nowadays, apartments are a lot more compact. You don't need as much heating/AC to run through your home if you live in an apartment. Same thing with lighting. Apartments require less lighting and electricity to light a room.
These items add up at the end of the month. Renters' utility expenses end up being an average of $2,416 less by the end of the year (which is not chump change). 🤯
Renters insurance is cheaper than home insurance.
It's pretty much unheard of to pay a high cost for insurance on a rental home. No matter where you live, renters insurance remains affordable.
You can find even more affordable renters insurance through companies like Lighthouse. Their insurance averages at just $10 a month. That way, you don't have to break the bank to get rental coverage.
You'll have access to select amenities or perks.
Although they're not available for all, many rentals offer extra amenities or perks.
These amenities could include:
- Pools or saunas
- BBQ areas or fire pits
- Terraces and patios
- Yoga studios or cardio rooms
- Media or movie rooms
- Lounge areas or bars
- Walking trails
- Pet parks
If these facilities come with the building, they'll get included in your rent. This is especially beneficial for people who regularly pay memberships to outside facilities. You'll get to cut those costs out of your monthly expenses!
Another cool thing about renting is that you can actually get cash back on it. It's safe to say that's not a perk homeowners get.
Lighthouse helps you get up to $1,800 on rent when you sign a new lease with them. It's a great way to get that rent money back so that you can spend it elsewhere!
You won't have to worry about paying real estate taxes.
Just like any job, you also have to pay taxes on the properties you own. When you rent a home, your landlord is in charge of paying the property taxes on your building or house.
The average American pays a little under $2,500 in yearly property taxes. We can't fail to mention that tax rates depend on the size of the house and the state you live in.
Some states like Illinois are more expensive. Residents tend to pay around $4,419 in taxes. Whereas residents in cheaper states, like Alabama, pay an average of $587 per year.
Regardless, that's a lot of money to be paying every year. Many people aren't in the position to be dishing out that kind of money. Renting makes their lives easier by eliminating this expense.
You don't have to save up for a down payment.
The biggest upfront cost (emphasis on the big) you pay when buying a home is the down payment. Typically, homebuyers have to put down 20% of the home's value as a down payment.
This money translates into home equity, so you're not losing this money. Rather, you're purchasing stock of the home's total value. As you continue to pay your mortgage, a higher percentage of the home's value will belong to you.
Yet, this is still a huge expense a homebuyer has to pay. In 2021, the average cost of a home was $374,900 in the US. This means that if you were purchasing a home, you'd have to put down $74,980 upon signing those papers.
The largest upfront cost a renter pays is the security deposit. This is usually equivalent to a month's worth of rent. That's still a significant amount of money, but it's much more affordable than a home down payment. If you're a good tenant, you'll get that security deposit back, which is a bonus too.
What are some benefits to renting that homeowners don't get? For starters, renters don't have to save up for a down payment (which is always, at least, a few thousand dollars). Renting means you're not tied down to your apartment or living location. You don't have to pay for maintenance, renovation costs, utilities, or amenities as a renter. We also can't forget to mention that renters insurance is significantly cheaper than home insurance. Real estate taxes are also not paid by renters- meaning that renters get a pass on paying over $2,000 in taxes per year.
So, there you have it! Buying a home isn't for everyone, and we hope we showed that. Renting has a lot to offer to the right person.
If you're currently looking for a rental apartment, don't miss out on getting cash back! Lighthouse offers cash back services for those who sign a new lease. You can earn up to $1,800 on your rental unit. Check us out here to check us out!