We've heard it time and time again- renting is a waste of money. Yet, many people fail to realize the pros and cons of renting versus owning a home.
Although renting is rarely associated with being a financially beneficial venture, we're here to debunk that it's not all a money pit.
Renting can be more affordable
To start things off, when somebody tells you that renting a home is more expensive than buying a home, they aren't telling you the full story. Sure, when you only compare the cost of a mortgage to the cost of rent, the numbers might make you think that buying a place of your own is the cheaper option.
However, there are all sorts of things that this comparison does not take into account. Buying a home comes with a variety of other expenses such as:
- Home maintenance and repairs
- Home insurance
- Closing costs
- Property taxes
- Remodels and upgrades
Most of these expenses will run you a couple of thousand dollars.
On the other hand, when renting, you get what you see. Nearly all of the expenses you will have to pay upfront will be laid out in your lease. At most, in addition to your rent, renters insurance, and security deposit, you will end up buying furniture or home necessities.
This will still run you a couple of hundred dollars, but the amount is much tamer in comparison to home costs.
Renting gives you access to amenities
One of the best, and most overlooked aspects of renting, is the amenities that many places give you. In particular, if you are looking to rent an apartment, you may get access to a gym, pool, community center, community events, clubhouse, and much more.
The best part is that in most cases, these items won’t cost you anything extra. It's all included in the rent price!
On the flip side, if you decide to buy a place of your own, you'll have to add all these extra amenities to your monthly bills. At the very least, you would have to pay HOA dues or property taxes. Those can definitely get pretty pricey!
Renting gives you flexibility
If your job requires you to move every few years, then renting would be the best option for you. In most renting cases, you will only be locked into a lease for a year or two. Plus, in most cases, if you ever need to terminate your lease early, you would only have to pay an early move-out fee.
If you own a home, things get a little more complicated. The moving process is a lot more challenging and time-consuming.
You'll have to prepare your home for sale. Then, you'll need to hire a good real estate agent, run the listing and get prospective buyers to view it. You'll also have to go through the process of appraisals, inspections, negotiations, and closing. Sure, you may make a bit of money on the sale, but if flexibility is a necessity in your life, renting is a phenomenal option.
Renting is a lower risk venture
By taking on a mortgage, you are adding a large amount of debt to your life. And with debt, comes financial complexity and risk.
So, if the idea of jumping into hundreds of thousands of dollars worth of debt makes you uncomfortable, then you should consider renting. Since renting doesn’t require you to take on debt, it is much less risky.
Oh, and by the way, it doesn’t make you weird if you choose to rent in order to avoid a mortgage.
It’s definitely a different path than most people take, but since most believe that living a completely debt-free lifestyle, renting is anything but a waste of money for us.
Renting requires less responsibility
In addition to the fact that renting carries much less risk than buying, it also requires a lot less responsibility.
For instance, when you own a home, you are responsible for all the upkeep and financial responsibility that comes with it. So, if anything breaks, from a light bulb to the furnace, then you are the one that has to get it fixed.
That is a lot of stress and responsibility to take on. And, if you are not quite ready for all that, then it might be in your best interest to rent until you are.
Think about it like this, if you are renting a house and the furnace goes out, all you have to do is call the landlord, and they will send somebody out to fix or replace it. At worst, you have to stay home and wait for the furnace repairman to show up. But at least you didn’t have to pay for it!
Renting has fewer overhead costs
It's no secret that owning a home comes with tons of upkeep and maintenance costs. These ongoing expenses can rack up over time.
Experts say you should budget 1% of your home's purchase price to upkeep the maintenance of your home. For most people, that would result in thousands of dollars per year. If you rent, you don't have to worry about that!
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