We tend to think of buying a home as a mandatory part of the materialistic dream. But despite the constant messaging telling us to buy, homeownership may be overrated. A lot of people who shop for homes would actually be better off renting.
Renting a home can be an ideal option for those wanting extra flexibility and less responsibility. While buying a home can involve some serious saving and commitment, renting can help you maintain your flexibility and lifestyle.
Especially for those in expensive housing markets, renting a house can be a simple way to get the space you want without having to spend years saving for a down payment. Renting also allows you a bit more flexibility than homeownership would, whether you’re in a house or an apartment. With renting, you’re not tied to the property long-term, and you’re also less responsible for saving for repairs, paying for taxes and insurance, and keeping up with other expenses.
Renting gives you a home without any of the burdens of homeownership. It’s the easiest way to live in a house without the hassle. Here are 7 Reasons to rent instead of buying a home:
1) No Maintenance Costs or Repair Bills
One of the benefits of renting a home is that there are no maintenance costs or repair bills. This means that when you rent a property, your landlord assumes full responsibility for all maintenance, improvement, and repairs. If an appliance stops working or your roof starts to leak, you call the landlord, who is required to fix or replace it.
Homeowners, on the other hand, are responsible for all home repair, maintenance, and renovation costs. Depending on the nature of the task (and whether multiple jobs pop up at the same time), it can get quite pricey.
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2) Renters Don’t Tie Up Their Money
Another advantage is not having to put up a huge upfront cost like a down payment. Although renters often pay a security deposit and first and last month’s rent, these costs are small in comparison to those made by owners. When purchasing a home with a mortgage, you’re required to have a sizable down payment far more than the renter’s upfront costs. That down payment could instead be earning high risk-adjusted returns on a low-fee investment—say a Vanguard mutual fund—which is a lot more liquid and a lot less expensive to manage than putting all those eggs in one basket.
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3) You’re not stuck with any losses
Homes gain and lose value all the time, and it doesn’t always just have to do with the house itself. Neighborhoods can go up and down in value, for instance, or school districts can have a big impact on the house’s value.
These are things you’d have to consider if you were buying the home. You might not want to live in the same area if you were going to buy the property.
But as home value fluctuates, it probably won’t be affecting your monthly rent payment too much. Without having to consider these factors, there’s a wider variety of locations available, rather than focusing on where the resale market is heating up.
4) Flexibility to Downsize
Renters have the option to downsize to more affordable living spaces at the end of their lease. This kind of flexibility is especially important for retirees who want a less costly, smaller alternative that matches their budget.
It’s much more difficult to break free of an expensive house because of the fees involved with buying and selling a home. Also, if a homeowner has invested a significant amount of money in renovations, the selling price might not cover these costs, leaving them unable to afford to sell and move.
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5) Fixed Rent Amount
The amount you pay for rent is fixed for the span of the lease agreement. While landlords can raise the rent with notice, you can budget more efficiently, because you know the amount of rent you are required to pay.
The same applies to homeowners with fixed-rate mortgages, which also allow for efficient budgeting. But adjustable-rate mortgages (ARMs) can fluctuate, often resulting in rising mortgage payments due to higher interest charges. Property taxes are another variable that can increase costs for homeowners but don’t affect renters.
The Bottom Line
Owning a home can be beneficial for homeowners over the long run, due to the amount of equity they acquire in their home. Renters have nothing tangible to show for years of rental payments. However, for those who want to avoid the hassles associated with homeownership, the costs of upkeep, and property taxes, renting might be a better option. Of course, it depends on an individual’s lifestyle, financial situation, and whether they’re working or in retirement.