I, Mark Roemer, know that owning a home is a lifelong ambition for many Americans; it is not for everyone. Homeownership rates in the US are currently very high, but this hasn’t always been the case. Traditionally, families had to build their homes or rent one from someone else. While renting does have its drawbacks, it also has many benefits. For some people, renting makes much more sense because of their financial situation. We’ve compiled a list of ten of the most compelling reasons to rent rather than buy a property.
Fewer Maintenance and Repair Costs
One advantage of renting is the lack of maintenance and repair fees. That means that if you rent, your landlord is responsible for the maintenance, the improvements, and the repairs. When an appliance is on the fritz or the roof starts to leak, you inform your landlord, who is ultimately responsible for repairing or replacing it.
On the other hand, Homeowners are liable for all costs associated with home repairs, maintenance, and renovation. It can get expensive depending on the nature of the assignment (and when numerous tasks appear simultaneously).
Affordability of Available Amenities
Another advantage of renting is having access to amenities that would otherwise be too expensive to purchase yourself. Many midscale to affluent apartment complexes include amenities like an in-ground pool and a fitness center at no additional cost to tenants.
A homeowner would have to spend thousands of dollars on installation and maintenance if they desired access to these advantages. Condo owners aren’t immune to these expenses, either. These costs are included in their homeowner’s association (HOA) dues, which are paid monthly.
No Real Estate Taxes
Renters do not pay property taxes. That is one of the advantages of renting over owning. Real estate taxes can be a huge financial burden for homeowners, and they differ from county to county. Property taxes are expensive in some places, costing thousands of dollars annually.
Property taxes are calculated based on the estimated worth of the house and the amount of land on which it is built, despite being complicated. Property taxes can be a huge financial burden for homeowners as new projects become larger and larger.
No Deposit Required
The advance payment is another area where renters have a better financial offer. In almost all cases, renters must pay a security deposit equal to a month’s rent. And that’s usually the end of it. If they don’t cause damage to the rental property, the deposit will be refunded to them when they move out.
When you purchase a house with a mortgage, you’ll need a substantial down payment—usually approximately 20% of the property’s worth. Of course, having a down payment means you have equity in your property, which grows as the mortgage is paid off. And if you buy a property outright, you have a valuable asset that renters will never have.
Even so, a down payment on a home is much greater than a security deposit on a rental. A $40,000 down payment on a $200,000 home is 20% of the purchase price. In July 2020, the average apartment rental in Manhattan, one of the most expensive cities in the United States, was $4,801. 1 Renting is a preferable option for those who cannot afford a down payment.
More Freedom in Terms of Where to Live
Homeowners are limited to areas where they can afford to buy, whereas renters can live most anywhere. The majority of house buyers might not be able to afford to live in a pricey metropolis like San Francisco, but renters will. Despite the fact that rent might be high in regions where home values are likewise just as high, renters are more likely than home buyers to find a reasonable monthly payment.
Few Concerns Regarding Property Value Decline
The value of a home fluctuates. While this may significantly impact homeowners, it has less impact on renters. The price of property taxes you pay, and the amount of your mortgage are both affected by the value of your home. Renters may not be as badly affected as homeowners in a shaky property market.
Flexibility to Downsize
At the end of their contract, renters will have the choice to downsize to a more financially attractive living place. This kind of adaptability is very significant for retirees who are looking for a less expensive, smaller option that fits their budget.
Because of the expenses comparable with buying and selling a home, getting out of an expensive residence is far more complicated. Furthermore, if a homeowner has spent substantial money on improvements, the selling price may not be enough to pay these costs, leaving them unable to sell and relocate.
Rent Amount (Fixed)
The rent you pay is set for the duration of the lease agreement. While landlords have the option to raise rent without warning, you can budget better because you know how much rent you must pay.
Homeowners with fixed-rate mortgages are in the same boat, as they allow for more efficient budgeting. However, adjustable-rate mortgages (ARMs) are subject to change, which might result in increased mortgage payments due to higher interest rates. Another factor that might raise costs for homeowners but not for renters is property taxes.
Less Expensive Insurance
A homeowners insurance policy is required for homeowners, whereas a renter’s insurance coverage is better for renters. Renter’s insurance is much less expensive and covers almost everything you possess, including furniture, computers, and collectibles. According to research by the Insurance Information Institute, the average cost of renter’s insurance is $179 per year, while the average cost of homeowner’s insurance is $1,249 per year. 4
Reduced Utility Bills
Due to the fact that home sizes vary, they are often larger than rental apartments. As a result, they are significantly more expensive to heat, and their electric bills may be greater. Rental properties often feature a more compact and efficient floor plan than most houses, making them less expensive to heat and power.
Final Thoughts
I, Mark Roemer, know that due to the amount of equity they accumulate in their property, owning a home can be beneficial to homeowners in the long run. For years of rental payments, renters have nothing tangible to show for it. On the other hand, renting may be a preferable alternative for people who wish to escape the hassles of homeownership, as well as the expenditures of upkeep and property taxes. Of course, it is dependent on a person’s lifestyle, financial status, and whether or not they are working or retired.