The Challenges & Benefits of Buying Vs. Renting
Our culture touts home ownership as the American dream, but, in reality, owning a home doesn’t work well for every lifestyle or personality. Plus, when searching for your first home, relocating to another area, or downsizing, researching the benefits of buying vs. renting can feel overwhelming. Some people advise that renting equates to throwing money away. Others warn that buying comes with hidden costs that could strain you financially. However, as the housing market continues to shrink and tighten, our society accepts renting more and more as a legitimate option well beyond young adulthood. But, how do you know whether renting or buying is the right fit for you?
The decision to rent or buy amounts to more than just a financial one, though. Many factors come into play when choosing the ideal living environment for yourself and your family, such as how much time you wish to spend managing upgrades and repairs yourself, or how important that yard is to you. When weighing your decision, these factors ensure you find the right living environment and financial situation for your specific budget and lifestyle.
Pros and Cons of Buying a House
A home purchase requires a hefty down payment and purchase fees before you can sign on the dotted line. Once the house belongs to you, you pay mortgage interest, property taxes, homeowner’s insurance, and, for certain types of homes, HOA fees on top of the costs associated with maintaining a house and property. While the numbers may look daunting, home ownership is also an investment that brings you a decent return if you play your cards right.
Buying a home allows you to put down roots and build a foundation for your future. You may see home ownership as the next step to settling down and raising a family. You may want to invest in a house that you can remodel to your specific taste and specifications, making it feel like your own. Or, you may want the extra indoor and outdoor living space that comes with a house or townhouse.
With home ownership comes responsibility, however. In addition to the financial investments, houses typically require cleaning, upkeep, and landscaping to maintain curb appeal and value. You may discover evenings and weekends devoured because your lawn needs mowing, and a project is always in progress. Some homeowners find the commitment satisfying, while others might see home projects as an inconvenience that keeps them from other activities.
Advantages of Buying
The advantages of buying real estate include tangible and intangible considerations. When buying a home, you get:
- Equity that can grow your wealth over time,
- Changes to the home that align with your personal style,
- Tax breaks if you itemize and deduct mortgage interest,
- The same monthly payment for consistent budgeting,
- No stress over having to move quickly when your lease is up, and
- Stability for you and your family within your community.
Disadvantages of Buying
While numerous benefits accompany buying vs. renting, significant drawbacks arise as well. Buying a home requires the following financial and time investments:
- Large monetary investment up front that can leave you pinched for cash;
- A months-long process to complete the transaction and finally move in;
- Additional monthly costs of homeowner’s insurance and property taxes;
- Responsibility for maintenance, repairs, and improvements;
- Risk of losing money on your investment if home values go down;
- Less freedom as care of the home and property takes up more time; and
- Challenges that come with selling if you decide to relocate, upsize, or downsize.
Pros and Cons of Renting
Renting offers freedom from the responsibility and added expenses typical of home ownership. When you choose to rent, you pay a deposit, application fee, and your monthly rent and utilities. The upfront price tag looks incredibly cheap compared to the fees, taxes, and down payments when buying. But, rather than functioning as an investment, a lease leads to sunk costs on which you never see a return. In other words, once you make that monthly payment, that money disappears forever.
On the positive side, renters leave the aggravation of caring for a property to the landlord, while they enjoy freedom without worry about keeping the grounds tended or repairing plumbing leaks. Renters come and go as they please, at least when the lease ends. Rent stays a set amount for the duration of a lease and often includes some services like water and trash pickup, making it easier to budget. However, a lease renewal at the end of the year usually means higher rent, or could lead to the need to move if a landlord decides not to renew for renovations or some other purpose.
The rental landscape, especially in big cities, is competitive, and many properties attract tenants by featuring additional amenities, such as a swimming pool, recreation room, or fitness center. However, if you don’t like the wall color in your unit, you may just have to deal with it. If you can paint, you will likely have to change it back when you move out. You can’t change flooring or even replace appliances without your landlord’s blessing. Many renters may not see this situation as a disadvantage, but if your goal is to create a personalized nest that resonates with your style, you will find your options limited.
Advantages of Renting
Tenants benefit from the numerous advantages of renting over buying, depending on their lifestyle needs. The upsides to renting include:
- Additional cash to save or invest with low up-front expenses;
- Quick approval process and a shorter wait for move-in day;
- Amenities like a clubhouse, pool, or fitness center;
- Worry-free living without the responsibility of maintenance or repairs;
- No additional monthly expenses like property taxes; and
- Easier to move to another location once your lease ends.
Disadvantages of Renting
While renting offers many benefits for the right person, there are also disadvantages to this living arrangement:
- Monthly rent doesn’t build equity in the property,
- Rent will likely increase from year to year,
- Unplanned moves might happen if your landlord changes plans,
- Less control over designing your space to suit your style,
- A quick decision on the unit is required since competition for rentals is high.
Related: How to Get Approved for an Apartment
Should I Rent or Buy?
The right answer to this question differs for every individual and family. As you make your decision, remember that the benefits of buying vs. renting are more than financial. Consider your current lifestyle and goals. Are you looking for a place to settle down, or is your life in flux now? Do you want to invest your time and money into creating personalized spaces, or are you content with a more generic space that features amenities beyond the unit? By considering variables like maintenance, insurance, tax benefits, and peace of mind, you can find the right home for you.
Whether you choose to buy or rent, you’ll need to transfer your belongings to your new home, which means renting a truck or hiring movers. Learn how to choose a moving company as you prepare to relocate.
Ready to Buy?
Whether you choose to look for a rental near your work with free help from an apartment locator at AptAmigo or a home in the suburbs with support from a licensed real estate agent at its sister company The Nav Agency, our professional team is ready to get to work for you. Our experienced agents will match you with the perfect residence out of the entire inventory in the city of your choice. We strive to make every client feel they receive personalized concierge care throughout their property search. Contact The Nav Agency today to find your next home sweet home.