To Rent or to Buy? Pros and ConsMarch 30th, 2016
A lot of people like to boil down the “should I rent, or should I buy a home?” argument to a couple of pithy, well-worn phrases. One of them: “renting is like throwing away money.” Another: buying is a great investment, or a good way to “build equity.”
Although there’s at least a bit of truth to each of those statements, both living situations have positives and negatives.
Speaking of which, here are some of the biggest pros and cons associated with renting or buying a home.
You can move whenever you want (basically)
As a renter, it’s a lot easier to pick up and move if the need arises than it is when you’re a homeowner. Maybe you lose your job. Or you want to move in with your significant other. Whatever the reason, getting out of a lease often is less painful than selling a house.
All kinds of amenities
Free Wi-Fi. Fitness centers. Swimming pools. Even on-site “doggie day care.” More and more apartment complexes offer these facilities and services to renters. Looked at individually, they may not seem all that impressive. Add them together, though, they can save you a good amount of money and/or time.
On-call, no-charge maintenance
This may the best thing about renting. Got a leaky shower or a broken dishwasher? Call your landlord and he or she will find someone to fix it. Plus, you won’t be charged a dime.
Unexpected rent increases
In most apartment situations, a landlord can raise a tenant’s rent whenever his or her lease is up for renewal. That’s a big deal, especially if your monthly housing bill already is pushing your budget to the limit.
Rules and restrictions
It’s rare for someone to buy a house or condo and not be able to do pretty much whatever they want. (As long as it doesn’t annoy the neighbors too much.) Renters, though, usually have to get their landlord’s permission to paint walls, upgrade appliances—even buy pets.
Every time you send in a mortgage payment, you build a bit of equity – which winds up as money in your pocket when you sell -- in your house or condo. As long as it retains its value, that is.
On the surface, buying sometimes seems more expensive than renting. Dig a little deeper, though, and you’ll discover some perks that help bring down the price of owning a home. One is that your mortgage interest and property taxes are tax deductible.
Rental units = extra income
You don’t have to sell your house or condo to make money from it. Another option is to rent it out, or rent out part of it. Some people earn so much extra income this way that it covers their mortgage.
A depressing reality about owning a home is that, at some point, something will break or need to be repaired. Your roof starts leaking. A window cracks. The washing machine dies. Most of these things happen without warning. Many are costly to resolve.
No quick fixes
It’s easy enough to break a lease if you’re no longer able to afford your rent. Getting out of the same predicament as a homeowner is a lot tougher.
Your home could lose value
Although most houses and condos increase in value over time, that’s not always the case. As many people have learned during the last decade of booms and busts, homes sometimes lose value and leave their owners with “underwater mortgages.”