We’re all familiar with the American dream- a white picket fence, 2.5 kids, and being a homeowner…right? The older we get, the easier it is to see just how complicated it can be to own a home. In fact, in many instances, renting may be a much more practical option. So what is the right move for you? Let’s discuss the different aspects of buying vs renting a house.
One of the most favorable parts of renting a home is that bills are predictable. Your rent will not change month to month, and most of your utilities will stay relatively the same. The same is not true, however, when it comes to owning a house. If something breaks or busts or bruises, you could have a hefty and unexpected bill on your hands. With renting, you can make a clear and easy budget and usually stick to it (within a few dollars here or there in the warm and cool seasons). If you are right out of college and new to the workforce, this may be the most practical option for you.
You break it, you buy it!
When something breaks in a rented property, it is usually the responsibility of the landlord to replace it. However, if something breaks in a home you own, you could be responsible for hundreds or even thousands of dollars to repair or replace it.
The financial breakdown of renting vs. buying a home can be confusing. On the one hand, renting a home can feel like essentially throwing money away every month as you have no equity in the property. You may also be surprised, in some areas, a mortgage (https://www.rocketmortgage.com/learn/what-is-a-mortgage) is more affordable than a monthly rent payment. When you own a property, you also have equity. Should something happens, you have an asset in your property. There are also other financial factors to consider, however. Things like property taxes, trash pickup, pest control, homeowners insurance, etc., can really add up! Another huge cost is the amount of interest on your mortgage. If you are paying long-term, there is a huge potential that you are paying way more than the property is even worth.
Location, location, location
Another thing to consider when it comes to renting vs. buying is how long you want to stay in the area that you’re in. As a renter, it is easy to pick up and move. If a new job opportunity comes your way, it isn’t hard to relocate with just a few month’s notice. Buying a home often ties you to one location (based on your financial situation), so if you’re not totally happy in the city that you’re in, buying may not be the best choice for you. While it’s true that you can practically sell your house at any time or maybe rent it out, these decisions take a lot of time and effort and are not choices to take lightly.
Another thing to consider is the time and effort that you need to put into a purchased property vs. one you are just renting. Will you have time to clean the gutters? Mow the lawn every week? Give it a fresh coat of paint every year? Houses are a lot of work, and it should not be underestimated how much time, effort, and energy they require. If you are someone who travels a lot or who works many nights and weekends, owning a home may not be the best option for you. Yes, you can always pay somebody to help with these pesky projects, but you will spend an arm and a leg over time if you primarily rely on delegation.
When it comes to renting vs. buying, only you know what is right for you! All of these factors, and many more, are ones you should consider while making such a big decision.