Advantages to Renting vs. Buying

I don't regret purchasing any of the homes I've bought over the last ten years. I used to be staunchly in the “People need to be homeowners!” camp (I once wrote a book about the very topic of millennial homeownership.) But after being a homeowner, getting a divorce, and living in an apartment, to now being a homeowner again, I have to say I get it. I now see the advantages to renting vs. buying. And while I like the space of my new house, I miss the pure ease of my divorce-era 1100-square-foot rental and how convenient it was at a time in my life when I didn't really have the emotional bandwidth for home maintenance or renovations.

Homeownership isn't a one-size-fits-all thing. And while I think it can be a great thing for your finances if it doesn't jibe with your values or lifestyle, then what's the point?

Owning a home is also a massive, massive lifestyle change in itself. Most buyers are so ready to be a homeowner they often don't realize how much your thinking has to shift when you begin owning a physical residence. So, in this spirit of putting the “renting vs. buying” debate to bed once and for all,  I've listed some of the advantages below.

The five biggest advantages to renting vs. buying

Let's look at the advantages of renting vs buying and why not buying a house can be a good thing. Plus, questions to ask when deciding if you're ready to buy. 

Benefit #1 – Flexibility

I think this is the go-to argument for renters. Even a 12-month lease is way more flexible than a 30-year mortgage. If you plan to relocate or change careers in the near future (for work, family or just 'cause), renting is the way to go. I'm not saying you can't buy a home and then rent it out or sell it quickly (like I did), but it's harder to set these things in motion than it is to just simply pay a fee and break a lease.

Questions to ask when looking at the benefits of renting vs buying: Am I rooted in this area (for my career, family, or deep community ties)? Do I like where I'm living now, or would I like to move in a few months? Have I been renting the same apartment already for many years?

Benefit #2 – Low maintenance

If you aren't that handy with a wrench, you can rest easy knowing that your landlord should take care of any repairs your rental property needs. When you own a home, it becomes your responsibility to fix or replace what's broken and to pay for those repairs yourself. Even if your home is in good working condition, it will still need regular maintenance, which you also have to budget for. (Here's my guide on budgeting for home maintenance.) Even if you outsource almost everything, you'll still likely end up at Home Depot a lot getting bulbs or air filters or mulch for the yard.

Questions to ask: How do I like to spend my time on the weekends? Would I enjoy home projects and maintenance? Would I find the upkeep stressful? How will my partner and I divide these duties if we share a home?

Benefit #3 – You can get away with a smaller emergency fund and focus on other financial goals.

Everyone needs an emergency fund. But when you rent, you can get away with having a smaller emergency fund because, well, you don't have much that you're financially responsible for.

Because you're not responsible for maintenance or other related upkeep, you're less likely to drain your emergency fund on your home. This makes renting a surprisingly helpful strategy for saving money for other expenses, such as paying off credit cards or making a dent in your student loans.

Questions to ask: What other debts do I have right now? What are my overall money goals in the next 3-5 years? Could money for a home be better spent on debt repayment? What could I achieve financially if I put off buying a home for a few years and chose to rent instead?

Benefit #4 – You can hop around into different neighborhoods more easily. 

It depends on your area, but maybe all the apartments are closer to the city, and single-family homes are out in the suburbs. Or perhaps you would like to “try out” a few different neighborhoods in your city before choosing the one where you'd like to put down roots. All of this is completely possible with renting.

What if you rent an apartment in one area and then get a job in another? Because you're renting, you can easily move to be closer to work (or family or whatever) and make that change happen sooner rather than later.

Questions to ask about the benefits of renting vs buying: If I want to buy, do I know where I'd like the home to be? Do I see anything in the next six to 12 months that will impact my commute or my ability to be close to family or something else I value?

Benefit #5 – Fewer upfront costs

If you're hesitant about buying a home, you probably should rent. A home is a huge financial responsibility and can end up costing even more if you aren't prepared or don't do your research.

• Think about it this way: The upfront cost alone of buying a home is usually tens of thousands of dollars (down payment + inspection and appraisal + closing costs), which deters many first-time home buyers.
• Compare that to the upfront cost of renting, which typically includes a security deposit, maybe a pet deposit, and any move-in fees.

Before you buy a home, you typically need to have plenty of savings as well as a stable job, and a good credit score. While you work on achieving these goals, renting can be a great option for you.

Questions to ask: Do I have enough money to buy a home? How is my credit? Have I saved enough for a down payment? Do I have enough for a monthly mortgage, upkeep, and expenses? Even if I have some money saved, will I need to use it elsewhere in the next 12 to 36 months?

Is it cheaper to rent or buy a home?

The answer depends on where you live. You may actually have to run the numbers on renting vs. buying based on your area to get a clear answer. Here's a great rent-vs.-buy calculator I like.

Is renting better than buying?

Financially speaking, if you can afford both the monthly mortgage payment and home maintenance (about 1% of the purchase price of your home each year) then buying is better. That's because you can build equity in the home and reap a tax benefit every year. Homeownership historically has offered more financial security than renting. 

But after my brief stint in apartment living in 2021/2022 during my divorce, I've found there's also incredible emotional value in being a renter. Especially, if a low-maintenance lifestyle is one you desire. Even though I'm in a house now and nearly recovered from my divorce both emotionally and financially, there are still many days when I'd rather spend time with my son or work on one of my side hustles than work out in the yard.

Conclusion

When I worked in NYC, we got ridiculous Christmas bonuses at the hedge fund where I was employed. RIDICULOUS.

So large, in fact, that we joked about how everyone started shopping for newer, bigger apartments in January because of the yearly Christmas cash influx.

My colleague Jen (who is now an author, mentor and friend) thought the idea of owning a home was ridiculous. I began slowly warming to the idea of buying, and she strongly discouraged me from it.

“Lauren, houses have roofs that leak and heaters that break,” she'd say.

“But renting is so expensive!” I countered.

“Yes, but you pay for the luxury of not having to worry about those things.”

And you know what? It turns out she was right. You can't put a price on your emotional energy and mental bandwidth. Ultimately, taking some time to gut check will help renters decide if buying is really the right option in the short or long term.