I don’t regret purchasing my home, but there are a million little incidentals and life lessons that will completely blindside you if you’re used to living in an apartment. I got so inspired by all the things I didn’t know about homeownership, I wrote my first book about it. But in the very first chapter, I include a section on how to tell if you’re ready to buy and the benefits of renting vs. buying if you’re feeling uncertain or need a bit more time.
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 big lifestyle change. I rented an apartment with my boyfriend (now husband) for nearly two years, and I can definitely see the benefits of renting vs. buying, especially now that my stint as a homeowner has been sandwiched between periods when I lived as a renter.
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, according to The Balance website), then buying is better. That’s because you can build equity in the home and reap a tax benefit every year. Homeownership traditionally offers more financial security than renting.
But there’s also value in being a renter, if that’s the type of lifestyle you desire. There are many benefits to renting, but I’ve listed five of the biggest ones (at least, the ones I found the sexiest while being a tenant). Here’s an extensive list of all the pros and cons to factor in when deciding whether you should buy or keep renting for now.
The five biggest benefits of renting vs. buying
Let’s look at the benefits 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 take the leap.
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 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 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. We have professionals who fix our home, but it still feels like we’re 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.
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? Could money for a home be better spent on debt repayment? What could I achieve if I put off buying a home for a few years and chose to rent instead?
Benefit #4 – You can choose where you want to live.
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, 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?
Why renting may not always be the more expensive option
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 against 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.
On the flip side, there are definite benefits to owning a home. In the end, the benefits of renting vs buying are very personal.
Like this post? Get more first-time home buying information in my book, The Millennial Homeowner: A Guide to Successfully Navigating Your First Home Purchase, now on Amazon. Click here to get your copy!