The price to rent a home or an apartment has skyrocketed across the country, but so have home prices. There are plenty of instances where it still makes more sense to rent versus buy in the current economic climate.
Here are ten reasons why renting might be the smarter choice vs. buying a home.
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No Maintenance Costs
When you purchase a home, you become responsible for any maintenance and repairs that need to be done to the property.
These repairs can often be quite expensive. When you rent, repairs and maintenance are the responsibility of the landlord.
No Down Payment
While renting does require a security deposit and first and last month’s rent, it will still cost less than the down payment you would need to purchase a home.
Plus, you have to keep in mind that the down payment is just the beginning of home ownership costs.
When you rent, if you decide you want to change location and move across the country, you can do so when your lease is up. Once you have purchased a home, you are set in that location unless you decide to sell your home.
If you plan to relocate in the future for your career or family, renting may be the best choice for you.
You Don’t Have to Worry About Property Values
When you rent a place to live, rising or decreasing property values are not really your concern. However, this is a huge concern for people who buy their homes.
Increased property values mean more taxes, while decreasing values mean they may not break even on their purchase.
Low Insurance Costs
When you purchase a home, you are required to have homeowner’s insurance in the event of a fire, natural disaster, or burglary.
This policy can cost you thousands of dollars per year. On the other hand, renters can have their belongings insured for just a couple of hundred dollars for the year.
No Property Taxes
As a renter, paying the yearly property taxes is not your concern. Those costs fall on the owner of the property, and it is yet another way that renters may save money over their home-owning counterparts.
Fixed Monthly Cost
As a renter, you know what your rental payment will be each month for the entire term of your lease. You don’t have to worry about rising and falling interest rates that may catch you off guard and increase your monthly mortgage payment.
If you rent an apartment, duplex, or townhome, chances are good that your utility costs will be less than they would be if you were living in a single-family home.
This is because the rooms tend to be smaller and laid out more efficiently when it comes to heating and cooling needs. You may even find a place to rent where utilities are included.
Depending on the property you choose to rent, you may have access to a pool, gym, playground, park, or clubhouse. These are nice amenities that you don’t have to pay to keep up like you would if you bought a home with a private pool.
Flexibility to Increase Or Decrease In Size
When you are renting a property, it is much easier to upsize or downsize as your needs change. Having a baby? Maybe you want another bedroom. Have some kids who are moving out? Maybe it’s time to get something smaller and easier to maintain.
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I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.