Owning a home is one of the lifelong dreams that every person likely has. It doesn’t mean, however, that everyone wants to buy a house of their own. For those who don’t think owning a home is right for them, renting could be a better, more ideal prospect.
Real estate ownership is an investment that can build towards equity, but renting has its own advantages. From the lack of responsibilities to avoiding major expenses, renting is not as bad as many people tout it to be.
Here are 7 reasons why renting could be better than buying a house. This can give millennials and nervous renters the peace of mind they deserve.
Buying a house is extremely expensive. Not only are you buying a property, but you’re also going to pay for your home’s future maintenance. Sure, small expenses feel heavy once they add up, but it’s not always the small stuff that gets you.
In most situations, it can be a pain to pay for expensive repairs in your home. Roof replacement, for example, can cost somewhere between $5500 to $11000, which can drain your rainy day savings. Something as simple as a leak on your ceiling can set you back thousands of dollars to repair.
When you’re renting, you’re not responsible for the upkeep and maintenance of the home. Sure, you’ll have a few responsibilities to help keep your home in good condition but the cost of maintenance is not your business.
Not all people have the financial stability to buy a home. Even if you have some money in the form of savings, it’s hard to make enough to build a level of financial stability that you’ll be comfortable with. When buying a home, you would need up to six months’ worth of reserves to keep you afloat.
Without the level of protection that six months’ worth of your budget allows, buying a house puts you in danger of defaulting. When all the chips are down, you need enough to cover emergency expenses, as you can’t default on your mortgage.
Working with a real estate brokerage can help find the right home for you. Even then, a rental property could be better, especially if you have a lot going on your plate right now. Everyone has a different starting point in life, so those who find it harder to stay afloat may want to rent until things get better.
It’s rare nowadays for professionals to stay in the same place for too long. Unless it’s an extremely well-paying job, most workers will only stay for around five years until they find a better option. This helps them grow as a person and expands on their skillset.
Buying a home from a reputable property management team means you would have to set your feet to the ground. Putting your roots in a single place is hard to do. It doesn’t help further if you’re looking to live a nomadic lifestyle.
Selling your home and then buying another every time you move is not ideal at all. The cost of uprooting alone makes moving a pain than it already is. Renting a house is much different, as you only have to take care of your personal belongings. Transferring is easier because you don’t have to worry about getting into the housing market.
One of the biggest issues with homeowners is slowly adding equipment and other dead assets that owners rarely use. This level of asset hoarding is common for those who believe they’re not moving any time soon. From that vintage car project lying in the garage to the swimming pool, these all add up.
Renting forces you to be smart with your spending. Most rental homes are either within the city, which means no parking, or they are too small for too many dead assets. This forces homeowners to improvise, usually utilizing public transport or other facilities outside of their homes.
Having to rent means knowing which luxuries work for you. You can’t own a nice pool if you’re in a lush cityscape. Not having too many luxuries means fewer dead assets. Renters can instead access amenities that you won’t find in suburbs. You also get to stick to your budget closer than homeowners who have these assets.
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One of the biggest benefits that you can get from renting is the lack of additional taxes that you would need to pay for. Property taxes are the bane of many homeowners, becoming a heavy burden. While some states only charge less than half a percent in property tax, many charge more than 1.5% and as much as 2.21%.
The cost of property taxes can go as much as thousands of dollars a year. It doesn’t help that property tax calculations depend on the value of the property, including the amount of land you own. Bigger properties equate to a costlier property tax scenario.
When renting, you’re free from such burdens like property taxes. These thousands of dollars that you save can then go towards different financial activities like your savings or even your Roth IRA.
Even in more modest cities, most median-income earners would need almost a decade to afford a 20% downpayment for most residential properties. It’s near impossible to earn enough for a downpayment if your salary is not above average. The situation is even worse if you want to live in expensive cities like Los Angeles.
Renters, on the other hand, would still need to save up for a security deposit. Even then, this should only cost a fraction of what you’d need to pay for if you’re buying a house. While rent is getting more and more expensive, it’s still more advantageous than spending all your money on a new home.
Depending on where you live, homeowner fees are another responsibility that you would have to bear. Many homeowners’ associations (HOA) charge an absurd amount, running at a few hundred dollars. That can be quite costly, especially if you’re only skirting by.
Regardless of your opinion on the usefulness of an HOA, you would need to abide by their laws if you’re buying into their community. That can get annoying, especially if it costs you money that should go towards your daily expenses.
When renting, this is never your problem. You don’t have to deal with annoying people who try to dictate what you can do with your own property. On the flip side, you get all the benefits of the common amenities available to the home you live in.
There’s nothing that can beat owning a home in most situations. The amount of equity that you build is hard to match, but those looking to rent are not missing out a lot. If you’re looking to evade many of the hassles of homeownership, renting is for you. Depending on your lifestyle, a rental can be a better option for you.