Whether to rent or buy a home remains an overwhelming question for a majority of Americans. Everyone holds an opinion when it comes to renting vs. buying. Sadly, not even experts have managed to hold back their two cents on the question of home renting or home buying.
So, what are some of the pros and the cons of renting vs. buying? Is it better to rent or own a home?
In this post, we look at the advantages and disadvantages associated with home renting vs. buying. If you are on the fence about buying a home or renting, here are some ideas to backup your argument. Let’s start with home renting:
A recent report shows that more people are renting their homes right now than at any point 50 years ago. In 2016 close to 37% of households lived in rental properties. This can be attributed to the larger amounts of student debt, fears from the housing crash of 2008, and a myriad of other reasons.
So, what are the pros and cons of renting properties?
Advantages of Renting a Home
Renters Pay a Lower Property Maintenance
A homeowner or landlord is typically responsible for all property maintenance and repairs. When you rent a property, you can contact your landlord when something is broken or if the home needs unexpected repairs. It’s usually the responsibility of the landlord to fix the leaky faucet and unblock the sewer line.
However, this is not always the case! When renting a house, go through your lease agreement to understand your responsibilities when it comes to property maintenance costs. If you cause damage to the rental, your deposit may be withheld for repairs after you move out.
Renters Enjoy Easy of Mobility
Renting a property means a shorter-term commitment. If you are known to wander from one city to another like in the case of changing job requirements, it could be better to rent instead of buying a property. By renting a property, it is easier to get up and relocate to a different city. If you aren’t planning to be in the home for a long time, renting might be your best choice!
Renting is Associated with Lower Upfront Costs
Buying can sometimes come with more upfront costs compared to renting. This includes your down payment and closing costs. For rental properties, you need to pay the initial month’s rent and a deposit as required by the property managers. This can be less than the upfront costs of getting a mortgage on a home.
Those are some of the advantages of renting a property. Now let us shift the attention to the disadvantages of home rentals:
Disadvantages of home rentals
Tenants not allowed remodeling or decorating the property
If you choose a home rental, know that you can’t make changes to the property. For instance, you cannot modify the features of the home without the express authority of your landlord. This gives you less freedom to make the home your own. You can’t change the paint color, update the finishes, or put holes in the walls without permission from your landlord.
Renting Means You Are Paying Someone Else’s Mortgage
When you are renting, all of your rent money goes toward paying someone else’s mortgage payment. You don’t get any return on your investment. At the end of your lease term, the only return may be getting your deposit back. If you were to buy a home, you would be paying your own mortgage and putting money into your home’s equity. You can eventually use this equity later on either during the sale of the property or if you were refinancing the home to pull cash out.
A report published by the Statista Research Department in 2016 showed that 68% of the respondents were homeowners. This shows that more Americans prefer home buying as opposed to home rentals.
Homeownership comes with various benefits. Let us look at some of the advantages of owning a property.
Buying a Property Comes With A Mortgage Interest Deduction
One of the best deals enjoyed by homebuyers is the deduction of 100% mortgage interest paid in that year. The money you spend on your mortgage interest is tax-deductible, possibly resulting in thousands of dollars in savings.
A Home is an Investment
When you purchase a property, it’s yours to make your own. Depending on the property type, you are free to rent it out or even sell at a profit. You can keep a home you have purchased for your lifetime.
Enjoy the Freedom to Modify or Decorate the Property
So long as you are the property owner, you have the freedom to make changes to the home. You can make additions, knock down walls, install upgrades, and whatever else suits your families needs.
Disadvantages of Home Buying
The Homeowner pays for Property Maintenance
Property maintenance can be expensive, but there is no way around it. If you want to ensure your property does not depreciate, you have to keep up with the property maintenance cost. Every few years you may have to invest in updating your home. Examples being: replacing your roof, installing a new water heater, updating your appliances, and upkeep on your landscaping.
Cope with Housing Market Uncertainty
Are you buying a property with an intention to resell in the future? There is a small risk that your property may lower in value due to economic shifts. The housing market is typically predictable, but there is always a possibility for it to fluctuate.
Renting vs. buying has been an ongoing debate for decades. If planning to rent or buy a home, refer to this article to make a better decision. If you are looking to purchase a home, we would be happy to answer any questions you may have.