Conventional wisdom (and tax law) supports the notion that owning a house is a goal that everyone should have. But renting has many advantages over homeownership, and deciding whether to buy or rent is not a decision to be taken lightly. Here are a few thoughts on the upside and downside of renting.
The freedom
When you own a home, moving can be difficult if not impossible. To go somewhere else, you have to either sell your place or rent it to someone else. Worst case scenario, you have to sell at a steep loss. When you rent, you can pack up and go at any time. Worst case scenario, you lose your deposit.
Less upfront expense
As any resident can tell you, rent payments can easily cost more than a monthly mortgage in some parts of the country. However, it will typically cost a lot less to get into a rental than to buy a place. Renters just have to come up with a security deposit and first month’s rent, whereas homebuyers need to have enough cash for a down payment and closing costs.
The cash that you save on a down payment can be invested, or used to buy a killer home theater system and pair of jet-skis. (Don’t take that as financial advice from Atlas Group.)
Lower maintenance costs and headaches
When you rent a place and something breaks, you call and complain to your landlord. When you own your place and something breaks, you complain about the size of the handyman’s bill.
The best managed apartments even have on-site maintenance that can handle repairs while you’re at work and be done before you come home. When you own your place you may have to miss work to coordinate with repairmen and their notorious four-hour scheduling windows.
Lower insurance costs
Renters insurance is basically free. Homeowners insurance, not so much.
Easier tax preparation
Renters have less recordkeeping and shorter forms to fill out when it comes time to prepare there income taxes. That’s because they can’t claim a mortgage interest deduction and other tax goodies.
