While there may be a lot standing in the way of renters who are wanting to break into homeownership, in reality, there are many benefits of renting. In fact, renting is the preferred housing choice for those who value the flexibility and affordability associated with deferred ownership and maintenance.
In the rent vs. buy debate, realtors and financial institutions are quick to point out that mortgage payments can be less expensive than monthly rent payments for similar homes. Other benefits heard from the home buying industry include the equity potential and tax breaks available to homeowners.
Realtor.com offers a rent vs. buy calculator that helps you calculate the net cost of buying a home versus the cost of renting over time. Depending on the type of home you want and the location, Realtor.com notes that buying becomes cheaper than renting after 9 years. This calculator, and other ones found on Zillow or NY TIMES, factor in net costs over time to include taxes, maintenance, insurance, renovations, and closing costs. With all these monetary factors that go into the rent vs. buy equation, we see that renting does become less expensive in the long run.
What this equation fails to consider is the value each individual places on the non-monetary benefits renting, that gives priority to this popular housing choice of the millennial generation.
Benefits of Renting
If the furnace goes out in the dead of winter or the roof starts leaking, dealing with the problem is only a call away. Property managers and landlords are tasked with maintaining the property and handling repairs. Even simple things, like shoveling snow or cleaning the gutters are simple tasks that add up to a lot of time for homeowners.
Discovering major home maintenance issues(think rotten structures or cracked foundations) or dealing with regular homeowner responsibilities are foreign concepts to most renters. Landscaping, tracking appliance life expectancy, replacing the roof are stressful homeowner duties that go beyond the dollar signs associated with each task. A renter’s main duty is to pay their rent and keep the property in the same condition they found, except for normal wear and tear. The low maintenance side of renting equals less stress for a lot of people, creating an extreme renter perk!
Moving from a rental property is far easier than relocating if you own your home. Renters find it easy to move for a new job, to experience life in a new city, be closer to family, or to upgrade or downgrade to a different type of house.
Although technically a fiscal benefit in favor of renting, one cannot overlook the debt associated with home purchases in this discussion. Renters live debt-free for their housing decision, while home buyers find themselves tied to a mortgage for anywhere from 15-40 years. With roughly 70% of college students graduating with some sort of student loan debt already, the idea of taking on more loans in order to buy a home can be unappealing.
Many apartments offer amenities such as fitness centers, pools, game rooms, or internet/TV services. These amenities might come with a higher rental rate, but the convenience of an all-inclusive living space with only one bill has its allure.
With the resurgence of cities as centers of economic energy and vitality, there are more affordable options for renters who want to live in urban areas. Renters can enjoy the convenience of living close to shops, restaurants, and offices, while home-buyers may have to look at the suburbs for similarly priced house payments.
The idea of liquid worth straddles the line between the monetary and flexible benefits associated with renting. While home purchases are solid investments for the right people, when it comes to actual cash you will find a large part of your personal wealth tied up in your home as a fixed asset. Although homeowners have the opportunity to sell their property in order to create liquid assets, they are dependent on the market and buyers making an offer. On the other side, renters can build their savings and focus on other investments that are easier to access when necessary.
While there are many advantages to renting, owning a home comes with its own perks as well. The decision ultimately comes down to your financial situation, personal presences and which benefits you find most important.
Are you renter or homeowner who has an opinion about the rent vs. buy debate? We’d love to hear your thoughts in the comments!