While the US is a nation of homeowners, more than 100 million Americans live in rented homes.
Although some renters aspire to own their own home in the future, renting is often a cheaper and easier option for many people.
For this reason, renting is especially common among 20-somethings. This age group often want to establish independence from their parents but lack the financial means to buy their own home.
That said, for 20-somethings and older adults alike, the temporary and flexible nature of renting holds many advantages.
Read on to find out more about the benefits of renting instead of buying.
1. No Responsibilities
Living in your own home sounds great until you have to deal with the many stresses of owning and maintaining a property.
When you rent your home, any problems or issues means calling up your landlord for a solution, while everything from taxes to security is always your landlord’s financial responsibility.
But if you own your own home, the buck stops with you. It’s your duty to ensure your home is safe and well-maintained, and everything that can and will go wrong with your home is your problem.
2. No Maintenance Costs
The responsibilities of owning your own home can also be expensive, especially when it comes to maintenance costs.
Homeowners must cover the cost of all home repairs and replacements, as well as general upkeep such as gardening, painting, and clearing snow. These extra expenses can run into hundreds of dollars a year. And, if there’s damage from adverse weather conditions or a serious problem such as subsidence, the expense can be a lot higher.
In contrast, when you rent a property, all maintenance, renovation, and repair costs come out of your landlord’s pocket. And often, whether you’ve got a leaky roof or a broken toilet, all it takes is a call to your resident handyman for a free fix.
3. Lower Upfront Cost
Renters also enjoy a better financial deal when it comes to the upfront cost.
The exact dollar amount renters have to pay upfront on their lease agreement varies from case to case. But it’s rarely more than two month’s rent for the security deposit and possibly some added fees. And, if you’re moving into a furnished rental property, you don’t even have to splash out on furniture when you move in.
As such, while the upfront cost of renting can be a few thousand dollars, that’s small change compared to the amount that you’d have to pay for a down payment on your own place.
When buying a home with a mortgage, you usually need to put down 20 percent of the total cost. For a home with a market value of $200,000, you’d need $40,000 to secure the property.
As such, for those who don’t have the savings to cover this kind of amount, renting is often a better option than pursuing a mortgage with a lower down payment.
4. Lower Monthly Payments
As well as having lower upfront costs, renters usually pay out less per month than homeowners.
Rent is often cheaper than a mortgage. Even in 2012 when home prices fell and rents increased, renting costs were still less expensive in most of the biggest US cities.
And, when you include extras such as insurance, interest, fees, and property taxes, renting is even cheaper by comparison. This is especially the case for homeowners with low down payment mortgages. These types of mortgages often have much high monthly mortgage premiums as well as added costs such as private mortgage insurance.
Also, while most renters have extras such as utilities and renter’s insurance to consider each month, some landlords offer utilities as a bonus. And, states like New York, landlords must provide heating and hot water for their tenants no matter what.
5. No Real Estate Taxes
Of all the added fees and costs that homeowners have to pay, real estate taxes can be one of the most expensive. These taxes vary from county to county but can be a huge financial burden on top of mortgage payments, reaching as much as thousands of dollars each year.
Property tax calculations are complicated but depend on the estimated value of the home and the amount of land. Since new homes are becoming larger and larger, property taxes for these residences can be a major expense for homeowners.
As such, not having to pay these kinds of hefty taxes is a big financial bonus for renters.
6. Conserve Your Down Payment
Lower renting costs and fewer added expenses like taxes means you’ll be able to save up money faster than if you were paying off a mortgage.
With a large sum sitting in your savings, you may consider the best way to make the most of your money. Many people’s first instinct would be to buy a property. But there are far better ways to invest your money.
Homes don’t tend to be good investments. At present they appreciate at or slightly ahead of the rate of inflation. And, buying a property comes with many out-of-pocket costs.
By investing your down payment amount instead of buying a home, you could end up much better off over time.
7. Decreasing Property Values
A rocky housing market is a big worry for homeowners, while renters rarely feel the impact of property values going up and down.
As a homeowner, your property’s value can have an impact on the property taxes you pay, your mortgage payments, and more. Not to mention, one of the reasons that buying a home can be a risky investment is the possibility of negative equity. This happens when the value of your home decreases so that it is worth less than the mortgage amount you’re paying off.
Homeowners are then forced to sell at a loss or wait until the market improves to try and make their money back.
8. Greater Flexibility
As well as the many financial benefits of renting a home, there are lots of personal reasons why renting is better for some people, including greater flexibility.
Renting comes with a lot more psychological freedom. If you’re the kind of person who doesn’t want to feel tied down to a home, city, or area, renting makes a better choice.
At most you’ll have a 12-month lease agreement, while most contracts have a month-to-month deal in place where you only have to give your landlord notice 30 days before you want to move out.
In areas where job opportunities are limited, it can be a huge blessing to have the flexibility to relocate to find a better job elsewhere. And, if changes in your personal life such as pregnancy or retirement warrant a larger or smaller home, renting makes it easier to move at short notice.
In contrast, homeowners have to worry about selling their home before they can move. This is because they’ll often need the money invested in their house to buy somewhere else. And, depending on the current housing market, you could be waiting a long time before you sell.
9. Wider Choice of Locations
Another one of the many advantages of renting is having access to a wider choice of locations when it comes to deciding where to live.
If you want to buy a home, you’re restricted to properties in areas you can afford. Rents in areas where home values are high can also be expensive, but it’s a lot easier for renters to find affordable monthly renting costs.
After all, there’s a big difference in coming up with a down payment of $50,000 and coming up with $1,500 a month for rent.
As such, renters can often afford to live in city centers if the rent is within their income range according to this simple rental calculation. But home buyers will often have to stick to the suburbs and less desirable neighborhoods to find a property within their price range.
10. Access to Amenities
Since they encounter fewer restrictions when choosing a location to live, renters are then more likely to live closer to work, restaurants, parks, shops and more.
This access to work and leisure facilities is another huge advantage to renting. What’s more, if you rent an apartment is that you’ll often have access to amenities that would be a huge expense as a home buyer.
For example, luxuries such as a fitness center or community pool are standard at many mid-scale and upscale apartment complexes. And they often come with no extra charges for tenants.
In contrast, for a homeowner, these amenities would cost thousands to install and maintain. Likewise, condo owners have to pay hefty fees for access to these kinds of amenities.
Your Guide to the Benefits of Renting
As this guide to the benefits of renting shows, there are many reasons why people prefer to rent.
With greater flexibility when it comes to choosing where to live and how long for, as well as a range of financial advantages, renting could be the right choice for you too.
