Why rent when you can own? This question has been on people’s minds generation after generation. Over the last decade, however, things have changed, and it’s slowly evolving into a “why own when you can rent?” type of decision.
Apartment living packs new levels of convenience, and you often get more by renting than you could afford by buying. New apartment complexes come with all the bells and whistles, from well-manicured outdoor spaces and stunning views to resort-style swimming pools, clubhouses and sports courts. You can have all of that as a homeowner, but the costs will be an ongoing concern with the initial investment and maintenance.
Perhaps not so surprisingly, renting has been gaining ground in the last decade. While it’s certainly true that the decision is often a matter of personal preference and is strongly correlated with the stage of life you’re in, renting is perhaps now easier and more convenient than it has ever been. Is it a good choice for you, though? We’ve collected a few tips from seasoned renters with first-hand renting experience who have some wisdom to share to help you make your decision.
Here are the pros and cons of renting vs. owning a home, plus a few extra things to consider before diving into rentership.
The pros of renting vs. owning a home
There are many advantages in choosing to rent, with flexibility being cited as the most common reason for doing so. But there are also other perks, including less hassle with home upkeep and property taxes.
1. Flexibility is pure gold in today’s world
Swapping places of residence is much easier when you’re not tied down to a 25-year mortgage, and the reasons that trigger a relocation are more varied now than they have ever been. The current work-from-home trend — having received a massive boost over the last year or so — is here to stay, giving more freedom to move to both regular workers and digital nomads. As such, Dwight Zahringer, president of Pure Cabo sees immense opportunity in long-term renting. “One of the major advantages of long-term renting is the flexibility to travel, which is increasingly important in the age of remote work. Long-term rentals are more cost-effective than short-term renting, allowing residents to keep their options open while maintaining stability at home.”
Holly Mills of Thrive Cuisine shares this opinion: “The best part about renting is the freedom to simply finish out a lease and move when you find somewhere you’d rather live.”
Flexibility is further enhanced by the evolution of the real estate world – which is following lifestyle shifts and needs. In addition to delivering more rental units, developers have also focused on creating solutions for keeping extra stuff. Self storage has grown significantly in recent years, making relocation and digital nomading easier. Once you’re set on your next destination, you don’t have to move the whole house anymore – you can simply take the things that you frequently use with you and leave most of your non-essentials in storage.
2. Enjoy predictable costs
When renting, you typically pay your lease on a monthly basis, which is stipulated in your lease. This means that you will be able to anticipate your housing costs for the duration of your lease, as opposed to owning when there’s always something unexpected – and usually costly – to fix. Just looking at pool maintenance, for example, applying a simple patch easily costs $350, whereas fixing leaks may amount to $3,500, depending on the size of the pool and the extent of the problem.
When you rent, your housing costs are usually standard and include monthly rent, utilities and renter’s insurance. Landlords deal with rental unit repairs and maintenance, including leaking faucets and plumbing issues, and there’s dedicated personnel to oversee the normal functioning, maintenance and repair costs of community amenities – including pools, spas, green spaces and lounging areas.
3. No upkeep, no problem
When you rent, all maintenance-related costs are covered by the landlord. For instance, all roofing problems are the property manager’s responsibility, as well as any related to the plumbing, HVAC and electrical systems. But more than costs, with renting you avoid the hassle and headaches of having to find renovation solutions and oversee repairmen.
For Maria Diamonte, professor at the University of Rutgers at Newark, a long-term rental has been the way to go for more than two decades. “I am a long-term renter in my current residence for 20 years. Before this apartment, I was in another apartment for five years, and another apartment for five years before that,” said Maria. Like many other people, she enjoys the hassle-free lifestyle that comes with renting. “Being in an apartment, I have someone that is on duty to fix whatever breaks. I make a call, and it is fixed by the time I get home. I initially signed a one-year lease. Now, I have a recurring renewable lease every year,” she added.
4. Rent for now, buy later
For many graduates, buying a home fresh out of college is not necessarily feasible. Homebuying requires a down payment which takes time to accumulate. That was the case for Alexandra Arcand from Quote, who saw renting as a way to save for a future home purchase. “The financial restraints led me to consider if it is better to rent or own a home. After weighing the pros and cons, I decided to rent long term until I could afford to buy a house.” This strategy eventually paid off, and it led Alexandra to her dream home. “I bought a house a year and a half out of college. So, the need to save for a home is what led me to be a long-term renter.”
Similar reasoning pushed Holly Mills to turn to long-term renting to gain some financial footing. “I started out renting when I was around 20, and I moved around a lot,” said Holly. “Renting was a necessity in the beginning due to credit, finances and following jobs.” Even as she established her career, renting seemed the viable option as opposed to committing to a mortgage that tied her down to one place. “Then, as I settled into my career, I began working remotely and my place of residence wasn’t tied to a job, so I didn’t feel the pressure to pick a place and take out a mortgage.”
5. Changes of plan are easier to navigate
Oftentimes, life just happens, and you need to adjust to those various changes. Renting is what can assist in both good times and bad times, and it makes adjusting to new realities easier. This holds true for Ashley Mann, owner of ashleymann.me. “My husband and I are both entrepreneurs who own online businesses. Even though our income easily covers our rent because my husband’s business is funded by an investor and shows a loss on income taxes, we can’t qualify for a home loan right now,” Ashley told us. In the past, they used to be homeowners but sold their house and chose the RV lifestyle for about three years.
“At first, we were just living in our RV at a mobile home park, but when we realized we could be renting a three-bedroom house in a nice neighborhood for the same amount we were paying for our RV loan, insurance and lot rent, we decided to sell our RV and rent instead,” Ashley said. “Rents in Missouri are some of the cheapest in the nation. After three years in our RV, we decided to stay put in one place and wanted to live in a house again. Because we are self-employed online business owners, we can’t currently qualify for a home loan, so renting is our best option.”
For many people, renting long-term is the alternative after a life-changing event like separation or divorce. Caroline Lee, growth marketer and co-founder of CocoSign, experienced a challenging situation. She looked for a rental in the aftermath of her divorce. “After my divorce, I had to move out. It was one of the most stressful things I ever went through. So, I decided to look for a specific apartment that fitted my needs, knowing that I won’t move out anytime soon,” said Caroline. “I had to sign a 15-month long-term lease, considering it was more flexible than buying a home at the time,” Caroline added.
6. Renting will get you easier access to a good school district
Renting gives families the option to enjoy good school districts without the high cost of property ownership that might come with neighborhoods that boast such schools.
Kim Chan, the founder and CEO of DocPro, said she and her family based their choice of neighborhood on the school ratings and their desire to offer their children access to a good education. “The schooling is very competitive at all levels in our city. So, we are always trying to get into a better school, which could be in a different district,” according to Kim. “For us, it is always about getting into a good school first then deciding on a place to live near the school.” Kim and her family intend to commit to this lease for at least four years, the duration of her children’s primary schooling.
7. Enjoy a personalized living environment without ownership issues
While renting doesn’t allow you to make structural changes to your home or even to change the paint color without permission, you can still make it your own. Long-term rentals are ideal for people who enjoy a more stable living arrangement that you can personalize and really make your own. “If you dislike moving around like me, then long-term renting is ideal for you. Plus, you’ll get to make your apartment feel like home with personalized decor and furnishing,” according to Caroline Lee from CocoSign.
Most long-term renting enthusiasts choose this lifestyle to avoid moving too often. Holly Mills of Thrive Cuisine also subscribes to that opinion. “While I’m a fan of renting, I don’t love moving, so I do like to stay in one rental for as long as possible or until I find one I like better. My longest lease was five years,” she added.
Cons of renting
Renting may be a good option compared to owning, but it can also come with some drawbacks. Knowing and being prepared for them makes them easier to navigate. Here are some cons associated with renting.
1. Return on investment less obvious than when owning
As opposed to homeowning, where owning a home helps you build equity, renting means you won’t directly access any financial incentives, as your monthly rent payments do not go towards ownership. However, a lot of times, the monthly mortgage payment exceeds the monthly rent. In this case, as a renter, you could use the money you’re saving to invest and thus keep tabs on your finances. You can easily access the extra money as opposed to the non-liquid equity that home ownership brings.
2. Rent increases
Each time your lease is up for renewal, you face potential rent increases, typically between 3-5% per year. This is especially true for highly desirable neighborhoods and newer communities where the costs of land and property maintenance are higher. The only exception is if you live in a rent-controlled area. In anticipation of a potential rent hike, you should plan your finances accordingly: Make sure you have savings to fall back on in case you wish to continue to live in the same rental, and your rent goes up.
3. Potential relocation due to external factors
In the long run, the landlord might decide not to renew the lease. In fact, they might wish to sell or convert the property into a different type of building, and this is something you’ll need to accept, even if you love your apartment.
“For us, the biggest con would be if our landlords decided to sell our home and we had to leave it, because we love our neighborhood so much, and we love the house too,” says Ashley Mann.
4. Limited home personalization
Yes, you can arrange furniture and add décor to suit your tastes, but you won’t be able to add hardwood floors or break down walls if you’d like to go for an open space concept. If your landlord allows you to do some light redecorating, such as changing cabinet doorknobs, you will typically be required to return the rented space to its initial state.
5. No tax deductions
When renting, you’re not entitled to tax benefits as homeowners are. This is typically touted for homeowners, but you may still find there are tax deductions that renters can benefit from.
Are you more inclined towards renting or buying? Share your thoughts in the comments section below and join us in helping other people navigate this choice.