Homeownership is seen as the American dream. Everyone wants the little house with the white picket fence.
Actually no, scratch that. In today’s current world, everyone wants the huge house on the popular street. But the same idea applies, it’s the idea of owning a small (or large!) slice of the real estate pie.
So you may be asking yourself, is this my dream too? Is this what is best for me? Not to mention my pocket book? Let’s take a look at 3 pros and 3 cons to consider before deciding if renting is the choice for you, or if you should reach for that same American dream that’s held true all these years.
Pro #1 – Freedom to Move
When you rent a house or apartment, you sign a year (or 2) lease. In order to move out at the end of the lease, you simply have to give notice to the landlord that you wish to vacate the property. The ease of changing your location, whether to a different city or a different state, is one big pro of renting.
Let’s look at another side of the situation, owning a property. What happens if you want to move? Now you have to put your house on the market and negotiate a selling price. If you get the price you want, you may walk away with some money 30-45 days later. If you can’t agree on a price that makes you a profit, then you might owe money back or not come to an agreement at all, meaning you are stuck with the property.
Looking at those 2 situations, it is very clear that renting a property allows for much more flexibility in being able to move. Not sure you want to settle down just yet? Then renting might be the right choice for you.
Pro #2 – Amenities
Swimming pools, gyms, saunas, clubhouses, wifi, free cable, walking trails. What do all of these things have in common? They all can be classified as amenities!
If you live in a larger city, you can find apartments, and sometimes even townhomes, that have these amenities built into their properties. For the price of your rent, you now have access to things you would have to pay monthly for if you owned a house.
No big deal, right? Well, if you plan on using these amenities, they can add up. Let’s look at some examples of prices.
Swimming pool/gym/sauna: $60/month
Renting a venue (clubhouse): $200/event (assuming 1 per month)
Wifi/Large cable package: $160/month
And the grand total is…..$420!!
Yes, it’s true, you may be able to find cheaper prices for these items, and you may even discover that you don’t use all of these amenities. But if you do, you could be forking over a large sum of money every month. So if you plan on using all that your property has to offer, you may be better off renting for the time being.
Pro #3 – No Repairs!
Let’s picture 2 different scenarios of a broken toilet. Then we will decide which one you would rather find yourself in.
The first one we will call scenario A. In this case, you flush your toilet at 2am and water starts pouring out. You attempt to shut off the water, but the valve breaks. You reach for your phone and call the landlord, and someone rushes right over to take care of it for you, costing you a whopping $0. You go back to bed, and go to work like usual the next day.
The second we will call scenario B. You flush your toilet at 2am and water starts pouring out. You attempt to shut off the water, but the valve breaks. You rush to your basement and find the main water shut off. Once the entire water to the house is shut off, you hurry back upstairs to attempt to clean the water mess up before it ruins the bedroom carpet. You miss work the next day as you attempt to find a plumber who can come take care of the issue. You need a new toilet and shut off valve. The cost of the all of this is $347, all of which comes out of your personal checking account.
Which scenario would you rather find yourself in? If you said scenario A, you may be better off renting.
Con #1 – No Equity
I am sure you have heard this from every person you know that owns a house. You need to start building your equity! Each time you make a mortgage payment, your principal amount gets paid down a little. After a few years, the amount that gets paid down is greater and greater. When you go to sell your house, you will owe a lot less for it, and the money will come back to you at close of sale.
What happens to the rent checks you pay your landlord? Well they still go to paying down principal on a loan, just not your loan. And if you stay in your rental for 3 years, how much of your rent do you get to take with you? $0.
The bottom line is this, if you plan on being in your property for 5+ years, then renting may not be the best option for you.
Con #2 – Limited Freedom to Make Changes
When you own something, you have freedom to make changes to it. The same goes to your house. You can change the paint color, flooring, lights, almost anything, all without getting permission. When you rent, you have to get prior approval from a landlord.
Nothing is worse than stifling your creativity and living in a beige world. Sure there are some great options available for making your rental feel like home, but there is nothing quite like the feeling of making your own house a home.
If you are someone with a strong sense of style, creativity, or inspiration, you may find that renting is dreary for you. Owning a home and making it your own may be the best option for you, and may make you happier in the long run.
Con #3 – Loss of Control of Lease Renewal
When I got my first apartment out of college, I signed up during a special they were running. It was great! I got a little one bedroom apartment at an affordable price.
About 3 months before my lease was up, I got a letter in the mail offering to renew my lease. It then went on to state that the current rental rate was $240 more than what I was currently paying, so that is what they would be charging me. Yikes! My options became (1) pay the difference (2) find another apartment and pay another security deposit (3) move in with my parents.
Ok #3 was a joke 🙂
The point of this section is to make you aware of the loss of control you have to both rental price changes and availability of the rental property. A landlord can change prices or sell the property any time they choose, which will have a direct effect on you.
When you own a house, aside from minimal changes in taxes and insurance, there are not a lot of unforeseen mortgage changes, and as long as you pay your bills you won’t be kicked out of your property. If you crave that security and control, then renting may not be for you.
In conclusion, no one can tell you if renting is the best option for you, or if you’d be better off buying a house. It comes down to you and your lifestyle, and what your plans for the future are. Take some time to think what would work best for you and your budget.
Do you currently rent? Or have you bought a house?