Rent or Buy? 10 Reasons Why It’s Great to Be a Renter
Maybe you’re moving out on your own for the first time. Or perhaps you simply need a new place to live.
If a move is in your near future, you’re probably considering lots of things like location, square footage, and of course, price. You’re also probably wondering whether it would be better to rent or buy your next home.
From fewer expenses to greater flexibility, let’s look at 10 key benefits that make renting a worthwhile choice.
#1: Renters Incur Less Debt
In recent years, many people have discovered the importance of paying attention to how much debt they take on and managing the debt they have.
If you’re paying off student loans, car loans, or other expenses, renting an apartment or other dwelling lets you focus on those priorities, improve or maintain a favorable credit score and helps you attain greater financial stability before taking on the additional debt load of a mortgage.
#2: Renting Is Less Expensive Up Front
When you buy a house, you make your initial mortgage payment at closing. You are also responsible for a number of fees known as closing costs. These fees include the following items:
- A fee for running your credit report
- A loan origination fee
- Inspection charges
- An appraisal fee
- Title insurance
- And more…
Closing costs typically range between 2% and 5% of the cost of the property you buy. So if you buy a home worth $150,000, you would pay between $3,000 and $7,500 in closing costs.
When you rent your home, by contrast, you pay a security deposit upon signing your lease. Security deposits typically include one to two months’ rent and sometimes extra fees to cover the landlord’s maintenance costs. Depending on where you are leasing, your security deposit is likely to be less than $1,000 and rarely exceeds $2,000.
#3: Renters Pay Lower Monthly Housing Costs
Renting an apartment usually costs less than a monthly mortgage payment for a comparable dwelling in the same location. In addition, you won’t have pesky homeowners’ association fees eating into your budget.
That frees up more money each month to spend on other things like food, fuel, utilities, and clothing — or to save up for fun things like travel and entertainment!
#4: Renters Pay No Property Taxes
Homeowners must pay annual property taxes to municipal or local governments. These taxes pay for education, public works, worker salaries, and other local government expenses.
Renters do not have to pay this tax, giving you one less expense to worry about and leaving more money in your pocket to spend or invest as you choose.
#5: Renters Enjoy Lower Insurance Costs
Insurance is always a wise move whether you rent or own your home. But one key advantage for renters is that rental insurance rates are lower than a comparable homeowners policy.
Because homeowners insurance covers the entire structure, it understandably costs more, typically about $35 per month for every $100,000 of home value, with variations based on location. For a home worth $150,000, that works out to about $53 per month, or $630 per year.
Renters insurance protects your belongings inside of your apartment or house, while the landlord’s property insurance covers the actual structure. Although individual rates vary by location, you could pay as little as $20 per month, or $240 per year, for a typical renters policy.
#6: Renters Have Lower Utility Costs
If you’re living in a loft, apartment, or townhouse, your dwelling is probably smaller than most single family homes. Most rental homes are much more efficient to heat and cool — so you’ll spend less money keeping the lights on and, instead, have more left over for more important things! In addition, you’ll help reduce your environmental impact and carbon footprint.
#7: Renters Pay Lower Maintenance and Service Costs
Many landlords pay for routine maintenance and repairs. Although specific services will vary from one rental property to another, here are a few examples of maintenance activities — and expenses — that renters may avoid:
- Mowing the yard
- Landscaping maintenance
- Plumbing repairs
- Repairing or replacing HVAC systems
- Cleaning up mold
- Fixing broken doors or windows
Also depending on where you rent, some landlords pay for services like basic utilities, Internet access and trash collection.
#8: Location, Location, Location!
Living in an apartment makes it more affordable to live in a preferred section of town if you rent instead of buy. It may also be easier to live closer to your workplace — so you spend less time stuck in traffic and less money on fuel.
#9: Renting Gives You More Flexibility
Maybe your career requires you to move frequently. Maybe you are facing a drop in income or greater expenses such as medical costs. Or perhaps you’re still considering where to put down permanent roots.
Whatever the case may be, if you need the freedom to move soon or frequently, renting is a great option. Whether you need to relocate for your job, or downsize your housing costs to free up extra resources, renting gives you flexibility that you don’t get when you’re tied down with a mortgage.
#10: Renters Enjoy Lots of Amenities
Much of the time, apartment living gives you access to lots of wonderful amenities you just don’t get when living in a single family home.
- Don’t want to spend hundreds of dollars on a gym membership? Many apartments offer free onsite fitness centers, complete with cardio equipment and weights.
- Can’t afford to rent that banquet hall for your holiday party? Some rental properties include access to community centers that are perfect for hosting social gatherings.
While specifics vary by property, other amenities available to renters may include snack bars, swimming pools, and on-site security features that will give you greater peace-of-mind.
Renting your next home will offer a plethora of advantages for your budget and lifestyle with these 10 advantages and more. It’s no wonder so many people are discovering why it’s great to be a renter!