By Evan Vitale
This is the first in a two-part series on renting or buying your own home.
Buying and owning your own house has been the “American Dream” slogan for many generations. However, there are many disadvantages and advantages of owning your own home vs. renting a home, condo or apartment.
It all depends on your current and future financial situation, so let’s first take a look at the advantages and disadvantages of renting your own home.
Advantages of Renting
- One of the biggest advantages to renting is lower upfront costs. Instead of a hefty down payment on a home (inspections, closing costs, etc.), renters may only have to pay a security deposit or perhaps the first and last month’s rent. If you are renting at an apartment complex, you might be able to find a renter’s special where the security deposit waived or the first month is free if you sign a long-term lease.
- If your job or career changes, it’s much easier to pull up stakes and move if you are a renter as compared to being a homeowner.
- If you have poor credit, renting gives you the opportunity to rebuild and improve your credit score, which makes it easier when it comes to purchasing a home at a later time.
- By renting, you have extremely low maintenance costs as furnace repairs; a leaky roof and plumbing problems are taken care of by the landlord (check your lease for details).
Disadvantages of Renting
- It may not be a huge deal to some, but renters usually aren’t allowed to paint walls or make any major changes to the house or unit without prior consent.
- You must follow the rules in the lease and you must also make sure you can get along with your landlord. Just as the landlord can check your references, you should also consider checking the landlord’s references as well. A tenant-landlord relationship is a two-way street.
- After the initial term of the lease (usually 12 months), the landlord could opt to increase your rent for the next term. Be prepared for any rent increases. Can you afford an increase or do you have to move again?
- Your monthly rent is an expense, so you don’t build any equity in your property. When you own a house, part of your payment goes into building equity (value) that you can borrow against some day.
In our next blog, we’ll take a look at the advantages and disadvantages of buying your own house.