Owning a home is a cultural norm that has been ingrained in our society from early on. But is becoming a homeowner that important? Surprisingly, it is not. Experts argue that renting a house would be a more attractive option than buying one, especially to the millennials. Here are five convincing reasons you should rent instead of buying a home:
1. Purchasing and maintaining a home can be very expensive
For starters, renting out is always a better financial option for people who cannot meet the high price tag of a house. Assuming that you work or study in an area where housing isn’t affordable, then renting might be your only hope. Most of the times, renting such a home can be up to $1,000 cheaper.
“Besides the mortgage, buying a home comes with other financial obligations in the form of maintenance & repair costs, insurance, and taxes. Remember that defects in your home’s wiring, plumbing, and other structural issues in your rented home are for the landlord to fix. That reduces your annual housing budget,” explains Team Forster.
Speaking of taxes, that is where things get expensive for most homeowners. Owning a home in the US, for example, necessitates an average property tax of 1.19% a year in 2019. Depending on your home’s value, 1.19% per year can be a lot of money in the long run. As of the insurance, the average cost of renter’s insurance doesn’t exceed $20 per month, yet it covers all the valuable possessions in your home. The average homeowner’s insurance policy, on the other hand, can be as much as $80 per month. Enough said.
2. You don’t have to worry about fluctuations in the real estate industry
Property values fluctuate all the time. When you are a homeowner, a rocky housing market can easily throw your financial life off balance. The good thing about being a renter is that all you care about is paying your rent, which remains constant for the duration of your initial lease agreement.
Things get even rougher for homeowners when they decide to sell their properties in the middle of an unfavorable market. Selling a $200,000 home, for example, can attract selling costs of up to $14,000. This amount goes up with an increase in the estimated home value. If you have rented a home, these are costs you’ll never lose sleep over.
3. More flexibility
As a renter, you have the flexibility to move and live virtually anywhere in the world. This is a luxury homeowners can’t afford because they are restricted to live where their homes are. You can, for example, afford to rent a high-end apartment in an urban neighborhood, but you may not have the finances to buy a home in such an area. Households in rural settings are cheaper compared to homes in the city. So you may have to brace yourself for life away from the city for the rest of your life if you insist on buying a home.
Assuming that you are young, being restricted to a rural neighborhood is the last thing you’d want. After all, you still have your whole life ahead of you. If you are renting, breaking your lease or subletting your apartment will be easy, fast, and convenient. The same cannot be said about selling a home.
“You can also decide way easier when renting versus buying. With many websites offering listings of rents, you can easily filter the houses/apartments that fit best for you and choose” say experts at Florida Rentals.
4. Lesser complications in case of a break-up
Things can be all rosy in your relationship today, but then everything can go south tomorrow. What happens to your home in the case that happens, supposing that you jointly paid for its mortgage? Who gets to keep it, and how will the one who doesn’t get to keep it be compensated? These are problems that often lead to lengthy and sometimes costly litigations. But with a rented home, the disgruntled love partner can quickly move out without legal or financial implications.
5. Easier to downsize and downgrade
Last in our list of the reasons you should rent your home is the fact that renting a house gives you the flexibility to downsize and downgrade when the need arises. Assuming that you live with your wife and four kids today, what happens to the kids’ rooms when they become adults and buy/rent their own houses? Because of the high tax obligations and maintenance costs that come with a big house, your best option would be to downsize to a smaller house. On the other hand, you may hit unexpected financial turbulence along the way, forcing you to downgrade to a smaller home. It could also be the other way around: You can need to upgrade or upsize your home in the future, maybe after getting a pay rise or succeeding in business. Whichever the case, a renter will have an easier time making these adjustments than a homeowner.
Bottom line:
After carefully balancing the pros and cons of renting vs. buying a home, renting remains the most reasonable option, especially for young people.