Renting and buying can each be great options when considering how and where you want to live. Each has great upsides as well as some downsides. Even if you think you know which option you want to go with, it is still important to consider all the angles to decide which really is the best for you.
When considering renting or buying, it is most important to first think about the costs. Typically when renting, your initial costs are only going to be your first month’s rent, last month’s rent, and security deposit, but there isn’t a guarantee that you will be able to stay in the same place for an extended period of time, as landlords can increase rent or sell their property after your lease is up. Additionally, you may have to pay extra for utilities. However, you never have to worry about fixing things up yourself.
On the other hand, owning your own property is more expensive upfront, and is a much bigger commitment than renting. There is a lot that goes into buying a home, so using online tools like mortgage and housing affordability calculators can help you understand what you can afford when buying a home. Additionally, renting vs buying calculators can help you decide if it is more worthwhile for you to rent or buy a home. Try this one from the New York Times. https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Renting
Pros
- Freedom to move when you want to
- Fewer upfront costs and paperwork
- Not responsible for maintenance
- Not responsible for property taxes
- Utilities sometimes included
- Sometimes amenities are included (pool, gym, security, etc.)
Cons
- Landlord can raise rent or sell
- Does not add to equity
- Restrictions on what you can do (no pets allowed, no home renovations, etc.)
- Choices are limited
- No tax benefits
- Rent rises over time
Buying
Pros
- Build equity
- Can do whatever you want to your home
- More stability
- Could be cheaper than renting due to low interest rates
- Potential tax benefits
- Mortgage can improve credit
Cons
- Greater responsibility
- Costs more upfront
- Harder to move easily
- Extra expenses (property taxes, insurance, repairs)
- Could lose money if home values decline
Takeaway
There are countless pros and cons to buying and renting property. If you’re not sure whether you want to rent or buy a home, it is worthwhile to weigh the advantages and disadvantages, as well as getting opinions from experienced homeowners and renters. Buying a home is a huge commitment that some people don’t want to make. However, it is also an investment in your future. Renting a property means you don’t have to have the responsibilities of taking care of it, but some feel that it is a waste when it doesn’t add to your equity. Everyone has different tastes and styles, and it is important to determine what is right for you.
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