Renters by necessity dream of homeownership, but the truth is that even though both renting and buying have their own financi
l advantages, in today’s economy, renting seems to have an edge. The financial benefits to renting as opposed to buying are quite big. Here are a few.
Maintenance costs and repair bills
One of the most obvious advantages renters have over homeowners is that they don’t need to worry about maintenance costs or repair bills. As a renter, the landlord is responsible for all maintenance and repair costs. When an appliance stops working or when the roof starts leaking, as a renter you have no financial responsibility to fix them. On the other hand, homeowners need to prepare for all their own repair, maintenance and renovation costs, and depending on the type of work that needs to get done, these can get quite costly.
Amenities
As a renter, without additional charge, you have access to all those luxuries such as swimming pool and fitness center, available at many midscale to upscale apartment communities. As a homeowner, the price for such features reaches thousands of dollars in installation and maintenance costs. Condo-owners aren’t spared the expense as they need to pay monthly fees for access to these amenities.
Real estate taxes
Another obvious benefit that renters have over homeowners is that they don’t have to pay real estate taxes. Real estate taxes can be a substantial burden for homeowners and vary by county. Typically, property taxes are determined based on the estimated property value of the house, the larger the residence, the bigger the tax.
Down payment
Upon signing, it’s the renters who get the better financial deal—most landlords require a rental deposit equal to the amount of one month’s rent. When purchasing a house with a mortgage, you’re usually required to have a sizeable down payment, ideally 20 percent.
Unstable market
Even though some say the U.S. housing market is making a full recovery, others argument that the market is just now stabilizing. Many are still scarred from the last recession and stay away from buying altogether. They feel that by renting, they avoid potentially owning a mortgage that becomes more than the house’s worth.
Unstable property value
Property values are never stable, they go up and down, and this affects homeowners much more than it affects renters, if at all. Home value determines the property tax, the mortgage amount and more. In a rocky housing market, renters are not as badly affected.
Flexibility to downsize
Even though the market is stabilizing, there are still many people who struggle to get by. Renters have more freedom to downgrade into more affordable places at the end of their lease. As a homeowner though, it’s much more difficult to break free of an expensive house, partly due to the expensive fees involved with buying and selling a home.
Fixed rent rate
Rent amounts are usually fixed for the duration of the lease agreement. While it’s true that landlords can raise the rent with notice, you can still budget more efficiently knowing the amount of rent you a required to pay monthly.
Insurance costs
Homeowners need to keep a homeowner’s insurance policy, which can go up to $80 per month. Luckily for tenants, renter’s insurance is much cheaper and cover plenty. A renter’s policy can be purchased for as little as 43 cents per day with Resident Shield.
