I don’t want you to think that I’m all pro-housing, because I’m not. Renting comes with a lot of under-talked-about benefits, difficult to hear over the constant chant of financial experts telling you it’s the right time to buy.
As a result, buying a home should be a carefully considered decision, with all the pros and cons of both buying and renting evaluated against your own priorities and finances. Don’t get pressured into something that won’t work for you!
The benefits of renting include:
Financial flexibility. Think of a ocean liner and a speedboat. The first represents your mortgage, the second is your lease agreement. If you get into financial trouble and need to reduce your living expenses, it’s much easier to make changes to your life if you rent.
Financial stability. For many of the reasons we’ll outline below, a renter’s finances are very predictable. There are few “unexpected expenses,” like an appliance breaking or a roof leaking that you’ll need to take care of on your own. There’s also less risk of uncovering an unforeseen problem (think “termites” or “airport corridor”) because you can just move.
Career flexibility. As many unemployed home owners will attest to these days, when you rent you’re not locked into your location if the job market or economy shift, or your career preferences change.
Low maintenance costs. If nearly anything inside or outside your house breaks, it’s your landlord’s responsibility to fix it. That includes the cost, but also the time required. It’s also their responsibility to maintain the yard, paint, keep up common areas, etc.
No market risk. When you buy a home, you take on the risk (and potential reward) of the home’s value changing. This puts the capital you “invested” in your home via the down payment and subsequent mortgage payments at risk, and influences your ability to change course.
You don’t pay taxes or insurance directly. Your landlord is still asked to pay property taxes and insurance, and presumably rolls that into your rental price, but you’ll never be asked to write a check for these on your own, or get hit with a surprise bill if they increase abruptly.
No cash outlay required. There’s a tremendous amount of money required to close on a house, including the down payment and closing costs. Many people feel like it’s money they’ll never see again (if they sell the house, it will roll into the next one they buy). When you rent, no one will ever ask you for $20K out of pocket.
Some bills are included in the rental price. Many communities include things like water, trash collection, and even cable in their base rent price. While it’s probably priced into the rent, it still saves time every month not having to deal with extra bills.
Communities often offer “bonuses” for moving in. What was the last time you got a “bonus” for buying a house? It’s not unheard of to get a month of free rent or bonus amenities just for moving into a rental.
Decreased stress. I’m going to get some feedback on this one for sure, but I believe that owning a home leads to greater stress as you have to deal with your home’s problems. I’m not saying it’s not worth it, I’m just saying it’s there.
You can’t be foreclosed on. You will be kicked out when you don’t pay your rent, but in the grand scheme of things, that’s probably a better alternative to the fairly damaging process of foreclosure.
Less area to clean. I’m going to make an assumption here, but most people who move into a home will upgrade the size of their living space, not the other way around. There’s also the new 2-car garage, and the front and back yards. You’re going to spend a lot more time cleaning, my friends.
You can change your neighbors. I’ve found that a large factor in the quality of life as a renter is the kinds of neighbors you have. The good thing is that neighbors move, and when they don’t–you can. Would you move out of the house you bought because of bad neighbors? That’s a much tougher decision.
And perhaps the biggest benefit of all–no matter which path you choose (renting or buying), you are never locked into it for life. Make sure your living situation is complimentary to the lifestyle YOU want!
Photo by turkeychik
Fiscal Fizzle 
I’m curious why you call the list “surprising.” I’ve been a long-time renter, and for most of the reasons you mention, wouldn’t even consider buying.
Good point–I guess I feel the mass media is always touting the benefits of buying a home, and few talk about it from the other angle. The result is my “surprise” when I actually list out the benefits.
Good list! i do wish I could make some changes around my apartment though — like painting the walls, replacing the hideous bathroom tile, repairing the floors that are giving me splinters…
Then again, I’m saving on renovating costs, so there’s a trade off!
That’s true–I think if I had the chance, I would spend a lot of money on renovations. Instead, I have a kind of “forced savings plan” because I rent.
A lot of apartments let you paint the walls whatever color you want as long as you paint them a neutral color that they approve of before moving out. 🙂
We currently rent an apartment, and have no plans to buy a house any time soon: a) we’re just starting to save for our down payment, and b) I’m not sure where we want to settle.
What we really want is to rent a house, but as “good” as the housing market is for buying, it doesn’t seem like there’s *anything* to rent. And maybe we’re just looking in the wrong places, or at the wrong time of year, but I’d really love to figure out how to rent a house. I don’t think it should be this hard.
I think the problem is a lot of homeowners who would otherwise rent have out-of-control mortgages and they can’t get any reasonable rent amount that would even begin to cover their costs.
We’re kind of at the same point you are–re-starting our savings plan and still unsure of where we’ll end up.
Thank you for this post. I bought a home in 2009 and as much I’m grateful for being able to buy such a nice home, I have been feeling a lot lately that renting will give me the opportunity to save a lot more and the flexibility to move for career advancement. I feel my choices are limited being a homeowner.
Thanks for your feedback! Always nice to hear real-life stories.
Hear, hear! In Europe noone looks down on you for renting, but it’s different here in the States. I guess home ownership is the American Dream? But for many it’s a nightmare. Too many people buy homes who have *no business* doing so.
I could never be a renter from a lifestyle standpoint with the family dynamic, wanting to be able to do what I want to my home, etc. But that’s because I’m relatively confident in my employment locale. If that weren’t the case, I might have to consider otherwise. From an “investment” standpoint, the case doesn’t hold that housing’s a “good investment”. Home prices tend to track with inflation and we’re still above the 100 year mean…meaning, we probably have further to go. People should buy a home for lifestyle reasons, not to invest.
After watching 90% of my friends having to move away because they lost their jobs and couldn’t find replacements, you can imagine where my job confidence is right now. 🙂 But that might change…
Excellent article. Check out Trulia.com rent vs buy index. To me, cost of the house needs to be less than 100x the monthly rent to justify buying.
Great tip! First time I’ve checked out that data.
I had a new home in the late 80s and it was very cute and fun, but there are so many expenses and time associated with home ownership, that I don’t want anything to own me like that again.
Interesting list. For us, buying has made a lot more sense (we own a small condo), but I can definitely see how it’s not the best option for many people and I’m surprised at how it’s viewed as this ultimate step in one’s life.
For us, a few things triggered our desire to buy – we have a Great Dane, and were worried about being able to find many apartments that would allow him; and my job will take us overseas, so we can rent out our condo while we’re gone and move back in when we get home – much easier than signing leases on unseen apartments from across the globe!
Absolutely–sounds like it’s working great for you! We have a dog also, but she’s only 20 lbs. and most apartments have had no issue with her so far. The only reason we rent right now is lack of cash to buy, and job uncertainty.
I’ve spent years as a homeowner, and years as a renter. I whole-heartedly agree that one’s stress decreases immensely when one rents. Example: was that “clunk” I just heard the death knell of the fridge/air conditioner/furnace or (insert big ticket item that you don’t have the $2k to fix here)?
Also, you left out rental complex amenities: ours has not one, but two swimming pools for our use, as well as a like number of jacuzzis. When we’re finished using either the pools or the spas – someone else cleans them. I just LOVE that.
I spent years doing upgrades as a homeowner – only to see all of that sweat equity evaporate when the market went south at the very same time I was forced to sell. I find it curious that those who seem to be “talking up” the market (buy now! buy now! you MUST buy immediately!) are realtors or others with a vested interest in keeping housing prices high.
Great point, I thought for sure I mentioned the amenities. I have a friend who just bought a house a year ago, and all of his free time since then has been invested into the house…not sure if that’s what I want for our family, too.
You’re right that even today most Americans think buying is preferable. I saw a recent poll that had the number higher than 80%!
I teach first time home buyers and in six years, I’ve never held a class without talking about the pros of both renting and homeownership. Our list of pros for renting usually comes out longer.
If people pick home ownership after analysis like you describe, there’s little regret. But when they go into it blindly, it’s a recipe for failure. 😦
I love renting! There are times when I feel the urge to buy a house, but it’s something I will think about doing when I am more financially secure.
That said, I think renting is the better option IF you’re not going to move every year or year and a half. I have seen myself and my parents spend so much money on moving costs that you end up saving nothing.
I’d like to move again closer to work, but I just moved in here last September and don’t want to have to save up firsts/lasts, moving expenses, setting up utlities, etc. It’s so expensive!
That’s definitely the case–we end up spending about one month’s rent every time we move even though nearly all of our moves have been in-town.
Thanks for the article. I’ve rented all my life, and at times I’ve actually sat down and tried to write down reasons to stop renting and buy a place. Through all the analysis and the calculations I’ve always come to the conclusion that renting is better for me. NY Times has an amazing calculator and every time I’ve put in my numbers, renting has always come out ahead, even after 30 years. Sometimes, it’s not just financial though. If you have a family or other extenuating circumstances sometimes buying is your only choice. I don’t plan on getting married or having children, so renting works great for me. James Altucher, a featured Yahoo! finance commentator and hedge fund manager has espoused renting over buying many times. Thanks!