Owning a home is a dream for many people. You have the opportunity to invest in a place of your own and build equity, not to mention carve out a space that reflects who you are and what you love.
However, worries about down payments, property taxes, maintenance, and insurance (and student loans) can make buying a home seem like wishful thinking, which is why you may prefer to rent a home or apartment.
But is renting cheaper than buying a home? There are more than just financial costs to consider. Let’s discuss the advantages and disadvantages of renting.
You Receive No Return When You Rent a Property
As a renter, you’re paying hundreds of dollars a month to live in your community, and if you want to move, it’s much easier. But renting a home doesn’t offer you investment opportunities.
Unlike paying off your home loan and building equity, the money you pay when you rent goes straight to the property owner or manager.
You Don’t Build Credit When You Rent
As this recent Forbes article explains, your credit score often does not factor in your on-time monthly rent payments, so renting a property is not a great way to build credit.
Additionally, renting doesn’t provide you with any tax benefits. If you own a home, however, you can deduct mortgage insurance and property taxes, and exclude capital gains when you sell.
You Cannot Customize Your Living Space
Not all costs are financial. There are opportunity costs of renting a home instead of buying a home, and customization is one of them.
There may be rules and regulations in your rental community that prevent you from changing your space to fit your style, such as painting the walls or upgrading the kitchen. These rules may also prevent you from living with a pet.
Owning a home means you can create your own space (with your choice of countertops and kitchen cabinets), you can invest in home improvements, and you can live with your furry companion.
You Have a Harder Time Connecting with Your Community
Forming deep connections with your neighbors is likely not high on your priority list if you’re a renter, especially when you consider that you will only be living in the community for a short time. If you desire to get to know your neighbors, home ownership is a better option.
Renting vs. Buying: The Bottom Line
Renting gives you flexibility and little maintenance to worry about. Buying a home is a long-term investment that gives you a space you can customize, helps you build credit and equity, and connects you with your community.
We want to help you make the best decision, and we have important real estate market resources that you can use to help you decide if renting is cheaper for you than buying a home. Just give us a call at 734-761-3060 or email info@bouma.com and we can talk about your plans!