Do you ever feel like paying rent is a waste of money? I can understand why.
With so many people talking about the negatives of renting, it can be hard to find value in anything short of home ownership. But, what if renting isn’t as bad as it’s made out to be?
Is Renting A Waste Of Money?
No, renting is not a waste of money. For those who are unable to commit to the costs and responsibilities of owning a home, renting is an attractive and practical alternative. In many cases, renting offers greater flexibility, lower-hassle living, and more financial peace of mind.
In other words, if you are unprepared for the financial responsibilities of home ownership, then renting is a wise decision; not a waste of money.
5 Reasons Why Renting Is Not A Waste Of Money
When it comes to your financial situation, you are the one that has to live with your decisions.
No matter what other people try to tell you to do, it’s in your best interest to do your own research so that you can make the best decision possible.
And while there is all sorts of information out there about buying a home, the information on the benefits of renting vs. buying is seriously lacking. So, in order to balance the scale a bit, here are 5 reasons why renting is not a waste of money.
1. It’s More Affordable
To start, when somebody tells you that renting a home is more expensive than buying a home, they are not telling you the full story.
Sure, when you only compare the cost of a mortgage to the cost of rent, the numbers might make you think that buying a home is the cheaper option. However, there are all sorts of things that this comparison does not take into account.
For example, when you buy a home, you will run into a number of other costs. To name just a few:
- Home repairs
- Private Mortgage Insurance (if your down payment is less than 20%)
- Closing costs
- Property taxes
- Homeowner’s insurance
- New furniture and decorations
- Upgrades and remodels
Depending on the size and price of home you buy, some of these expenses can cost thousands, or even tens of thousands of dollars.
On the other hand, when renting, what you see is what you get.
Nearly all of the expenses you will have to pay up front will be laid out in your lease. At most, in addition to your rent, renter’s insurance and security deposit, you will end up buying furniture, decorations, and small, comparatively inexpensive, living supplies like cookware, towels and a plunger.
These things might add up to a few hundred, or maybe even a couple thousand dollars. But trust me, that pales in comparison to the cost of buying a home.
2. Renting Is Flexible
If your job requires you to move every few years, then renting is a great option.
Because in most cases, you will only be locked into a lease for a year or two. Plus, if you ever need to terminate your lease early, you will likely just have to pay an early move-out penalty, and you’ll be good to go.
Meanwhile, when you own a home, the process of moving is much more difficult, stressful, and time-consuming.
First, you will have to get your home ready to sell. Then, you will need to hire a good real estate agent to list it, and get the word out.
Then, you will have to go through the process of appraisals, inspections, negotiations, and closing. Sure, you may make a bit of money on the sale, but if flexibility is a necessity in your life, renting is the clear winner.
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3. Access To Amenities
One of the best, and most overlooked aspects of renting, is the amenities that many places give you access to.
In particular, if you are looking to rent an apartment, you may get access to a gym, pool, community center, community events, clubhouse, and much more. And, in many cases, these things won’t cost you extra.
On the flip side, if you decide to buy a place of your own, all of these expenses will be in addition to your mortgage. At the very least, you will have to pay for them through your HOA dues.
And those can get pricey!
4. Lower Risk
I don’t think it’s any secret that when you take on a mortgage, you are bringing some financial risk into your life.
As Dave Ramsey says, “100% of foreclosures happen on homes with a mortgage.”
Now, let me be clear, I’m not saying that buying a house means that you are going to go through a foreclosure. All I’m saying is that by taking on a mortgage, you are adding a large amount of debt to your life.
And with debt, comes financial complexity and risk.
So, if the idea of jumping into hundreds of thousands of dollars worth of debt makes you uncomfortable, then you should consider renting.
Since renting doesn’t require you to take on debt, it is much less risky.
5. Less Stress
In addition to the fact that renting carries much less risk than buying, it also comes with a lot less stress.
When you own a home, you are responsible for all the upkeep and financial responsibility that comes with it. So, if anything breaks, from a light bulb to the furnace, then you’re on the hook to fix it.
That is a lot of stress and responsibility to take on. And, if you are not quite ready for all that, then it might be in your best interest to rent until you are.
Think about it like this, if you are renting a house and the furnace goes out, all you have to do is call the landlord, and they will send somebody out to fix or replace it.
At worst, you have to stay home and wait for the furnace repairman to show up.
But at least you didn’t have to pay for it!
As a homeowner, you are responsible for everything that happens to your property–which can be pretty stressful and expensive.
When Does It Make Sense To Buy Instead Of Rent?
Ok, so at this point we’ve looked at a number of reasons why it makes sense to rent instead of buy. But renting isn’t always the best option. So, before you completely shy away from homeownership, allow me to answer the question, when is it better to buy instead of rent?
Put simply, it may make more sense to buy a home if you can put 20% down, while also keeping the combined monthly cost of your mortgage, property taxes, maintenance, and home insurance lower than the monthly cost of rent.
Obviously, the best case scenario would be to save up enough money to buy a house outright, but I realize for many people that is unrealistic.
As with any major purchase, in order to make the best financial decision possible, you should weigh all your options carefully.
Don’t believe everything you hear. Just because a bunch or mortgage companies tell you that renting is a waste of money, doesn’t mean you should believe them.
In reality, renting may be a more beneficial option for your financial situation.
Just be sure to do your research, and be completely honest with yourself.
I’ll finish with this, renting is not a permanent situation. So, if you are thinking about buying a home, but you are feeling unsettled about it, don’t be afraid to rent a little while longer. It is better to take your time and make a wise decision than it is to ignore your gut feeling and rush into buying a home before you’re actually ready.
Do you think renting is a waste of money? Comment below!