When it comes time to move and change homes, you’re likely having the eternal debate:
Why rent when you can own? vs. Why own when you can rent?
What’s the answer? It’s not as cut-and-dry as you’d like it to be. In all honesty, both owning and renting come with their own sets of pros and cons.
What you choose is entirely up to you, depending on factors like your lifestyle, your budget, and your future plans. That’s why the numbers vary—over 100 million Americans rent their homes and about double that are homeowners.
However, there are some things to know about renting vs. owning that could help you make an intelligent decision. In this guide, we’ll run through the advantages and disadvantages of each so that you’re coming from a place of knowledge.
Why Rent When You Can Own?
This question is certainly valid when it comes time to move you and/or your family. Many Americans consider owning a home their version of the American dream. It provides a place to live and grow, work and play, and build a stable presence in a community.
However, some people wonder whether it’s worth the investment. In many cases, it is—but that greatly depends on several factors.
Are you prepared to keep up with the maintenance of homeownership? Are you planning to stay put for the foreseeable future? Do you have the budget to make your own repairs, upkeep your own lawn, pay your mortgage?
Take a good hard look at your finances and what your future holds in terms of career and location. There, you’ll likely find the answer to your question. For more insight, check out our pros and cons below.
Pros of Owning
Homeownership comes with several benefits, including:
- An increase in value (appreciation) over time, which means you could potentially sell your home for a profit
- The potential for building home equity
- If you sell your home (which is likely at some point), the capital gains exclusion allows you to keep the majority of the profit without having to pay tax on it
- Opportunity for tax deductions, which includes homeowner expenses such as mortgage interest
- Ability and freedom to make changes to your home, from large-scale renovations to small-scale repairs and updates
Not cited in this list are other benefits such as being an active member of your community and having the pride of a place to call “home.” Additionally, while buying a home may be more expensive in the beginning, interest rates are in your favor, and you’re ultimately paying for something you’ll own—rather than lining someone else’s pockets.
Cons of Owning
There are some caveats to homeownership, including:
- Higher upfront costs than you’d see when renting
- The potential for depreciation, instead of appreciation (this situation can happen for several reasons, such as a housing crisis, economic decline, lack of maintenance on the structure)
- Additional expenses and responsibilities, such as upkeep for its foundation, structure, appliances, and more
- It may take time to sell, in which case you’re still responsible for mortgage payments
Some of these “cons” you have control over, such as maintenance. If you keep up with your home regularly, you’re likely to encounter fewer substantial problems.
Of course, if you’ve got a larger budget, some of these financial disadvantages may not be deal-breakers for you either.
Why Own When You Can Rent?
Owning a home isn’t for everyone—yet. You may be in a place if your life where something as permanent and costly upfront as homeownership isn’t right for you.
Then, maybe it is. Again, it all depends on the factors we’ve mentioned thus far.
To aid in the decision-making process, keep reading for a list of the pros and cons of renting a home.
Pros of Renting
Renting comes with its own set of advantages, such as:
- You can get yourself and your family into a lovely home, even if you don’t have the budget to buy one yet
- More flexibility in the event you have to move or change locations
- Opportunity to save money on the upkeep and maintenance costs we mentioned comes with homeownership
- Renter’s insurance is commonly more affordable than homeowner’s insurance
- While you may have to put down a security deposit, you’ll be able to forgo a down payment
- Any losses, such as with depreciation, are not personal to your finances
When it comes to renting vs. owning, the primary advantages come in the form of budget and the flexibility to leave.
Cons of Renting
Besides the fact that you’re paying rent to whoever actually owns that home, renting has a few other cons worth considering:
- You’re not receiving certain financial benefits, such as tax deductions, leverage, and/or profits when it’s time to sell
- Rent can rise over time, meaning you may end up paying the same costs (or more) as a standard mortgage payment in the same area
- You won’t have the freedom that homeownership entails to make changes, upgrades, or renovations
With renting certainly comes less flexibility of creativity and less creation of wealth.
Now that you’ve got the details, the choice is up to you.
Rent vs. Own: Which Will You Choose?
At the end of this article, if you’re still wondering, “Why rent when you can own?”, that probably means you’re ready to become a homeowner! If, by now, you’re still on the fence, you may be an ideal candidate for renting.
While the answer is entirely up to you and your family, we can help. Our tri-county real estate team is armed with the knowledge needed to help you make the best decision.
Contact us today by calling our office or filling out our contact form. We can’t wait to help you get into the place of your dreams, regardless of what you choose.