Much of today’s financial advice tends to center around buying a home. Yes, homeowners experience various fiscal benefits, such as building equity and potentially earning a return if they sell the property. However, not everyone is ready to become a homeowner – nor is it the best option for all. Renting an apartment or home can provide many financial perks – especially to those younger members just starting out.
Here are ten reasons why renting might be the smarter financial move for you.
1. No Financing Required
As a renter, you can bypass worrying about loan approvals or interest rates. While you may have to wait a day or two for your new landlord’s background and credit check, the process is typically quick and easy. As long as you can afford to pay the security deposit and monthly rent, you’re all set.
2. No Property Taxes
Property taxes can make up a significant portion of your monthly payment when you purchase a home. Depending on where you live, these taxes can be as much as $10,000 per year. Renters are not responsible for paying property taxes. Instead, that responsibility falls on the shoulders of the landlord or property owner.
3. Lower Upfront Costs
The only upfront cost renters usually experience is a one-time security deposit. Most security deposits are the amount of one to three month’s rent. As long as you leave the rental in good condition, these funds will be returned to you upon moving out.
4. No Maintenance or Repair Costs
As a renter, you are not responsible for maintenance costs on items such as an A/C unit, furnace, a broken dishwasher, etc. Instead, you can enjoy the convenience of a landlord who will take care of any home repairs or maintenance necessary.
5. Lower Insurance Costs
Landlord’s are responsible for maintaining the homeowner’s insurance on the property. While it’s not required, it is highly recommended that you opt for renter’s insurance. This coverage is typically inexpensive and will cover your belongings in the case of theft or fire.
6. Lower Utility Costs
Renters will typically experience lower utility costs when compared with homeowners. For example, a homeowners' water bill may be higher due to them watering the lawn regularly. Often, renters may find that some utilities, such as water, are included in their monthly rent.
7. Greater Flexibility
One of the most significant benefits of renting an apartment or home is the lack of commitment. While your lease may be for a designated period, such as a year, you’re free to leave afterward.
8. Included Amenities
Many apartment complexes today are more like mini resorts. With pools, fitness centers, and dog parks on property, renters experience extra luxuries they would otherwise have to pay to access.
9. Low Risk
Buying a home can be a risky financial investment and particularly expensive, depending on where the house is located. As a renter, you can live in the area you want without being financially tied down to the property.
Having roommates as a renter is a great way to cut down on monthly expenses – both in rent and utilities. It’s relatively low risk as well. If you sign the lease and the roommate doesn’t work out, you can always ask them to move out. Also, it’s an excellent way to make new connections if you’re living in a new city.
The Bottom Line
While buying a home has many financial benefits, it also comes with added costs, responsibilities, and commitments. Renting is more flexible, affordable in the short-term, and often includes extra perks like amenities.
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