To Rent or to Buy A Home? That Is The Question

Many renters find themselves in a state of perplexity – they often ask themselves at least once, should I keep renting or should I buy a home? And often, the answer to this perplexity is buying a home, especially for those who think of the bigger picture. You better believe it applies even in a crowded market for real estate.

Renting – What Are the Pros?

Depending on which part of the country you are from, renting has its share of advantages. A primary advantage is that your monthly rent payment may be less than an equivalent mortgage (but that’s usually not the case, especially with the rising cost of rent). And because the landlord would be financially responsible for shouldering maintenance, repairs and home improvement, you could also save more money that way.

Also, you don’t have to come up with a down payment to get into an apartment or other rental property like you would when buying a house, so the barrier of entry is lower.

In addition, most rental agreements are not a long-term commitment, so it’s pretty flexible to just stay your stay and then just move on somewhere else to live if you choose to.

Still, these advantages pale in comparison to the disadvantages of renting.

Renting – What Are the Cons?

The disadvantages of renting are significant. The disadvantages, in fact, are so obvious that if you had a chance to purchase a home, you would not think twice about doing it.

The biggest disadvantage of renting is the loss of value. Let us assume the following given – you live in an apartment for rent for two years, and through the course of your stay, your monthly rent was $1,000. That means $24,000 worth of rent paid over a span of two years, nothing but straight expense. The $24,000 is simply gone and you will have nothing to show for it other than the time you spent in the home. You have everything to lose, while the landlord has everything to gain.

Rent payments have some form of congruity to the landlord’s monthly mortgage. So let us now assume that the $1,000 rent is equivalent to the mortgage payment of your landlord. So for two years, you have been indirectly abetting your landlord in his goal to build equity in the house as he pays down his loan with your rent money. In addition, the landlord will benefit from any appreciation of the property.

Appreciation, in case you are not familiar with the term, means the increase in an item’s value. If the rental appreciated $20,000 in two years, the landlord has received a windfall. They may have seen a gain of $24,000 in appreciation and payments lowering the mortgage. If only your landlord could give you a plaque of appreciation. Not!!! Most you’ll get is maybe the words “it’s been a pleasure doing business with you”, and then they’re on to the next renter!

Home Ownership

Now, what would have happened if you had purchased a similar home with similar financial figures? You would be enriching yourself, and NOT your landlord by $24,000, but through your property’s appreciation. Now I understand that people are at different times in their live and have different situations, but this is seriously something to think about.

I know what you’re probably thinking right now…”OK…but with if the home falls in value?” Well in this case you are the property owner, so you have the power to do several things: You can consider holding on to it until the market rebounds; you could consider selling it; heck, you could even consider renting out a room in your home and have someone else paying or offsetting your mortgage!

Either way, that beats paying your landlord’s mortgage and building his equity and power. Also, there’s homeowner assistance programs that exist to help homeowners that are going through a struggle.

Final Thoughts

So if you’re renting right now, you should at least start looking around and checking into the advantages of owning your own home. Maybe you’re ready and maybe you’re not, but at least check into it and explore all the benefits that home ownership has to offer. After all, isn’t it time to make your money work for you, and not a landlord?

36 Replies to “To Rent or to Buy A Home? That Is The Question”

  1. For me, still the best choice is to buy a new home instead of renting. Though, I know that renting (specially near your workplace) is still comfy & less travel hours going to work. Having a new home is still the best feeling,because at the end of the day or let me say a week, you’d still wanna be with your loved ones & being in a renting home without anyone whom you knew makes you a loner.

  2. Thanks for writing this, DebtGuru! I have been renting for as long as I can remember. I mean, back in the 80’s I was renting and up until now I’m still paying the dreaded monthly rent. It has become legend as in the Musicale “Rent”! Well, luckily now, after hard work and luck, I was able to buy my own house and I will be moving in a month. Definitely strive to have a hole of your own that you can call your home.

  3. Actually, when I opted for renting, I thought it was much cheaper. I had not looked through to see that my money is vanishing. I now need to draw a plan and own my home. I liked the post very much.
    Thanks again for the read.

  4. I think it is important to look at your resources first before deciding to buy or rent a house. If you don’t have the funds to buy a house, you can always rent and save to buy a house. You can also try looking at tiny houses maybe that way you can own a house with the budget that you have. Tiny houses don’t cause that much than your average two story houses. However, if you really want to buy a two story house and you don’t have the budget to do so you can always save up to buy it.

  5. Personally, I have experienced renting for almost 7 years. Fortunately, I bumped into an ad online about rent to own studio type condominium. I am thankful that it went well for me through the help of a real estate agent. Even if I am still renting right now, at least I can now call it my own. In few years time, the condo would be mine 100%.One thing I realized, I am spending the same costs before when I was just literally renting but at least, rent to own houses is something that you can call your own. Its also a form of investment.

  6. One pro not mentioned in this agreeable article is the convenience bubble. Renting is a perfect niche for undergrads,postgrads and the archaic type who prefer to be alone;have no family or friends they wish to sign a will or estate to..much like some who love living in hotels. Buying a house feels like getting married doesn’t it(with a hidden cheat of your inlaws acting as your landlords haha);the thought that goes in to it,the investment..whereas renting is like dating ,with an actual landlord around who may or may not bicker like a wife.
    All said and done it might safely be at what stage of the reputed Life Cycle one is at that determines the best step(assuming finances don’t limit those options) . People like me,young adults living off the skin of their teeth ,rent for the convenience. Those looking to invest usually do buy and marry their lives with their new home.
    So have you asked yourself..which one are you?A renter or a buyer?A date or a life investment?A young adult or whatever else there is?A landlord or an in-law?

    1. Nice addition Alexio! And as stated in the article, everybody may not be ready for home ownership. Also, just because you buy a house it doesn’t mean have to have a family. A lot of people tend to think that, but it’s not true. You can buy a house a live solo or with a family; that’s your choice. There’s even the tiny house craze going on now:)

  7. I feel that owning your own home is much better than renting, when renting your X amount of money is lost, never to be seen again, when you´re purchasing, that money goes towards the X amount of money that you have to pay to finally make that dream home yours!

  8. Reading this article has given me serious points to consider especially that I am thinking of tranferring into a new home in the city. Being in my late twenties, investing on the right property at the right time will help me maximize the value of my money not only to satisfy my current necessities but to secure my future as well.

  9. Right after reading this article, I realized that buying a house is more beneficial than renting one. I cannot deny the fact that there are good sides in renting but this article has gave a clearer understanding of the benefits that I can get from buying a house. Sure, there are lots of good sides from renting but its a lot less compared to the good sides of buying one.

  10. Acquiring a new house is an asset and, as you stated in the article about the increase of the landlord’s item value, I could have the same privilege if I have my own property. That’s why I am really contemplating on buying my own house and release myself from the monthly worry of my renting bills. $24,000 is ample amount of money and can definitely buy me my luxuries.

  11. I still believe that owning a home is more advantageous than renting. Despite the cost, I have peace knowing that the house is mine and not someone else’s.

  12. I definitely agree with buying your own home, with all its benefits, and who wouldn’t want a home you can call your own. But there are a lot of considerations before jumping in to such a big decision especially if you have a narrow monthly budget. Better weigh your options, the consequences and the benefits. If you can do it now, why not?

  13. For me it’s all about where you are and what you currently need while considering your long term plan. Since I’m only 23 with a stable job, and no plans of having a family soon, I opt for renting. It’s cheaper, it’s near my work, and the location is very near places. In a country like the Philippines, the great locations for buying houses are far from the city where business is actually happening. So, it makes more sense for me to rent. However, if you’re starting a family soon, it will be more logical to opt for buying a house.

  14. I like DebtGuru’s point, beyond not only losing out on equity through rent payments that only benefit the landlord, but also market changes that can increase a home’s value without any investment, an often overlooked angle in deciding whether to rent or buy a home. We used a first-time homebuyer’s assistance program to make the switch from renting to owning. It was well worth the effort!

  15. After reading this, I must say that I will definitely look into buying my own house. Thanks for reminding me that I shouldn’t be giving my money away!! Haha

  16. Although I always believe that Proverb about my own sweet Home “East or West, Home is the best ” . But my perspective is something different. If you are living in quite difficult and sufffocating conditions, then why you will bother youself by buying own home? Just stay happily by paying montly rent. I think rent a home is good option for less privileged people.

  17. Personally, I feel that the benefits of renting are under-represented here. First, if you are fortunate to find a reasonable and reliable landlord, the sheer peace of mind knowing that broken pipes, dead appliances, and other common household problems will be taken care of is an investment in and of itself. Second, for young professionals who do not plan to live in one place for a long period of time, renting can be a positive way to build up a good credit rating and be better prepared to finally buy once you have made a decision as to where you want to spend a significant portion of your life. Third, a house is not always going to be the best investment. Prices can fall or even crash, and if something happens to depreciate your neighborhood you may be unable to sell without taking a loss that will devastate your finances for years to come. Both renting and home ownership have their advantages and disadvantages. Home ownership isn’t all roses and kittens, and renting isn’t just financial slavery.

    1. Hello Erin, you’ve made some good points. Here’s my take on a few of them:

      – As far as renting to build credit, usually it doesn’t – at least not traditional credit where rental companies are reporting your positive payments to the credit bureaus. At least I haven’t seen any of them do that. Now if you pay your rent with your credit card, then that is an indirect way of building your credit while renting.

      – As far as being fortunate enough to find a reliable landlord that will take care of repairs and dead appliance (at least in a timely manner), there are more renters than not that just don’t get this treatment. So the key phrase you said is “fortunate enough”. Well unfortunately people should not have to rely on good fortune or a stroke of luck to get what they are paying for. A lot of apartment complexes draw people in and get them to sign the lease, but then give tenants the run-a-round when it’s time to get something fixed.

      And you’re right, home ownership is not all roses and kittens, and renting is not just financial slavery (if you’re “fortunate” enough). But ultimately, owning your own property as compared to renting tends to always be a better option. My keyword here is “Ultimately” because everybody is not ready to become a homeowner at this time.

  18. Finally deciding to own a home is definitely the best decision we’ve made after renting an apartment for 10 years. There is that indescribable sense of permanence and security that I’ve never felt while renting. Plus, something that will most likely not exist when renting is having the creative freedom to do almost whatever you want with the house. A minor downside is that we had to delay beautifying the interiors because of upfront costs in buying. All in all, I wish we had bought a house sooner.

    1. Congrats Esandra! I know it feels empowering to be a homeowner, and you can make time to beautify gradually. The important thing is that you now have the creative free and power of ownership to be able to do this.

  19. Many people struggle with the decision of renting an apartment or buying a house. While renting an apartment can be a quick fix for temporary living, (College, etc.), I feel like buying a house is the way to go. In the long run, you spend such amount of money to own your own home eventually. When renting an apartment, you’ll never get the satisfaction of owning your own home; it will always be someone’s property, other than yours, technically.

  20. Although the decision of buying a home would rather seem more practical in the long run, there are still a great number of those who opt to rent. The reason for this probably lies more in their job or income security. In today’s economic trend, the prospects of being laid off runs high which is why a lot of people are having second thoughts about long term investment. Still, this shouldn’t dampen one’s dreaming of owning a home. Approach it as a calculated risk worth taking.

  21. As someone who has both owned a home and rented, there are advantages and disadvantages to both. Currently, my husband and I are back to renting. We sold our home a few years ago and went back to renting after our finances began to struggle. The upkeep on our home started to sink us financially. The roof was in need of repair and we found out it was going to cost us thousands to have the work done.

    Although I would not recommend renting for a lifetime, there are aspects of it that are cheaper than buying. In the long run, you are going to pay more if you rent for a lifetime than if you buy. However, when you rent, your landlord or rental company is typically in charge of repairs, which takes a lot of stress off your shoulders.

    Of course, you also have to take into consideration that there are certain freedoms you will not enjoy. For instance, you may not have the luxury of having a family pet because many rental houses are, “No Pets Allowed.” If the landlord does allow a pet, there is generally a decent non-refundable pet deposit that you have to pay. Also, you may not be able to landscape as you wish, grow a garden, paint the walls, or swap out the flooring for something you like better. When you own your own house, you can choose to do all of these things if your budget allows.

    It is best to get yourself financially situated before you rush into purchasing a home. If you are not financially situated for the future, you could find that owning a ome is damaging to your budget. For the time being, it is better to rent and save up the money needed to buy and maintain your home. At least, that is the lesson that my husband and I learned.

  22. I absolutely agree that if you’re renting, you should be looking into buying a home of your own. I rented for years and finally took the plunge to buy and it’s been the best decision I could have made. Rather than wasting money on rent, I’m paying my mortgage and putting money into my home to increase the appreciation. It’s not easy to buy and it takes a lot of patience but it’s totally worth it!

  23. Personally, I think the absolute truth in this article is that if you’re given the chance (or finances) to purchase a home, you’d do it in a heartbeat. Basically, a lot of people still can’t buy their own home because they don’t have the money, they’re still paying rent and spending money on staples like food, electricity and water. However, it is indeed wiser to look at the big picture, that it’s much easier to buy a home now, even if you spend a big chunk of money on it and never worry about paying rent or where to get the money to pay it for the rest of your life than simply settling on setting aside a specific amount for rent month after month.

  24. I’ve always believed that owning a home is a simple and solid investment, especially for those of us who don’t understand more complicated investment strategies. I think the only downside of home ownership is the responsibility of the upkeep.

  25. Renting versus buying a home is a dilemma to consider, though it is highly subjective regarding where the prospective tenant or homeowner is planning on living. For example, someone may find a Victorian in San Francisco for rent at $3,500 a month. That price is equal to a mortgage in a wealthy neighborhood in some suburbs. That said, renting or buying can be entirely dependent on many different circumstances. Additionally, the market for renting is large because it is a matter of convenience. I know many people who have rented an apartment or a house temporarily, while either saving to purchase their own home, or in order to find their dream house.

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