The Advantages and Disadvantages of Renting and Buying

When you leave your parents’ home, unfortunately, you are not going to be able to just up and buy and house. If only it was that easy. More likely than not, we all start out with renting apartments. However, it’s important to know the difference between renting and buying, that way, when you are ready to transition, you know exactly what to do.

First and foremost, before we discuss the differences between the two practices, you must first understand the one of most important things associated with your person: the credit score.

This video helped me understand the importance of credit and the credit score:

Got it? Good, let’s talk about renting and buying property.

Renting

There are some misconceptions about renting, it gets a bad rep, but for those who aren’t able to make long-term commitments like owning a home, renting is a safe bet. With renting, you know exactly how much you will pay every month.

Apartment complexes offer certain terms, for example, a 16-month lease, a 12-month lease, a 6-month lease or a month-to-month lease. Each monthly payment varies based on your lease.

Let’s look at some pros and cons that come with renting:

PROS

• Flexibility
• renting does not require you to put down a substantial payment in order to get your home/apartment. Although, some properties may require a one-time deposit that you can get back when you are moving.
• Cost
• when renting, you know how much you will owe for your rent and utilities.
• Relocation
• you can easily move when you rent. When your lease is over, you can move to a new location, however, beware that some apartment complexes require you to pay a penalty fee for breaking your lease earlier.
• Maintenance Costs
• renting an apartment is a dream when it comes to maintenance costs. Your landlord is often responsible for making sure your maintenance requests are taken care of. If they are not taking care of any of these requests, know your rights.

CONS

• Rising Rent
• if you choose to stay at property you are renting and your lease ends, the renewal document might show an increase in your rent.
• Pet Costs
• when owning a home, you do not have to pay a monthly fee for your pet, but when renting you may have to. Sometimes pets may cost up to $100 a month/pet.
• Neighbors
• owning a home provides you with the privacy you need to live your best life, however, when you are renting an apartment, you can encounter some awful neighbors. Unfortunately, all you can do is complain to your landlord, but you cannot control the actions of other people. And don’t get me started on upstairs neighbors.
• Little to no tax benefits
• when you own a home, you can be qualified for tax write-offs and other tax breaks, but with renting, not so much.

Buying

Eventually, your career is going to advance and with that you will be at a time in your life where you are ready to buy a home. Buying your home can be an arduous process, but it can come with a lot of advantages

Let’s look at some pros and cons that come with buying:

PROS

• Building Credit
• In order to successfully buy a home, you need to have relatively good credit. L uckily for you, you just learned what credit is and how it affects us at the beginning of the article. Making your mortgage payments on time can help you build strong credit.
• Tax Benefits
• You can qualify for federal tax deductions as a homeowner.
• Freedom
• You have more control over how you manage and decorate your home. Renters often do not have this luxury of being able to change the structure of your home, but homeowners do.

CONS

• Maintenance
• Whereas renters can rely on their landlord for any maintenance fix, homeowners have to pay for all of those expenses out of pocket. Depending on the fix, this can get really expensive.
• Depreciation
• If you do not take good care of the property you own, it can depreciate. On the contrary it can appreciate as well with any additional features you add to it. Be weary of the state of the economy, as it can force you to make changes about you to make difficult decisions about your home.
• Homeowner’s Association
• HOA’s can be great to some communities, but they also can be the bane of some. From the fees to the rules, homeowner associations can possess some power over your home. For example, if you get behind on your fees, they can foreclose your home.

Conclusion

In the end, whether or not you decide to buy, or rent is based on your financial situation. Make the choice that is best for you. Utilize the pros and cons listed above as a good starting point on your journey.

Written by Doreen Chirwa · My Growing Pains