In My Opinion: Renting Versus Owning

To begin with, here's where I stand on the question rent versus buy:  It depends.  Having learned immediately what I think, perhaps you'll decide to just click away right now.  Or if you're considering which is best for you, read on and learn why I say "It depends."   

Recently I ran across a video of a man extolling the virtues of renting.  He was advertising for a rental community.  I've read and had once subscribed to the many virtues of owning a home, as so many others have and they continue to do so.  Builders, community developers, banks and hedge fund investors  love this latter group. (But that's the subject for a different story.) My credential for having such an opinion is that I've done both, from renting apartments and a home, to owning a condominium, a town home and a single family home. 

There are many articles with good and valid reasons for either renting or owning a home.  My take on it comes down to just a few of these reasons:  

Proper Maintenance and Management

In renting, someone else maintains the property, from the exterior to the interior.  Leaky faucet?  not to worry.  Grab your cell phone or send an email to management.  

Home owning?  You fix it yourself or pay some else. Meaning, if you don't know how, you learn how from a friend, books, You-Tube and associates at the hard ware store.  Or you get three estimates, deal with a contractor, and write a fat check.  If you're not satisfied . . . well, get the picture.  I once had a contractor who was both an electrician and a plumber.  His work was outstanding; he was reliable; and he didn't hesitate to take that extra step.  When he told me he was moving out of the area, I cried like a baby!!  

 

Modifications to the property

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Most renters have to accept what they get in an apartment: wall colors; boring, tiny kitchens with insufficient nondescript cabinets and doll-house size storage  space; carpeting with smooth, worn out fiber naps installed on thin, cheap carpet padding.  (The secret to good carpet if you can't afford to upgrade is to spend the money on a good padding.)  Renting often means you don't get to change a thing.  Well almost.  You can paint if your're willing to repaint the walls before you leave or just forfeit some of your deposit.  Of course, if you have a luxury apartment, which means you have the funds, you can change a lot in a rental.  

Home owning, only your budget and perhaps the footprint of the house limits what you can do.  Want to remodel the kitchen?  No problem.  If if you don't have the immediate funds, you can dream, plan and save your money to get to that point.  Then remodel to your hearts content.  Paint the walls what ever color you wish and when ever.  (The quickest, most inexpensive way to freshen up a room is to paint.)  Knock out a wall, build upward, and the list goes on and on.                                                                                           

Flexibility, physically and financially

when a new career is on the horizon  (source) 

when a new career is on the horizon  (source

Renting means you only sign a lease, generally for one year and then renew for each continuous year.  Don't like the place?  Move.  Career change? You're ready to go to that new job and hopefully a promotion.  

On the other hand, if you need to leave sooner than for the period you had signed up for, you may forfeit your deposit. So, you find someone to sublet your apartment or you pay for the remaining months.  Let's face it, a good career change is worth the jumping to.  Renting can be cheaper and you can actually save money--no surprise when the furnace dies. 

With a home, you generally have a 15, 20 or 30 year mortgage.  You will have had to pay 10%, 20% or more as a downpayment on the settled amount of the house.  The reality is you have a debt, a sizable one.  For whatever horrible reason, if you are forced to give up the house, you are still obligated to pay the remaining portion of the loan.  Not only do you loose the house, (the condo or the town home), you loose every dime you put into it.  During a recession or a tax increase, investment in a home can take a negative effect.  Moreover, there is the cost of mortgage insurance if 10% or less of a down payment was made, and there is always the additional cost of exterior and interior insurance.

But one of the best financial upside to owning is that you can build home equity.  It's money that can be used for emergencies, college funding for children or yourself, to "buy up" (to another or bigger house) or just an accumulation of wealth upon retirement.

Caveat: I had foolishly moved to Florida) during the burst of this last U.S. housing bubble.  I had rented a house in an active adult community with the intention of building.  But  banks and lenders closed on the developer.  The home owners saw their property values fall to less than half of what they had paid (or for which they had a loan).  These were retirees who had put life savings into their "last" home only to have found themselves in a considerable debit owing more than the value of the home.   Me, I didn't get a chance to build that "last" home due to the collapse.  Lucky me!   

Family size

Let's face it, more than two children can make it very difficult living in an apartment.  It's funny how one can manage with multiple pets in an apartment (though I don't advocate it) but with children . . . well they do need space.  Very definitely, children heavily influence the choice to rent or buy.  Retirees will often buy homes just to have space for visiting grandchildren, as well as the big children they thought they had finished raising.   And then there are the "sandwich" families.  These are adults who children at home and a parent--each needing a little space they can call their own.

Still wondering why I say it depends?  When you have considered all of the pros and cons (see the links below for more of them), it comes down to where you are in life.  Finances aside because their is always a way to own a home, the primary reason for choosing one over the other is your lifestyle, your age, your career.  No other reason, I think, really counts.  And so, it depends.

Here's what a few others think.  I also include an article on why renting can be undesirable when there is a shortage of good properties available.  Such reasons can be anywhere in the world. I've known a few such places myself, especially during my college years!

Rent or own, I'd love to know your thoughts and your experiences.  Don't be shy.  Share.

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