Owning a home isn’t for everyone, and neither is the idea of renting an apartment. Every person has heard the saying “Only rent if you have to, or else you’re just wasting your money.” This saying may be true for some, but in the end, both options have their financial benefits. Let’s take a closer look at what both renting and buying a home offer.
Renting Allows for Flexibility in Finances
Renting is a great option if you are new to a city or job and unaware of what the future holds – maybe you want to get to know the area more before completely planting your roots there. At this point, a year lease isn’t going to make or break your financial status, unless you are comparing the price of apartments in a rural area vs. apartments in Houston. The location, square footage, and utilities are what can increase a monthly rent substantially.
Adding to flexibility, renting doesn’t require you to pay real estate taxes or a down payment. This can be a burden for many new homeowners, often costing thousands of dollars per year for taxes and a large chunk of money required for down payments. Plus, it isn’t always the case, but most apartments are smaller than houses, which means utilities are going to be cheaper than paying for an entire house.
No Decreased Property Value in Renting
The day you move into your apartment, you are essentially borrowing it. It belongs to the landlord, and it is up to you to pay the fixed amount of rent each month. Renters know that once they sign a lease and rent, they still have no property value. However, that removes the stresses of paying taxes, upkeeping the home, and other financial obligations that homeowners have.
Owning a Home Is Better Long-Term
Of course, everyone has goals in life, and for some, that could be owning a home. Whether you decide to build from the ground up, buy a fixer-upper or brand new home, being a homeowner is a reward in the long run. This is due to the increasing equity value once a person purchases a home. When you rent, you are paying the landlord X amount of money per month and getting nothing in return. Owning a home allows you to pay your monthly mortgage down to nothing in the end – and now it’s up to you to enjoy the home that you own, or eventually sell it.
Home Value Increasing
At this point, we are all aware that properties are more and more expensive, and home values will continue to rise. It is very popular to purchase a “fixer upper” and create a dream home, selling it for a much higher price later on. The money you put into your home will reward and earn you even more money over time.
In the End
Both owning a home and renting an apartment have their pros and cons, and it is essentially up to the individual to choose which option is best for them. Renting may be better short-term, while owning a home is a good long-term choice. The two options will never be one or the other, but both offer great experiences and responsibilities that need to be taken into consideration.