Renting an Apartment vs. Buying a House

Renting an apartment or buying a home is a very personal decision that will depend largely on your circumstances as well as needs and wants. Here are a few benefits and drawbacks to each option.  Use it as a guide to figure out what your priorities are, what you absolutely need and would like to have and what you can compromise on. Renting an Apartment PROS to Renting Ability to move when your lease expires. Sometimes, your work might force you to move frequently, or you get married and decide to move into your spouse’s house, or you’re working your way up to a dream location…whatever the reason, having the flexibility to move without worrying about selling your house may be an advantage. No major repairs or maintenance. Aside from the every-day maintenance tasks like replacing your light bulbs and unclogging your toilet, many landlords will take on any repair or maintenance work, leaving you free to enjoy your apartment without worrying about coming up with cash to fix that broken furnace, fix the leaky roof, or often even mow the yard. No extra fees and costs. You are responsible for your rent payment and any utility bills that are outlined in your lease. No need to worry about property taxes, insurance, repair costs, water bills, etc. Rent can be cheaper than a mortgage payment. In the current economy, the large gap between rent and mortgage payment is decreasing, and with the low interest rates the monthly payments may be similar. However, once you tack on taxes, insurance, and other costs on to a mortgage payment, renting may still be more affordable. Lower upfront cost to move in. Generally, you need a month’s rent and a month or two of deposit to move into an apartment. Pesky neighbors? Move! If you absolutely cannot stand your neighbors, it is much easier to change apartments than houses. CONS to Renting It’s not yours. The biggest drawback to renting, naturally, is that it is not yours, which means you cannot do much to change the space or customize it to your own needs. No equity. No tax breaks. All your rent money is going into the owner’s pocket, and at the end of the lease you are left with nothing to show for it. You don’t get any tax breaks on a rental, either. Stuck with pesky neighbors. If moving away is not an option, dealing with next door pesky neighbors can be a nightmare. Late night parties, stomping over your head, nosy neighbor who constantly tells on you, your trash bin missing,…again, refusing to help you keep the hallway clean…those are just a few uncomfortable situations you may find yourself in. No pets. If you are a pet lover, this may be one of the hardest challenges of renting an apartment. Most apartments, and especially most higher-end apartments, do not allow pets. For those that do, you will be stuck with hefty pet deposits and extra monthly fees. Different comfort and quality standards. If your standards for quality don’t quite match those of your landlord, there is not much you can do. As much as you would love for the walls to be straight and the crazy color of the house repainted, you will have to put up with it until you move. The lease. You are bound by the rules outlines in the lease, which may include an early quiet hour, no parties, limit on guests, and others. Buying a House PROS to Buying It’s yours! You can paint it if you want. You can move a wall and change the cabinets. You can have guests over as often and as long as you’d like. You set your own boundaries. Equity and tax breaks. With each payment, you are gradually paying down the mortgage debt and increasing your equity in the house. And the longer you own your home, the greater the potential return on your investment should you want to sell it. You can also write off your home on taxes, helping you get more money back. Close the door on pesky neighbors. Sure, you may still end up with pesky neighbors, but now you have to choice to put up a fence and keep them out. Pets ok. Dogs, cats, rabbits, gerbils, parrots…you can have them all. Your house, your standards. If the house doesn’t quite meet your standards at the time of purchase, you have the freedom to fix it. No lease. No landlord putting restraints on how to make your house feel like home. Mortgage can be more affordable than current rental market.  True, in many instances it’s much easier to rent an apartment than buy a home.  However, as the housing market fluctuates and rental fees go up and down, having an affordable, stable mortgage payment can be easier on your long term budget and saving efforts. CONS to Buying It’s yours. You, as the owner, are responsible for the taxes, insurance, repairs, and maintenance. Harder to move. If your work requires you to move, or you decide to move in with someone or take a trip around the world, it’s not as easy to step away from a house without either selling it, or coordinating ongoing supervision and payments. Major repairs and maintenance. All repairs and ongoing maintenance will be your responsibility. Those extra fees and costs. Property taxes, homeowners insurance, flood insurance, water and sewer bills, all utilities, all extras…all yours. Unfortunately, when you own a home, nothing is “included” in the rent. A higher total monthly payment. In addition to the mortgage payment, you also have to factor in fees for insurance, taxes, water and sewer bills, all utilities, and any other extras that are part of your home ownership. Higher upfront cost to move in. Generally, a minimum down payment, closing costs, and legal fees need to be paid before you can move into your home. ......... As you contemplate the pros and cons of each options, think about the long term of your investment and your life goals in the next couple years, and the next five years or more. If you see yourself traveling or moving a lot, you can still consider buying a house, but renting it out for extra income. Once you have a good idea of what your housing needs are, it’s time start looking!

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