Advantages of Renting: Why I Rent Instead of Buy

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Home ownership has long been a part of the American dream. Even with the housing crisis in 2008, 84% of Americans either currently own a home or think they will within 10 years.

I’d include myself in that 84%. One day, I imagine owning a home where my husband and I can raise a family. But right now, I’m a happy renter and I plan to rent instead of buy for at least more five years. Here are my top five advantages of renting:

1) Easy to Move

As a twenty-something, I’m just at the beginning of my career. By making my career a priority over the next five years, it’s possible I can greatly increase my lifetime earnings. According to one PayScale study, both men and women see a salary growth of about 60% from age 22 to age 30, with a slower growth rate in their thirties and forties (as shown below). One of the best ways to get a raise is to switch jobs — and that might require moving.

rent instead of buy

As a renter, it’s so much easier to move. I’ll never forget how my parents struggled to sell our childhood home. They put the house on the market in 2007, right as the housing market was weakening. They carried two mortgages for over a year. I know the housing market has recovered, but still, I like the lower commitment of renting. One of the advantages of renting is that it’s much simpler to break a lease than to sell a house.

2) We’ll End Up With More In The Bank By Renting

For most homeowners, buying a home for a short period of time is a terrible investment.  Often, any increase in the value of the house is offset by the expenses of buying and selling a home. As Derek showed in his recent article on house hopping, buying and selling involves closing costs and realtor fees. Homeowners also pay a substantial amount of interest in the first few years of their mortgage. That’s not even including the cost of home repairs!

As a renter, I pay for some of these costs as part of my monthly rent. However, if the hot water heater breaks in my apartment the year I live in it, my rent doesn’t change. Since I’m not sure how long I’ll stay in a particular city, I’ll end up with more in the bank by renting than by buying a house.

advantages of renting3) Small Apartment vs. the Big House

Even if I was staying put for a few years, I’d still like to rent. I love the small one-bedroom apartment I share with my husband. If my husband and I bought a house, we would want a two or three bedroom house to grow into as a family.

Buying a bigger house requires putting down a larger sum upfront and paying additional interest costs over the life of the loan. And I doubt that the added costs would stop there. With extra space, we would want a few more decorations. Each additional room would cost a little bit extra to heat and cool. One of the advantages of renting is that we avoid all this expense by remaining in our little one-bedroom apartment.

4) Less Time On The House

With my tiny one-bedroom apartment, I spend very little time cleaning and maintaining the place. That’s exactly how I like it. I hate to clean.

Even better, one of the advantages of renting is that I’m not responsible for maintenance! I don’t mow the lawn or trim the bushes. Last month, our shower stopped draining. Even after a bit of fiddling around, my husband and I couldn’t get the shower to drain. We called the landlord and the plumbers came over the same day. This low maintenance lifestyle is exactly what I want at this point in my life.

5) The Best Spot in Town

As renters, we are able to live in the best spot in town at an affordable price. It’s within walking distance to work with near-by parks, restaurants, and entertainment. Since we’re so close to everything we need, we spend more time walking and less time sitting in traffic. We  were even able to sell our second car and plop the funds into our investment accounts.

There’s no way we would be able to afford to buy in this area of town. As renters, we’re able to keep our housing costs at a reasonable level and live in our favorite spot in town.

A Happy Renter

One day, once my husband and I have settled down a bit, we would like to buy a house. Until then, I’ll tuck my savings away and remain a happy renter.

Are you a happy renter? Or do you enjoy owning your own home?

This post has been written by Jenna, our new staff writer who hails from http://pftwins.com! We are happy to have her as part of the team and can’t wait to share with you the content that she has in store. Be sure to welcome her in the comment below!

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Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

10 Comments

  1. Sometimes, I wish I was a renter. Then again, I just finished up a 6-month contract in North Carolina, during which I rented a one-bedroom apartment with my wife. All in all, the experience wasn’t bad, and I made enough money to pay for the apartment *and* my house back home (on which I did a lease to a friend to use it as a teaching studio, which worked out really great).

    This time of road-shopping turned out ok, but the prior time, I got shafted by a shady landlord. But it is a challenge to find good landlords who will go for short-term leases that I need for contracting. Sometimes it works out better to use an extended-stay hotel.

    I do like my 5-bedroom house in an upscale neighborhood, though. I especially like the $700/mo mortgage payment, which is less than the rental on that apartment in NC. But I’ve been here over 15 years, so the 20-year note will soon be paid off, and even that will go away. Eventually, we will downsize and move somewhere more distant from the Big City.
    Howard recently posted..Do You Need WordPress Hosting?

  2. Man, it’s no fun dealing with shady people, especially when it has to do with where you live.

    A $700 mortgage payment? That sounds awesome. I plan to buy eventually when we settle down. The equation quickly tilts toward buying in my area when you live there for 5+ years.
    Jenna recently posted..Brooke’s February Budget Preview

  3. Hi Jenna. Yes, there is definitely a time and place for renting. There are so many people that push college grads and newly married couples into buying a house because it’s a “good investment”. This is not always the case, especially if you don’t know if you’ll live in the area for a long time-frame. Instead, finding a cheap rental above someone’s garage is often the smartest choice financially!
    Derek@LifeAndMyFinances recently posted..Advantages of Renting: Why I Rent Instead of Buy

  4. Having owned a house in the past, I do miss the feeling that a place is truly yours. However, as I’m figuring out a bunch of things in life, renting is probably better right now. Alas, the apartment I am in now was rented based on some promises that weren’t followed through, so I’m now in a legal argument with the landlord. So long as they don’t meet the demands, I pay less, but it seems they are in no great hurry to fix it. Very strange case. It does leave me feeling uneasy. Also there is absolutely no sound insulation in this building, yet as I’ve never had any experience living in an apartment I have nothing to compare it by. Another year left on my contract, hopefully have some clarity by then. Lesson learned: A brand new apartment building may seem to be a safe bet, but it isn’t always so.
    Nina @ RichLife.io recently posted..Cashback could cost you money, here is how to avoid that

  5. I’ve been a homeowner for about 4 years now. I love it and must say I would never want to rent again. We’ve moved once from our old house to our new house, but kept the old house as a rental. Our mortgage is $600/month, for a 3 bedroom house with a yard, and the rents for a small 2 bedroom apartment go for over $800/month. But then again, yes, we did put down about $25,000 downpayment and we do have more expenses with fixing and maintaining the house. If I was in your situation, though, I might want to rent as well, so I can freely move if need be. I think it all depends on the individual situation, there is no right or wrong answer.
    Felix Money recently posted..We’re buying a business!


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