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Pros and Cons of Renting: Now that you know the things to consider when deciding what housing will fit your needs, lets take a look at the pros and cons of renting versus buying. Renting has advantages for most people at some point in their lives. This is especially true when you are starting out on your own as a young, single adult. As we noted above, renting an apartment involves no responsibility for repairs, maintenance, and other aspects of home ownership that can be both costly and time-consuming. Rental complexes may also provide many of the recreational facilities you would like, such as a swimming pool and tennis court. Apartments and other rental units often provide laundry facilities, which would save you the initial expense of purchasing laundry equipment.
Another major advantage of renting is that it doesn't require a large outlay of cash. Most rentals require a security deposit (usually equal to 2-3 month's rent), but that is much less than is normally needed for a down payment when buying a home. Monthly cash costs may also be reduced, as utilities may be included in your rent payment. There are, of course, disadvantages to renting. Some were mentioned in the section on "housing needs." Can you identify those? List them here: A major disadvantage of renting is lack of control over the property. The owners/managers of the property are responsible for repairs and general upkeep; if they do not do this well and promptly, you might be stuck with unpleasant (or even unsafe) living conditions (from leaking faucets to broken windows) for some period of time. Property owners can raise the rent (with proper notice), making your costs higher. They can also put restrictions on the property, such as not allowing children or pets, and not permitting you to do redecorating. Renting also provides no tax or equity benefits for you. Although you are helping pay the owner's property taxes through your rent, you cannot claim any deduction for these taxes on your tax return. The owner is also gaining equity in his/her property, but you are not. Equity is increased value in any property you own. But, as a renter, you are not building any equity. |
Another advantage of renting is that it provides more mobility or flexibility. As a young person, you are more likely to move rather frequently due to job changes and family changes (getting married, having children), etc. It is easier to move quickly when you are renting, because leases for rentals are easier to get out of than selling a home. A lease is a contract between the landlord and the tenant indicating that the tenant has the right to use a particular living unit for a period of time, such as one year. For this right, the tenant promises to pay the landlord a specified amount of rent over the period of time of the rental. Most leases will allow you to "buy out" of the lease by paying a penalty (often an additional 1-2 month's rent) if the lease is not up when you want to move. In some cases, the landlord will require no additional rent when you move out early if another renter suitable to the landlord is found who will assume your lease. Selling a home when you decide to move is usually a much longer process-taking months and sometimes years. The length of time depends on a number of factors including the available supply and demand for homes in an area and the relative demand for the type of house that you put on the market. For example, if you own a two bedroom older home, and that type of house is not currently popular in your area, your house will likely not be sold very quickly.
