Renting a Home: Pros and Cons
Is it better to rent or buy a home? Answering this question really depends on your lifestyle and priorities. While many people view homeownership as a goal, others might prefer the perks of renting.
Here’s a quick rundown of important advantages and disadvantages of renting:
The Pros and Cons of Renting a Home
|Pros of renting||Cons of renting|
|Flexibility to move at the end of your lease||You aren’t building home equity|
|Cheaper upfront costs||Less control over your living space|
|Not responsible for covering repairs and maintenance||Rent can continue increasing|
|Predictable home expenses each month||You could be evicted|
|No property taxes||Possible restrictions on pets|
Pros of Renting a House
Let’s do a deeper dive into the benefits of renting a home. Here’s a preview: Renting can help you streamline your housing expenses and keep your options open.
Flexibility to move at the end of your lease
Renters aren’t obligated to stick around once their lease is over. You typically have the option to renew your rental agreement, or you can move somewhere else. Some property owners may allow you to go month to month without having to sign another lease.
If homeowners want to move, they need to figure out what to do with the house first. Whether that means selling it or finding a tenant to rent to, homeowners have more work on their hands if they decide to relocate.
Cheaper upfront costs
Renting comes with lower upfront costs than buying a home. You might pay a rental application fee, put down a security deposit, and cover some additional costs — like a pet deposit — to move in. To become a homeowner, however, you’ll need to make a substantial down payment and pay closing costs.
Not responsible for covering repairs and maintenance
As a renter, you generally aren’t required to fix things around the house when they start to break down. Just put in a maintenance request, and the property owner will take care of it. That saves you from the headache of addressing broken home appliances, plumbing issues, and other things.
Predictable home expenses each month
Because you’re not responsible for the varying costs of home maintenance and repairs, your monthly home expenses as a renter are relatively stable. You’re in charge of making rent payments and paying whatever bills aren’t included in the rental agreement. Sometimes, certain utilities may be covered, which further streamlines your monthly expenses.
No property taxes
Homeowners must pay property taxes that are calculated based on the value of their home and the local tax rate. Renters, on the other hand, leave those tax payments up to the property owner.
Cons of Renting a House
Renting a home does come with certain drawbacks. Here are some disadvantages of renting a house.
You aren’t building home equity
One of the biggest downsides to renting is that you don’t get to build equity in your home. Equity is how much the home is worth minus the amount owed on the mortgage. Homeowners build equity by making mortgage payments, or when their home’s value increases. Qualified homeowners can tap into their equity through a cash-out refinance, home equity loan, or home equity line of credit — but renters don’t have this option.
Less control over your living space
When you don’t own the space where you live, you can’t make certain changes without permission. In fact, doing so can violate your rental agreement and land you in hot water with the property owner. This could be a deal breaker for people who want to fully customize their dream home.
Rent can continue increasing
In the year leading up to February 2022, average monthly rent in the U.S. increased by about 15%, according to real estate platform Redfin. Even if you’re staying put, the property owner can still increase your rent once your lease ends. In comparison, having a fixed-rate mortgage on a home would lock in the principal and interest portions of your monthly payment over the life of the loan.
Read More: The Pros and Cons of Buying a Home
You could be evicted
The possibility of eviction can make renting less stable than buying. In general, property owners may evict tenants for different reasons, such as violating the rental agreement or not paying rent. But they can also simply not allow a tenant to renew their lease when it expires.
Possible restrictions on pets
Some properties for rent impose restrictions on the types of pets allowed, or whether you can have a pet at all. This limits housing options for renters whose beloved pets are part of the family.