Do you need to find somewhere for you and your family to live in the near future? If so, you’re going to have two main options: You can either rent or buy a house.
Many experts will tell you that buying a home is always better than renting a home. Some of them have gone as far as to put together long lists of scientific reasons why buying a house is a wiser decision than renting a house.
But you should still have the renting vs. buying a house debate before deciding in which direction you want to go. Because the truth is that there are lots of pros and cons for both of these options.
Today, we’re going to lead you through the many pros and cons of renting vs. buying a house. It should help you to decide on which side of the fence that you fall.
Continue reading to learn more about renting vs. buying a house.
The Pros of Renting a House
The idea of renting vs. buying a house sometimes gets a bad rap. As we alluded to a moment ago, there are real estate experts who will talk down on renting and make it sound like an awful idea.
But we would like to kick things off here by discussing the benefits of renting a house vs. buying one. There are quite a few of them that you should consider before deciding not to rent a house. Here they are.
- Your Monthly Costs Will Be Very Predictable
When you rent a home, the owner of it will tell you exactly what you’ll be responsible for paying them every month. You’ll sign a lease that will list your rent along with any other expenses that you’ll be responsible for (electric, cable, etc.).
Your lease will give you a very good idea as to what you’ll have to shell out every month to live in a house. You’ll appreciate the predictability of it.
You won’t get this same predictability when you buy a house. As the owner of a house, you’ll be in charge of paying the mortgage every month. You’ll also have to pay for things like utilities.
But you might also face surprise expenses some months. For example, you might have to pay $10,000 (or more!) for a roof at some point if yours fails.
You aren’t going to have to concern yourself with these types of expenses when you rent a house. All you’ll need to do is make sure the rent is in the mail at the start of every month.
- You Won’t Have to Worry About a House’s Value Declining
Many people will tell you that buying a house is a great investment. But if a house’s value declines from the time that you buy it until the time that you sell it, it could actually put you in a tough spot. You might end up losing money in this kind of deal.
As a result, many homeowners spend a lot of long, sleepless nights worrying about their house’s value declining. This isn’t something you’ll need to do when you rent a house.
If a house’s value suddenly shoots up because the part of town you’re renting in becomes very desirable, that could prove to be a problem for you. It could lead to you having to pay a higher rent later on.
But generally speaking, you aren’t going to have to spend much time worrying about the value of a home that you’re renting. Your landlord will do plenty of worrying for the both of you.
- You’ll Be Able to Move at the End of Your Lease If You Want
A lot of people who prefer renting vs. buying a house have come to appreciate the freedom and flexibility that it gives them. If they ever want to move, they’re more than welcome to do it at the end of their leases.
You aren’t going to be tied to any one house at any point. It’ll be a nice feeling to have if you’re someone who likes to move around.
The Cons of Renting a House
As you’ve seen, there are many advantages that you’ll get when renting a house. But there are also some downsides of which you should be aware.
Prior to signing a lease and renting a house, you should discover more about the disadvantages of doing it. Here are a few of them.
- You Won’t Be Able to Earn Any Equity in a House
While you’re renting a home, you’ll have to pay rent at the start of every month. In some cases, your rent might be more than $1,000 depending on where you live.
That money will earn you the right to live in your rental for another month. But that’s pretty much all it will earn you since you won’t get any equity in the house in return for your hard-earned cash.
This might not bother you too much when you’re in your 20s or even your 30s. But when you look back at how much rent you’ve paid throughout your life when you’re in your 40s, 50s, and 60s, you might wish that you had taken all that money and used it to invest in a house.
- You Might Be Forced to Face Unexpected Rent Increases
Once you sign a lease, your monthly rent will be locked in for a year. Your landlord can’t just wake up one day and decide that they want to jack your rent up just because.
But when your lease expires, your landlord is allowed to make your rent whatever they want. Unless you happen to have a rent-controlled house, you could be subjected to unexpected rent increases.
Most landlords won’t raise your rent for no reason. But it does happen, and it could put you in a bad position if you don’t have any other living arrangements worked out.
- You May Be Asked to Leave If the Owner of a House Decides to Sell It
In addition to worrying about unexpected rent increases, you’ll also have to live in fear of your landlord selling their house at some point when you’re renting it. They can put it on the market and ask you to move out if they would like.
Some landlords are nice enough to work with their tenants in these situations and allow them to stick around. They’ll even sometimes talk to whoever is buying their house and convince them to let you be their tenants.
But there is always a chance that you might have to leave a home when the owner of the house decides to sell it. It could really throw a monkey wrench into many of your plans.
The Pros of Buying a House
Now that you know more about the pros and cons of renting a house, it’s time to move on to talking about the pros and cons of buying one.
First up, we’re going to dive headfirst into discussing the benefits of purchasing your own home. Here are several reasons why you might want to consider doing it.
- You’ll Get the Chance to Build Up Equity in a House
From the moment that you take ownership of a home, you’ll get the opportunity to build up equity in it. Every time you make a mortgage payment, you’ll own a bigger piece of your home. The same goes for every time that the value of your home goes up.
You could, of course, also find yourself in a spot where you have negative equity in your home. This occurs when the value of a home drops below what someone still owes on it.
But as long as you buy a house in the right neighborhood at the beginning, you should be able to build up positive equity from the start. It’s easily the biggest benefit of buying a house.
- You’ll Earn a Tax Deduction
Another big benefit of buying a house vs. renting one is that you’ll get a tax deduction at the end of every year. You can write off your mortgage interest on your income taxes.
This might not help those who claim the standard deduction on their taxes. But if you list itemized deductions, it could end up saving you a pretty penny on your taxes. It’ll be a nice little perk that comes along with homeownership.
- You’ll Be Able to Hang On to a House and Use It as an Investment
One day down the line, you might decide to move out of a house after buying it. But you don’t necessarily need to sell it if you don’t want to.
You could also choose to hang on to it so that you can use it as an investment. You can rent it out to someone else and generate income with it every month.
You should learn the ins and outs of real estate investing before you even think about doing this. But it’ll be nice to know that this could potentially be an option for you.
The Cons of Buying a House
While buying a house definitely has its advantages, it’s not without its downsides. Just like with renting a house, you are going to have to deal with some things that you won’t love when you buy a house.
It’ll be up to you to decide if the pros of buying a house outweigh the cons. Here are some of the cons that you’ll have to consider.
- You’ll Need to Pay Property Taxes and Cover Home Insurance Costs
You’ll need to pay more than just a mortgage every month to live in a house that you own. You’ll also need to get your property taxes squared away and cover home insurance costs.
Depending on where you live, your property taxes and home insurance costs could be just as much as your mortgage. This is something that could cripple your finances if you’re not careful.
- You’ll Be in Charge of Maintaining and Repairing Everything in a House
When you rent a house and something goes wrong with it, you can call your landlord and have them fix it. But when you buy a house and experience a problem with it, it’ll be your job to get things fixed.
From your roof and your foundation to your HVAC system and your plumbing, you’ll have to make sure that everything is working at all times. It can be a lot of responsibility.
- You’ll Have to Worry About Updating a House Every So Often
Technically, you don’t have to update a house after buying it at any time. You can keep it as-is if you would like.
But after a decade or so, your house is going to begin to look outdated. This will be especially true if you’re surrounded by neighbors who are always working on their homes and improving them.
This could cause your home’s value to plummet. So you’ll likely want to stay on top of making the necessary updates to it.
The only problem with this is that it’s going to mean that you’ll have to shell out a significant amount of money to do it. It’s one more thing that you’ll have to deal with after buying a house.
Renting Vs. Buying a House: Which Would Be Best for You?
There are some people who spend their entire lives renting houses and love it. There are others who buy houses as soon as they can and never go back to renting again.
Only you can decide where you stand on the renting vs. buying a house debate. You should give it some serious thought and see where you stand after doing it.
Either way, you should go with the option that makes you the most comfortable. You’ll sleep better at night knowing that you made the right decision.
Get more essential renting and home buying tips by checking out the rest of the real estate articles found on our blog.