Buy or Rent – Which is Better?
There are literally zillions of pros and cons that come to mind when discussing whether it is better to be a renter or a home owner, and guess what? There is no right or wrong answer to the question, because each individual’s financial situation and lifestyle preferences are inherently different.
A basic overview of rent versus buy pros and cons can provide guidance, but not answers. The answers can only be found by analyzing these pros and cons within the context of one’s own individual circumstances.
For example, for some people, purchasing a Las Vegas home is out of the question, either temporarily or not ever likely. These persons may have poor credit, low income, have no down payment money and no way to raise money for one reason or another.
On the other hand, there are those renters who are financially stable, have good credit and a healthy bank account, but just don’t want to deal with what they feel are the “hassles” of overall expenses and long-term financial commitment that go hand in hand with home ownership.
Obviously, there are no rights and wrongs here, it just depends on individual circumstances, as well as likes and dislikes.
What are some of the pros and cons of renting or buying?
- Renters have the flexibility to freely change residences without having to sell –once the lease has expired – with moving expenses, first and/or last month’s rent, and a new security deposit constituting the major up-front expenses.
- Renters have limited responsibility for maintenance.
- Renters monthly insurance premiums are much lower than a home owner’s insurance policy.
- Renters can call the landlord to fix a plumbing leak or A/C problem.
- Homes provide a better environment for children.
- Home ownership builds equity over time (when home values are on the rise.)
- Home ownership offers tax benefits (property tax and mortgage interest deductions for example.)
- Fixed rate mortgages offer reasonably stable monthly payments as opposed to annual increases in rental costs.
- Many retirees have paid off their mortgages and are now only responsible for property taxes.
- Renters are never free of monthly payments to the landlord.
- Home ownership offers more privacy and the option of decorating in any way you may choose.
- A mortgage can be considered a “forced savings” in some ways due to the equity build up in the property as the mortgage is paid down. That definition is open to argument, and there is not enough space to cover that subject here.
- Home improvements can increase the value of your investment. Improvements to an apartment can only be made with the landlord’s permission, and would only benefit the renter aesthetically.
So, as you can see, owning or renting is a judgment call if you have the option to buy or not, and if you don’t qualify to buy then there are no options.