Rent Or Buy

Common wisdom tells us that it is better to buy and own a home than it is to rent. The theory goes that mortgages have the same payment and that after they are paid off, the homeowner is saving a lot of money per month, plus has equity in the home.

What common wisdom doesn't tell us is that homes can often become money pits. Rehabbing or refurbishing rooms can get expensive and time consuming, and doesn't always build value in the property. Some people just aren't very handy, and so repairs are often done by professionals at inflated prices. There is also land maintenance to consider if the property has land. Property insurance is always higher than renter's insurance, and there are also property taxes that have to be paid. Property taxes have to be paid even after the mortgage is paid off, and can go up if the property's value goes up. The homeowner is also responsible for all utilities, which are sometimes covered in rental agreements.

Many who don't like to do maintenance might opt for a condominium which is basically an apartment that is owned, or a townhouse which is a small house usually connected to others in a row. Both of these home types work in what is called an association, which collects monthly maintenance fees in return for taking care of various services, such as lawn maintenance and garbage removal. The maintenance fees have to be paid monthly in addition to any mortgage on the home, and depending on the association can be quite high, especially when compared to an all inclusive rent that is paid by apartment dwellers.

Experts argue that when you pay rent you are lining someone else's pockets, which is true, but when you buy with a mortgage you are lining the bank's pockets for up to thirty years. Not to mention all the other bills you are responsible for.

One of the biggest disadvantages to owning a home is that if you need to move, you need to either sell it or rent it out. Selling in a hurry can be tough, especially in a down market. Renting out isn't an easy task, since landlords are responsible for all the repairs to the property, and for collecting rent from sometimes reluctant or unable tenants.

Apartment renting gives the greatest flexibility to those who might need to move for whatever reason, especially if the renters get a month to month lease. The tenant can move whenever they want, are not responsible for repairs (unless they caused significant damage), and often have heat and water paid for by the landlord. These alone can save the tenant so much that it makes renting better than owning.

In the end, whether it is better to rent or own really depends on the individuals involved. If someone wants to settle down or start a family somewhere, owning a home might well be the better long term option. But for someone who is just starting out in their adventure as an adult, or isn't sure if they want to stay in the area they are in, renting offers significant advantages.