Are you thinking of relocating to some other place or want to make a temporary shift for some years? If so, this question might crop up in your mind: “Is it better to rent a house or buy one?”
Actually, it depends upon a lot of things. There’re several pros and cons of renting a house. And at the same time, there’re advantages and disadvantages to buying a house too.
In this article, we will discuss the pros and cons of renting vs buying a house. That way, you can use the method you prefer.
I will first start with renting because about 43.3 million families dwell in rented houses in America.
Renting a House
Renting is a system where you pay a fixed amount of money every month to a landlord or homeowner, to live on their premises. This is usually done through an agreement between you and the homeowner on whose property you would be living.
According to Pew Research, about 65 percent of households living in rental apartments and houses are headed by young adults, aged lesser than 35 years. The figure tapers down as the age increases, indicating that such persons usually buy houses after the age of 35.
Pros of Renting a House
The sheer number of people that rent houses will clearly indicate that rentals are very popular in America. However, in wake of the Covid-19 pandemic and its economic fallout, an increasing number of people have relocated to their parental houses, according to various sources.
Regardless, let’s discuss some of the advantages or pros of renting a house.
Lesser Costs: Lesser costs are one of the main attractions of renting a house. All you need to pay is the rent. If the house requires any maintenance, all you need to do is call the landlord to get the stuff fixed. When you rent a house, you also don’t have to pay property taxes or bear home maintenance costs: these are the responsibility of the homeowner.
Flexibility to Relocate: When you rent a house, you have the flexibility to relocate easily to any other place or dwelling. The only thing you have to do is provide a notice to your homeowner and move. There’re no strings attached that you need to continue dwelling there. Even if you don’t like the house after a few weeks, you’re free to find another place.
Low Initial Costs: If you’re going for a housing loan- commonly known as a mortgage- there’re several fees involved. These include processing fees and a downpayment on the house that you intend to buy. In renting, no such costs are involved. That means, even if you don’t have much money to spare, you could still rent a house as long as you can afford the rent. At best, you might have to spend about $150 for the lease agreement and other documents.
Wider Choices: There’re countless houses available for rent. That means you can choose anyone that suits your tastes and is situated in a convenient location that could be nearer to your workplace. You can choose an apartment or a portion of a house to rent. Also, you have the flexibility to find a house within your budget and if necessary, bargain the rent where possible.
No Long-Term Commitments: When you rent a house, it’s a temporary agreement only. There’re no long-term commitments that you have towards that house or the homeowner. Meaning, you’re free to switch your house or move to another place at will. Such an absence of commitment makes it easier for you to find a place that suits your tastes, if necessary, or even look for cheaper or expensive places.
Cons of Renting a House
At the same time, there’re several cons of renting a house too. You’ll have to consider these carefully before you decide on renting a house.
Notice Periods: One of the greatest disadvantages of renting a house is the notice period. Your landlord can decide they don’t wish to rent the house anymore and serve you a notice to vacate it. In such a situation, you’ll have no option other than to move out. This leads to temporary issues since you’ll have to bear the hassles of finding a new place to live.
Rent Increases: In a rented property, the landlord calls the shots. They can increase your rent for any reason. In such cases, you have only two choices- pay the extra money or serve a notice and move out. And none of these choices are pleasant since one means an additional burden on your income while the other entails the hassles of looking for another place.
Lost Money: The money you pay as rent is lost to you. Instead, it goes to the homeowner’s pockets. You don’t get anything permanent from the rent that you’re paying. And this amount you pay as rent sums up to a considerable one at the end of a year.
No Customization: Meaning, you can’t customize a rented house to your liking. You’ve to accept the décor and arrangement of things at the house, as provided by the landlord. At best, you might be able to change drapes or curtains at your own expense and that too, temporarily. There’s also no sense of permanence when you live in a rented house.
Now that you know the pros and cons of renting a house, let’s study those of buying your own house. That should give you a clearer idea of which one to prefer.
Read also: 9 Cheapest Places to Live in the USA
Buying a House
Generally, buying your own house is the dream of every person on this planet, unless you’re living among some tribe in a forest where there’re no permanent dwellings. At the same time, there’re several pros and cons of buying your own house too. Here I will list the pros and cons of buying own home.
Also read: Things to consider while building a house.
Pros of Buying a House
Owning a house, as I mentioned earlier, is a dream. And most people with a decent enough income actually do buy a home at some point in time during their life.
Sense of Permanence: If you want to know one reason to buy a home instead of renting a home, then this is an important one. You get that deep sense of permanence when you own a house. For many people in America, buying a house is a sort of lifetime achievement. After all, you would be working hard to pay the mortgage. Therefore, a house serves as your permanent location and address for all legal purposes.
Ability to Have Own Décor: Nobody can stop you from decorating your home and garden in a manner that you love. It's your property and nobody else’s permission is necessary if you’re going for some superb interior décor. However, some permits may be necessary if you’ll be changing some important structures of the house.
Home as an Investment: The amount of money you’re paying doesn’t go waste. As a matter of fact, the mortgage installments serve as your investment. That’s because the prices of real estate are always on the rise, even despite occasional slumps due to issues in the national economy such as the one we noticed during the Covid-19 pandemic.
Possibility to Upgrade: If you want to have a better house after some years, you could do that easily and yet be in profits. That’s because as the owner of the house, you’re free to sell it anytime when the market prices are higher. And buy a bigger, better one for the same cost in another area.
Your Retirement Home: After retirement, you might not be able to afford the rent of a house. But when you have your own home, you don’t need to worry about the rent and other related expenses. The same house can serve easily as your retirement home and your biggest investment too. And you needn’t worry about being homeless during those golden years.
Cons of Buying a Home
However, all that glitters isn’t gold. Buying a house also comes with its own set of cons. Therefore, I will discuss some of the main disadvantages of owning a house.
Taxes and Other Expenses: As a homeowner, you’re responsible to pay taxes and bear all other expenses related to its maintenance. This can work out to a considerable sum of money every year unless your house doesn’t require much maintenance.
Ability to Make Money: You can make some money by leasing out a room at your house through Airbnb or to other tenants. Since it is your property, you have all the rights to accept a tenant or give a room or part of the house on rent on a short-term or long-term basis. The rent you get can go towards repayment of the mortgage.
Relocation Becomes a Hassle: If you’ve to relocate to another place permanently for any reason, you might find owning a house becomes a hassle. You would have to sell it through a real estate agent and get the money before buying another home at the place you’re moving.
Long Term Financial Commitment: A mortgage taken for a home is a long-term financial commitment. And you have to ensure that your mortgage dues are paid on time to avoid default so that it doesn’t damage your credit score. Owning a house and not paying the mortgage can lead to foreclosures and lead to you becoming homeless.
Huge Upfront Expenses: For many people, buying their own house becomes impossible because they don’t have the money to pay upfront as downpayment and other expenses. Thankfully, there’re ways to overcome this problem nowadays, but it’s not possible for everyone.
What Should You Prefer?
The above paras describe the pros and cons of both renting and buying a house. As you can see the pros and cons are almost similar. Therefore, whether to buy a house or rent one is your decision.
However, in my humble opinion, I would prefer to buy a house. Because it gives that sense of permanence that we always look for. And the money gets invested in our own future instead of that of another homeowner when we rent one.
Renting a house is fine as a temporary solution if you’re working and need to stay in another place for a year or two. At the same time, you should also exert extra effort to buy your own home. It means you’ve to maintain a superb credit score and save some money to pay upfront as a downpayment for your own home.