There are many benefits to renting a home, and in this guide we will explore them all. Whether you are a first-time renter or you have rented before, there is always something new to learn. We will answer some of the most common questions people have about renting, such as how it compares to buying a home and what the benefits are. So whether you’re just starting out on your rental journey or you’re looking for ways to improve your current situation, read on for everything you need to know about the benefits of renting!
How Renting is Different From Buying a House?
At some point, most people ask themselves whether they should buy or rent a home. For some people, the answer is obvious. They have the means to buy a home outright, or they plan to stay in one place for a long time so buying makes more sense financially.
For others, the answer is less clear. Maybe they’re not sure how long they’ll stay in one place. Maybe they don’t have the money for a down payment or their credit isn’t good enough to qualify for a mortgage. Or maybe they just don’t want the hassle of owning a home.
Renting has become increasingly popular in recent years as more and more people find themselves in these situations. Renting a home is when you agree to live in someone else’s property for a set period of time, usually in exchange for monthly payments. The agreement is typically made between the tenant (you) and the landlord or property owner.
For instance, your landlord cannot just raise your rent without giving you notice or kick you out without cause – unless it’s specified in your lease agreement. And, as a tenant, you’re responsible for paying rent on time and taking care of the property while you live there.
Below we will highlight the main benefits of renting a house to help you make your decision. We will cover both financial and non-financialreasons why renting might be the right choice for you.
Financial Benefits
First we’ll explore the financial benefits of renting. Many people believe that buying a home is always the better financial decision, but that’s not necessarily true.
You won’t have to worry about repair bills
One of the biggest financial advantages of renting is that usually you don’t have to pay for repairs or maintenance on the property. That means if something breaks, it’s up to your landlord to fix it. And if there are any major repairs or renovations needed, your landlord is responsible for footing the bill.
This can be a huge relief, especially if you’re living on a tight budget. When you’re a homeowner, you’re responsible for all of the repairs and maintenance on your property. If your furnace breaks in the middle of winter, it’s up to you to pay to have it fixed. Faulty plumbing that needs to be replaced can also be expensive, but you wouldn’t have to pay for it if you’re renting. Unexpected repair bills can be a real strain financially, but as a tenant you don’t have to worry about them.
Of course, it’s still important to take care of the property while you’re living there. If you damage something, you may be responsible for repairing or replacing it – so it’s not like you can just live however you want without consequence. But overall, the financial burden of maintaining a rental property is much lower than owning a home. [1]
You won’t need to manage property taxes
Another financial benefit of renting is that you don’t have to manage property taxes. Property taxes are one of the biggest expenses associated with owning a home, and they can really add up over time.
In most cases, your landlord will factor property taxes into your monthly rent payments. That means you’re still paying them, but you don’t have to worry about budgeting for them separately. And, since your landlord is responsible for the property taxes on the rental unit, they may be able to get a tax break – which could mean lower rents for you in the long run. But this is typically a smaller amount than what you would pay if you owned the home yourself. [2], [3]
Rent amount is usually fixed
When you’re a tenant, your monthly rent payments are usually fixed. That means that your housing costs will be the same every month for the duration of your lease – barring any unforeseen maintenance or repair costs.
On the other hand, when you own a home, your monthly mortgage payments can go up or down depending on interest rates. Of course, even as a tenant your rent will likely increase each year as property taxes rates go up but, typically, the amount is fixed for longer periods of time than a mortgage.
Renting can provide more stability and predictability when it comes to budgeting for housing costs each month. And that can be a big plus, especially if you’re living on a tight budget. [3]
You won’t have to pay down payments or closing costs
When you buy a home, there are a lot of upfront costs that you have to pay. For starters, you have to come up with a down payment, which is usually around 20% of the purchase price. So, if you’re buying a $200,000 home, that’s $40,000 that you need to come up with before you even start making monthly mortgage payments.
On top of the down payment, there are also closing costs. These are the fees associated with finalizing the sale of the home and can range from around 0.50% to as high as five percent of the total loan amount. So on our $200,000 home example above, closing costs could be anywhere from $1000 up to $10000.
These are just a few of the upfront costs associated with buying a home. As you can see, they can add up quickly – especially if you don’t have a lot of money saved up.
With renting, there are much lower upfront costs. In most cases, all you need is the first month’s rent and a security deposit, which is typically equal to one month’s rent.
Of course, there may be other smaller fees associated with renting – like application fees or pet deposits – but they pale in comparison to the costs of buying a house. [1], [2], [3]
Low insurance cost
The landlord is responsible for most of the insurance on a rental property. That means that, as a tenant, you don’t have to worry about things like homeowners insurance or flood insurance. This can save you hundreds or even thousands of dollars per year depending on your location and the type of property you’re renting. [2], [3]
Non-financial benefits
Now that we’ve covered some of the financial benefits of renting, let’s take a look at some of the non-financial benefits. Renting a house is not only cheaper than buying, but it also has a multitude of other benefits.
Flexibility
Renting a home provides a lot of flexibility that owning does not. For starters, you’re usually only committed to a one-year lease – sometimes even less. So if your job situation changes or you need to move for any other reason, it’s much easier to do so when you’re renting.
On the other hand, if you own a home, selling it and moving can be a long and complicated process. It can take months – sometimes even years – to find a buyer. And even then, there’s no guarantee that the sale will go through.
Similarly, it’s also easier to up-size when you’re renting. If you get a new job that pays more money or have another source of income come in, you can easily find a bigger rental unit that fits your needs and budget.
Renting also gives you the opportunity to try out different neighborhoods or areas before committing to buying a home there. This can be especially beneficial if you’re new to an area and are not sure where you want to live long-term. [1], [3], [4]
You gain access to amenities
When you’re a homeowner, you’re responsible for maintaining the property and all of the amenities that come with it. This includes things like mowing the lawn, shoveling snow, painting, and repairs. When you’re a renter, all of these responsibilities fall on the shoulders of your landlord.
In addition to not having to worry about maintenance, renters also have access to amenities that they wouldn’t otherwise be able to afford. For example, you may be able to rent a large house or a house with a pool, tennis court or a fitness center – something that would be out of your price range if you were trying to buy.
Of course furniture is another big one. When you’re a renter, you don’t have to worry about filling your home with furniture. You can simply rent furnished apartments or homes and have everything you need included. This is especially helpful for people who are moving to a new city and don’t have the time or money to buy furniture. [2], [3], [5]
Disadvantages of Renting a House
As you can see, there are quite a few advantages to renting a house. However, it’s not all good news. There are also some disadvantages that you should be aware of before making the decision to rent.
Landlord may increase rent anytime
One of the biggest disadvantages of renting a house is that your landlord can increase the rent at any time. Even if you have a good relationship with your landlord, they are still free to raise the rent as they see fit. This can be a problem if you’re on a tight budget and can’t afford to pay any more than you already are. In fact, in some states, landlords can even increase the rent if you get a pet or have a child.
Of course, this doesn’t mean that your landlord will necessarily increase the rent. But it’s something to be aware of – especially if you’re on a tight budget.
Landlords may set strict policies
When you’re renting a house, you usually have to adhere to the rules and regulations set by your landlord. This can include things like quiet hours, pet policies, and parking restrictions. And if you break one of these rules, your landlord may have the right to evict you from the property.
So if you’re someone who likes to party or has a lot of friends over, renting may not be the best option for you. Similarly, if you have a pet that doesn’t fit the landlord’s policy, you’ll either need to find a new home for your pet or look for a different rental unit.
Before signing a lease, be sure to read through all of the rules and regulations set by your landlord. That way, you’ll know what you’re getting into and won’t be surprised by any unexpected rules. [4]
Lack of freedom
Another downside of renting is that you usually don’t have much say in how the property is managed. If something needs to be fixed, you have to wait for the landlord or property manager to do it. And, if they don’t do it in a timely manner, you’re stuck waiting.
Similarly, if there are changes that you want to make to the property – like painting or adding new furniture – you’ll need to get permission from your landlord first. And in some cases, they may not allow it. This can be very limiting and make it difficult to personalize your rental unit to fit your needs and taste. So, if you’re someone who likes to put your own personal touch on things, renting might not be the best option for you.
Lack of sense of community
When you live in an apartment complex, there’s usually a sense of community. People wave to each other in the halls, know each other’s names, and may even have parties or get-togethers from time to time. But when you’re renting a house, it can be very isolating.
Unless you make an effort to get to know your neighbors, you’ll probably never see them. And even if you do become friends with them, there’s always the chance that they’ll move away at some point – leaving you alone again. So if you’re someone who likes having a sense of community, renting a house may not be the best option for you. [4]
Comparison of Benefits of Renting a Home
Renting a home offers numerous advantages, providing individuals with flexibility and convenience without the long-term commitment associated with homeownership. This table presents a comprehensive comparison of key indicators that highlight the benefits of renting a home. The data is presented in the imperial system for ease of understanding.
| Indicator | Renting a Home | Homeownership |
|---|---|---|
| Initial Cost | $X (Security Deposit) | $X (Down Payment) |
| Monthly Payments | $X (Rent) | $X (Mortgage) |
| Responsibility for Repairs | Landlord | Homeowner |
| Property Taxes | N/A | $X/year (Average) |
| Flexibility | Can easily relocate | Difficult to move |
| Building Equity | N/A | Build equity over time |
| Insurance | Tenant’s Insurance | Homeowner’s Insurance |
| Property Maintenance | Landlord’s Responsibility | Homeowner’s Responsibility |
This table compares the benefits of renting a home versus homeownership across several important indicators. Here’s an explanation of each indicator:
- Initial Cost: Renting typically requires a security deposit, while homeownership involves a larger down payment.
- Monthly Payments: Rent is a monthly expense for renters, while homeowners have mortgage payments.
- Responsibility for Repairs: Renters have the advantage of having the landlord responsible for repairs, whereas homeowners are responsible for their own repairs.
- Property Taxes: Renters are usually not responsible for property taxes, whereas homeowners must pay property taxes annually.
- Flexibility: Renters have the flexibility to easily relocate when needed, while homeowners face more challenges when moving.
- Building Equity: Homeownership allows individuals to build equity over time as they pay off their mortgage, whereas renting does not provide this opportunity.
- Insurance: Renters typically need to have tenant’s insurance, while homeowners require homeowner’s insurance.
- Property Maintenance: Renters are not responsible for property maintenance as it falls under the landlord’s responsibilities, while homeowners must handle their own property maintenance.
This table aims to provide a clear overview of the benefits that renting a home offers in comparison to homeownership, helping individuals make informed decisions about their housing options.
FAQ
Can a landlord raise my rent?
Yes, a landlord can raise your rent, but they must give you proper notice (usually 30 days) in writing and cannot do so more than once per year. Additionally, the amount of the rent increase cannot be arbitrary – it must be in line with local market trends.
Is renting cheaper than buying a house?
The simple answer is yes, in most cases renting is cheaper than buying a house. When you rent a property you are only responsible for paying the monthly rent, whereas when you own a property you have to pay for mortgage repayments, insurance, council tax, and other associated costs. This means that over the course of a year, renting will usually cost you less than owning a home.
What are the advantages of renting a home?
Renting a home offers several benefits, including:
- Flexibility: Renting provides flexibility as you can easily move to a new location or upgrade to a larger space without the commitment of a long-term mortgage.
- Lower upfront costs: Renting typically requires a smaller upfront payment compared to buying a home, as you usually need to pay a security deposit and possibly the first month’s rent.
- No property maintenance responsibilities: One of the significant advantages of renting is that you are not responsible for property maintenance. The landlord or property management company is responsible for repairs and upkeep.
- Amenities: Many rental properties offer amenities such as swimming pools, fitness centers, and communal spaces, which you can enjoy without the additional cost and effort of maintenance.
- No property value risk: Renters do not have to worry about fluctuations in the housing market or the potential of their property losing value.
Does renting a home provide financial flexibility?
Renting a home can offer financial flexibility in several ways:
- Lower monthly expenses: Renting often results in lower monthly costs compared to owning a home. While you pay rent, you are not responsible for property taxes, homeowner’s insurance, or costly repairs.
- No down payment: Unlike buying a home, renting does not require a substantial down payment, allowing you to allocate your savings towards other financial goals or investments.
- Opportunity to save: Renting can provide an opportunity to save money, especially if the rental costs are lower than what you would spend on a mortgage, property taxes, and maintenance expenses associated with homeownership.
- Investment flexibility: By renting, you can potentially invest your savings in other avenues, such as stocks, bonds, or starting a business, rather than having your capital tied up in real estate.
Are there advantages to renting for short-term or temporary living situations?
Absolutely! Renting is ideal for short-term or temporary living situations due to the following reasons:
- Flexibility: Renting allows you to have more flexibility in terms of lease duration. You can opt for shorter lease terms, usually ranging from a few months to a year, making it convenient if you expect to relocate soon or have uncertain plans.
- No long-term commitment: Renting does not tie you to a long-term mortgage, providing the freedom to move without the hassle of selling a property.
- Less financial risk: In short-term living situations, renting is often more financially viable since buying a home and selling it shortly after might result in additional costs and potential loss due to transaction fees and market fluctuations.
- Avoiding furniture expenses: Renting a furnished apartment or home can save you the cost of buying furniture for a temporary stay.
Can renting a home be beneficial for people who value convenience and minimal responsibilities?
Absolutely! Renting offers convenience and minimal responsibilities, making it a great option for those who prefer a hassle-free living arrangement:
- No maintenance duties: As a renter, you are not responsible for property maintenance. The landlord or property management company takes care of repairs and upkeep, saving you time, effort, and potential costs.
- Easy budgeting: Renting allows for more predictable monthly expenses, as you typically pay a fixed
rent amount without unexpected costs for major repairs or renovations.
- Access to amenities: Many rental properties provide amenities such as gyms, laundry facilities, or even concierge services, offering added convenience and luxury without the need to manage or maintain these amenities yourself.
- Location choices: Renting allows you to choose a desirable location that aligns with your lifestyle and needs. You can select a home near your workplace, in a vibrant city center, or in a specific neighborhood without the commitment of long-term homeownership.
Useful Video: Renting Vs Buying A Home In 2022 (What They Don’t Tell You))
Conclusion
As you can see, there are both advantages and disadvantages to renting a house. It’s important to weigh all of these factors before making a decision. Still, renting a home is a much cheaper and hassle-free option than buying a home. Not only that, but it also gives you the flexibility to move if you need to. Renting has its pros and cons, like anything else. But if you’re on the fence about whether or not it’s the right choice for you, hopefully this guide has helped clear things up. If you do decide to rent, be sure to do your research and find a reputable landlord who will treat you fairly. Thanks for reading!
References
- https://veritasbuyers.com/which-best-describes-the-benefits-of-renting-a-home/
- https://www.investopedia.com/financial-edge/0411/7-homeowner-costs-renters-dont-pay.aspx
- https://www.investopedia.com/financial-edge/1112/reasons-renting-is-better-than-buying.aspx
- https://www.investopedia.com/articles/personal-finance/083115/renting-vs-owning-home-pros-and-cons.asp
- https://www.realized1031.com/glossary/amenities