Posted on March 18, 2022

1) No Maintenance Costs or Repair Bills

One of the benefits of renting a home is that there are no maintenance costs or repair bills. This means that when you rent a property, your landlord assumes full responsibility for all maintenance, improvement, and repairs. If an appliance stops working or your roof starts to leak, you call the landlord, who is required to fix or replace it.

Homeowners, on the other hand, are responsible for all home repair, maintenance, and renovation costs. Depending on the nature of the task (and whether multiple jobs pop up at the same time), it can get quite pricey.

2) Access to Amenities

Another financial benefit of renting is having access to amenities that would otherwise be an enormous expense. Luxuries such as an in-ground pool or a fitness center come standard at many midscale to upscale apartment complexes with no additional charge to tenants.

If a homeowner wanted to have access to these amenities, they would likely have to spend thousands of dollars for installation and maintenance. Condo owners aren't exempt from these costs either. These expenses are rolled into their homeowners association (HOA) fees, which are due on a monthly basis.

3) No Real Estate Taxes

One of the major benefits of renting versus owning is that renters don’t have to pay property taxes. Real estate taxes can be a hefty burden for homeowners and vary by county. In some areas, the costs associated with property taxes can amount to thousands of dollars each year.

Although property tax calculations can be complex, they are determined based on the estimated property value of the house and the amount of land on which it's built. With new constructions getting larger and larger, property taxes can be a significant financial burden to homeowners.

4) No Down Payment

Another area where renters have a better financial deal is the up-front cost. Renters generally have to pay a security deposit that is equal to one month’s rent. And that's usually all. This deposit is theoretically returned to them when they move out, provided they haven’t damaged the rental property.

When purchasing a home with a mortgage, you’re required to have a sizable down payment—typically around 20% of the property’s value. Of course, that down payment results in having equity in the home, which only increases as the mortgage is gradually paid off. And once you own a home free and clear, you have a valuable investment that renters never attain.

Still, the amount needed for a down payment on a home is significantly more than a rental security deposit. A 20% down payment on a house with a market value of $200,000 is $40,000. The average apartment rental in Manhattan, one of the most expensive places to live in the U.S., was $4,801 in July 2020.1 Those who don’t have money for a down payment are better off renting.

5) More Flexibility As To Where To Live

Renters can live practically anywhere, while homeowners are restricted to areas where they can afford to buy. Living in an expensive city such as New York may be out of reach for most home buyers, but it is entirely possible for renters. Although rents can be high in areas where home values are also high, renters are more apt to find an affordable monthly payment than home buyers.

Original article: https://www.investopedia.com/financial-edge/1112/reasons-renting-is-better-than-buying.aspx