The Renting Argument

In an unpredictable real estate market buying versus renting becomes a bigger conundrum than it once was for many people. Because the market is no longer at its peak, Americans are being told buy now! This makes sense for some, but not everyone. For a large portion of Americans, buying now could be the wrong choice. For most, renting does not come with the same sense of pride as buying a home, but when you contemplate the trade offs, you might reconsider.

Renting offers flexibility. While buying is attractive because of the stability, there are many restrictions that go along with it. Renting allows you to move with limited notice and restrictions, but when you own your home you must prepare your home for sale, find an agent, and open your home up to potential buyers, inspectors and appraisers, all of which can be very time consuming.

Renting is affordable. If you use a mortgage calculator on many websites it will make it seem as though a mortgage is easily affordable. The problem is most of them only include principle and interest. A payment of $700 a month seems terrific, that is until you add in insurance, taxes, and maintenance, and in some cases, HOA fees. Not only is homeownership more expensive on a month-to-month basis, but also for the unexpected expenses. A broken water heater, new roof, or backed up plumbing can cost thousands of dollars. Wouldn’t you rather someone else pay for it?

Renting saves you money in the long run. It’s a common misconception that renting is money down the drain because there is no return on your investment like in home ownership. This makes sense to most people, rent is gone forever-no equity. But, if you crunch the numbers you will see it is not that simple. If you are paying $800 a month in rent and $20 in rental insurance you are out $820 a month with no potential return on your money. If you buy a home for $185,000 and pay a mortgage of $1100 a month, $100 for insurance, $250 for property taxes and an average of $250 for maintenance you have spent $1700. Over a typical 30-year mortgage you have spent $214,300 on interest alone, $90,000 in property taxes (assuming no increase), and $90,000 on maintenance. That’s $394,300 over 30 years that did not directly go to paying for your “investment”. If you invested the $880 ( amount saved when renting instead of buying) a month in an investment account yielding 7%, after 30 years you would have over a million dollars. The home owner’s investment, assuming the property appreciates 20% every ten years; it will be worth $319,680.

Amenities are a renting plus. Many apartment complexes have a number of amenities included, while some neighborhoods may have amenities as well, typically they are limited to a communal pool and a small park for the kids which is paid for by the homeowner’s HOA fees (which means added expense). In Phoenix, $650 a month will not only get you a nice two bedroom apartment, but access to a pool and whirlpool, a fitness center, a storage space, lounge, clubhouse and more.

With renting and buying there are pros and cons, it is important to consider your individual needs. The best thing about it, if you do decide to rent and then change your mind and decide buying is a better option for you, you can easily do so. If you buy, then decide it is not right for you, it is much more difficult to get out of your mortgage obligation. Still need help deciding whether renting or buying is right for you? Check out or just type “should I rent or buy?” into any search engine and you will get thousands of sites with helpful tools.

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