The renting vs. buying debate is one of the eternal points of contention in the real estate industry. As subjective as the issue is, there are several advantages to renting a house. Now, don’t get me wrong. This isn’t to say that everyone should be renters. For sure, there are certain situations in which owning a house is the better option. Over the long-term, it might even be a better investment in some cases.
Do you know what the operative word there is though? LONG-TERM.
That’s right. Owning a house usually means decades of commitment towards a mortgage. In a world that is increasingly connected, you’re not confined to one location any more.
What does that mean? Your dream home might not be your dream home in five years. But guess what, you’ll still have to pay for the house for a decade after you’ve grown tired of it.
In addition, there are certain hidden costs to owning a house.
• Remodeling – You’ll have to take up cosmetic beautification projects to keep your house looking like it used to.
• Maintenance – Yes, leaky ceilings and faulty plumbing won’t fix themselves for free.
Well, you might say, owning a home is an asset. If I don’t like it, I can always sell it and move on.
Yes, both of those things are true. But consider this – what if your property depreciates after you’ve bought it? What if the sale prices you get for your property can only buy you a smaller one 5-10 years down the line?
Here’s another scenario for you. Say you grow tired of the hustle and bustle of the city and just want to go live someplace quiet for a while. Maybe you’ve always fancied a calmer, more greenery-filled place. But, you can’t just get up and leave, because EMIs. OK, so you have to postpone your move for some time until you can sell your property or find a renter.
Here’s the exact opposite of that scenario. Suppose you’re an ambitious person who wants to live in the big city where all of the opportunities and movers and shakers are. OK, so what do you do? If you’ve been living in a low-end real estate area, selling your home won’t get you enough to buy a home in the city. On the other hand, maybe if you postpone your move to the city by another couple of years, you may lose the opportunity that exists right now.
Are you beginning to see the benefits of being a renter now? Let’s talk about some more.
Flexibility of location – Most rental leases last for a year or two. That’s it. If you don’t like the place when your lease is up, you just leave.
Less debt and EMI – You don’t have an EMI eating up a giant part of your monthly paycheck each month. Rent is usually less than what an EMI would run you. And, if your rent is running a bit too high for your liking? You just move to someplace cheaper.
Cheaper maintenance – Painting your house? Fixing the hole in the wall? You don’t have to do it. Your landlord will pay to get it done.
The mindset – Look, I know you’ve heard the cliché “The world is a large place.” And guess what, it really, really is. When you’re a renter, you have the option to try living in different places to see which one fits your vibe. If you have an online business, you can even move to another part of the country for a few months. Maybe you want to try living closer to the beach next year? DONE.
So, this might have seemed like an anti-home-buying article, but it really isn’t. There’s no clear winner here. Depending on your circumstances, you could choose one or the other. If you’ve got the money to afford it comfortably, sure, go ahead and buy a house. If you’re trying to find your place in the world or just don’t want to be confined to one geographical location, you might want to consider renting.