It is a major decision whether to rent or buy the place in which you live. It does not just affect how much money you have left at the end of the month; thus it also affects your lifestyle and the size of the savings you accumulate over the years. Every day people buy homes when financially they would be better off renting, because it is also important to them to have a place to put down roots and because they see buying a home as an investment that can grow in the long run. Similarly, people rent all the time for the flexibility and minimal responsibility it offers, even though they would amass a larger net worth over time if they bought a place.
Among the two options, there are also pros and cons to renting a property, just as there to owning a home. Both options have advantages and disadvantages. For example, renting allows you more expendable money in the short term, while owning a house gives one the sense of security as it is considered a long-term investment. Let us discuss the pros and cons of renting an apartment vs. buying an apartment.
Advantages of Renting an Apartment
- One of the benefits of renting a house is it is low maintenance. Depending on your rental agreement, renting a house may also mean taking on shoveling the walkway, mowing the lawn, maintaining the garden and general upkeep of the house. In an apartment, the grounds and outdoor maintenance are all taken care of for you.
- You will also have the freedom to choose the location. If you're looking for a prime location right in the downtown are, in the heart of the city, you're most likely going to be looking at an apartment. Single-family dwellings are usually found in more suburban or outer-city regions.
- Renting a property allows more flexibility than owning a home. This is ideal for those who could be faced with sudden changes such as a job relocation. Renting requires no long-term commitment from a Tenant, and is the best option if you don’t intend on staying in one place for a long time.
- Moving out is easier for a tenant than a homeowner as there is no stress of finding someone to take over the lease, or finding a Buyer to purchase the property as this is the responsibility of the Homeowner or landlord.
- After paying rent, a Tenant may have additional money which they can use to invest elsewhere, whether it is saving towards buying a house or investing in the stock market, and need not worry about putting additional funds into a home loan.
- The only insurance required by a Tenant will be to cover the contents of the home, while all maintenance work on the property is for the Homeowner’s account, as is homeowners insurance.
- As a tenant, there is the possibility of living in an area in which you could not afford to buy.
Disadvantages of Renting an Apartment
- You might have a problem with your neighbors. If you're a loud person or someone who needs a quiet environment, apartment living may not be for you. Remember, in many apartments, there are people and families living on all sides of you.
- From available closets to cramped storage units, apartments don't usually offer a lot of storage space.
- You might also encounter issues with infestation. The case with neighbors in an apartment complex. If, for example, others in the complex have roaches or ants invading their abode, those same pests are likely to eventually find their way into your home as well.
- You cannot make changes to a rented property without the consent of the homeowner.
- A tenant is bound by the rules of the lease agreement, which can impact the freedom to use or renovate the property.
Advantages of Buying an Apartment
- The value of a home will appreciate over time and in case you decide to sell, you can earn a profit off the sale
- When you buy a house, it becomes your legal property which allows you greater freedom in its use without restrictions often enforced by a landlord.
- Owning a home offers the long-term benefits of security, equity, and potential growth in personal wealth
- Being a homeowner allows you creative control of your property, including décor changes, landscaping and renovations, to suit your needs and your style.
- Being a homeowner who ensures repayments are made on time can improve your credit profile. Not only will you have a large investment to your name, but paying your monthly bond repayments on time increases your credit score.
- You have the option of buying to rent which enables a homeowner to generate income from renting out the property. You can have your house registered in AirBnb or websites for leasing. This income can be put towards the home loan.
- You have the option to refinance your bond amount should you wish to withdraw a large amount of money to pay for major purchases.
- There is an opportunity to save money in the long term as there are possible tax deductions related to income-generating properties.
Disadvantages of Buying an Apartment
- Home prices are well off their recent ridiculous highs and mortgages rates also continue to break new record lows, which is surely making many renters salivate at the notion of homeownership.
- There are additional costs to homeownership and these usually include rates, taxes, insurance, and maintenance for which the homeowner is responsible.
- Being a homeowner comes with huge financial responsibility including bond repayments and regular house maintenance.
- There are additional costs to homeownership and these usually include rates, taxes, insurance, and maintenance for which the Homeowner is responsible.
- A homeowner has less mobility when it comes to being able to move home than a Tenant who rents on a short-term basis. A tenant can leave a property after fulfilling the notice period, which is usually one month. However, a Homeowner is likely to be dependent on selling their home before being able to buy a new one, and therefore it might take longer to be able to move homes once the decision has been made to do so.
To learn more about the pros and cons of renting vs. owning a home click here.
To help you decide whether to rent or buy, click here.