Maybe your lease is almost up? Perhaps you’re looking to move out of your parents’ home? In any case, you’re wondering: should you rent an apartment or should you buy a house?
Both options have their upsides, but their downsides as well. To help you make an informed decision, we’re going to compare those upsides and downsides below. Here is a comparison of renting vs buying a house.
The Pros of Buying vs Renting an Apartment
There are a number of pros that come with buying a house. They include the following.
Freedom to Do What You Want
One of the biggest pros of buying a home is that you have freedom. The place is yours and you can do whatever you want to do with it. You can paint its walls, replace its siding, house pets inside of it, and more.
The only restrictions you’ll get are those from Homeowner’s Associations. And, if you buy in the right areas, you’ll be able to avoid those associations entirely.
Renting, on the other hand, puts tons of restrictions on you. When renting, you are beholden to the desires of the landlord. This can limit you greatly and prevent you from leading the life you want to lead.
When you rent an apartment, every cent that you put toward it is ultimately lost. You’ll never get it back.
The same is not true of buying a home. Simply put, buying a home has huge investment potential.
Sure, you may be paying $1,800 a month for a mortgage, but a large percentage of that $1,800 is being used to pay off the actual house and real estate that surrounds it. The more payments you make, the more you’ll own the home. And, the more you own the home, the more you stand to gain when selling that home.
Should your real estate appreciate (which is a real possibility, especially in desirable coastal and urban areas), you could end up getting back much more than you ever put in. In effect, after it’s all said and done, it could be as if you never had to pay for housing at all.
Yes, you have to put tremendous amounts of money into the house on a month-to-month basis, but the long term home value can be substantial. As such, you stand to see huge returns.
Renting apartments is a volatile practice. The price might be reasonable now but could jump up substantially in two years. Or, in the worst of cases, you could even be kicked out of your apartment between leases; it’s up to the landlord after all.
Houses provide much more stability. As long as you’re paying the mortgage and property taxes every month, you get to stay in your home. There’s no fear over what might happen in the future.
The Cons of Buying vs Renting an Apartment
Though there are many positive aspects of buying a home, there are negative ones just the same. They include the following.
Potential of Getting Stuck
By and large, home purchases are long-term transactions. If you’re buying a home, you should expect to be there for a while, at least 5 years or so.
If you don’t stay for 5 to 10 years, you might have to sell your home for less than what you still owe on your mortgage. This would effectively hamstring you financially.
In other words, if you buy a house, you could get stuck. You could find yourself in a position where you either lose money or stay in a home that you no longer want to be in.
Apartments generally come with 1-year leases. So, if you no longer want to stay in an apartment, your financial obligation when leaving is much less extreme.
Responsibility for Everything
When you own a home, you’re the boss. That means ownership of both the good and the bad, and the bad aspects pop up more frequently than you might expect.
Let’s say that your air conditioner stops working. There’s no landlord that’s going to pay to have it fixed. You have to front the money yourself.
Maybe your siding goes bad? Again, you will be responsible for replacing it. That’s a financial hit of several thousand dollars.
There are also landscaping duties, as well as payments for water, trash pickup, and the like. You’ll probably need a lawnmower and other such equipment. This equipment can add up to thousands of additional dollars.
So, in short, if you’re going to buy a home, you should have a decent-sized emergency fund available. You never know when something might crop up.
When renting an apartment, on the other hand, an emergency fund is almost completely unnecessary. Sure, you should have one for other unforeseen expenses, but there are few home-related surprises that you’ll ever have to pay for.
There is also a stressful side to owning a home. A home is something that needs to be managed, and if you already have a lot on your plate, the added stress of managing your residence can greatly affect the quality of your life.
Renting an apartment is like having a short-term fling. There’s less commitment but fewer (potential) long-term rewards.
Buying a home is like a marriage. It requires 100% commitment (which entails some stress and compromise) but can (potentially) pay huge dividends over time.
Renting vs Buying a House: There Is No Clear Answer
In truth, when it comes to renting vs buying a house, there is no clear answer. It’s dependent on your particular situation as well as on the trends that are happening in the real estate market. Weigh the pros and the cons and make the best decision for you.
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