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The Disadvantages of Renting a Home

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The Disadvantages of Renting a Home

How Much Does It Cost To Rent Vs. Buy A House?

Are you trying to decide whether you should rent or buy your home?

One important factor to consider is cost. But with so many variables entering the equation, it can be daunting to sit down and calculate everything by hand.

This rent vs. buy calculator makes the math easy so you can determine the total estimated cost of renting vs. buying. Simply provide the required inputs, compute your totals, and print out a detailed report!

As powerful as this renting versus buying calculator is, there are more factors to consider besides just financial cost.

There are many advantages and disadvantages to both renting and buying. Heres what you need to know to make a smart decision. . . .

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Advantages And Disadvantages Of Renting

Depending on your life situation, financial status, and tolerance level, renting a house might be the best option for you. Here are some factors to consider when renting a home.

Advantages Of Renting:

  • Youre free from the hassle of maintenance problems. The landlord is responsible for all maintenance including appliances and miscellaneous repairs. No muss, no fuss.
  • Rental payments might be less than mortgage payments. You wont have to worry about paying property taxes and other incidental costs of owning a house. Changes in the price of housing wont affect you as much thus lowering your risk in the event of another housing decline.
  • You can easily move. When you own a home, you might need to sell it before you can afford to move. When youre renting you can just pick up and go giving your life increased flexibility. You arent tied down by a mortgage.

Disadvantages Of Renting:

  • Some landlords will not allow you to make minor alterations without consulting them first. This could include hanging pictures, and other fixtures that would leave holes in the walls. This make it hard to ever truly feel at home.
  • Some landlords dont pay much attention to concerns regarding repairs and maintenance. It might be difficult to get your landlord to take action quickly, if at all, when something goes wrong.
  • Rentals arent investments. Rent payments never build equity but they can for your landlord. This means you are on an endless treadmill of eternal rent payments as long as you choose not to own.

Lets switch gears for a moment and take a look at the advantages and disadvantages of buying a house.

Advantages And Disadvantages Of Buying A House

Home ownership is not for everyone, but there are some financial and emotional advantages to consider . . . .

Advantages Of Buying A House:

  • The house will be all yours once you pay off the mortgage. Also, the odds greatly favor that you will earn some capital gains if you remain in the house long-term. Neither of these will occur as long as you rent.
  • Youll have the option to rent the house out should to decide to move. Rental earnings can be used to pay the mortgage.
  • You can pay off your home and stop making monthly payments. Once the mortgage is paid then your housing costs will fall dramatically thus lowering your risk long-term while increasing your equity.
  • You have the freedom to remodel and improve your home whenever you want. No landlords to stop your creative expression!

Disadvantages of Buying A House:

  • Its a long-term financial commitment. Its expensive to buy and sell real estate thus only making financial sense if you have a long-term perspective.
  • It can be stressful to maintain a house. It takes time and money to complete repairs and maintenance. Some people dont want to be bothered.
  • Theres no guarantee that the value of your house will increase. Theres a chance that you may even incur losses if youre forced to sell it due to relocation or financial constraints.
  • Youll need to shell out a lot of money for the down payment, broker fees, and closing costs. The Rent vs. Buy Calculator will take these costs into account and show you which is the best deal.

Final Thoughts

Its important to notice how this Rent vs. Buy Calculator asks you the length of time youll stay in the house.

This is a critically important input that dramatically impacts your decision because the costs of owning a home change over time. Dont make the mistake of looking at monthly payments alone. Its important to consider future expenses and changing housing needs.

Traditional wisdom advised to buy because homes are an investment. But remember, these investments can go down in value as evidenced by the 2008-2009 housing collapse in the United States. Nothing is certain.

This is why its crucial to take a birds-eye view of your situation. Why are you moving? What costs are involved? Is this temporary or long-term? How much can you afford? How much do utilities cost? Will you have a longer or shorter commute to work?

The Rent vs. Buy Calculator will make the financial portion of this decision easy by weighing all the costs into a complete analysis. When coupled with your personal needs as discussed above, it will help you make a smart decision you can live with.