Why Renting Could be the Best Thing for You

Why Renting Could be the Best Thing for YouThere is a saying out there, “Why rent and pay off someone else’s mortgage when you could be paying of you own?” Seems like pretty sound advice, doesn’t it? Except that things aren’t always the way they seem. What a lot of people fail to consider is that there are vast differences between renting a property and actually buying it.

A Cautionary Tale

An acquaintance of mine, let’s call him Ted (identity disguised to protect the dummy), used that very saying about owning a property and paying off your own mortgage on me. I advised Ted not to do it as the mortgage installment was bound to be higher. He had been living in a place and paying rent of about $1000 per month.

He ignored me and bought the house. The mortgage was $2000 per month and he was now responsible for repairs on the house and taxes, etc. Within 6 months, he admitted that he’d made a big mistake – he simply could not afford the place and he sold it a short while later.

Fortunately for him, he did not lose much as he got a bit lucky with the market timing. It certainly cost him a lot of stress, but when it was all said and done, it could have turned out a lot worse if the market had moved the other way during those 6 months.

This may seem like an extreme example but it does happen to a lot of people – especially first time buyers. You simply don’t know how much extra expense being the owner of a house can bring.

When Renting is the Better Option

Even if you can easily afford the mortgage and extra costs, here are some other reasons why you might want to rent instead of buy:

Your Life Could Change

Have you settled down in the town you are living in and are happy there or do you yearn for a bit more excitement in your life? Have you found the career path that suits you to a tee? If not, you probably should not buy a house – what happens if you have to leave?

This happened to another acquaintance – let’s call him Tim. He bought a house and got married 6 months later. His company then moved Tim to Australia and they bought a new house. They figured that the old house would sell fairly quickly.

That was a few years ago and they are now battling to pay both mortgages. They are stuck – both houses are mortgaged to the maximum and their new home needs some repairs.

I know that this is an extreme example but it just goes to show what can really happen. As a tenant, you have a lot more flexibility when it comes to moving.

You Can Just Barely Afford it

Here I also blame the estate agents – they always seem to show you dream properties that are a little higher priced than what you can truly afford. If the installment of the house that you are considering buying is at the very top end of what you can afford, carry on renting.

Will you be able to enjoy your new home when the payment is a stretch? What if some urgent repairs are needed? How will you handle the property taxes?

In this case, you are better off continuing to rent.

You Can Rent in a Better Area

There are areas that are very desirable to live in and, as a result, homes there sell at a premium. You could still possibly afford to rent a home there and enjoy the benefits of the good area without the headache of having to come up with a huge mortgage payment.

You Need to Know What you Are Doing

Buying a house is no small matter and requires some research into the area that you are considering. While houses usually appreciate in value, if you choose the wrong house in the wrong area, you could actually lose money when it comes to selling, or might end up, like Tim, with a house that will not sell at all.

There are advantages and disadvantages to both renting and owning a home. It can’t be reduced to a simple little saying and all the pros and cons should be given due consideration.

3 Responses to Why Renting Could be the Best Thing for You

  1. Jenna says:

    I plan to rent for quite a while. I haven’t settled down yet, so I don’t want to buy a house and then move shortly after.

  2. I’ve never rented, but I agree owning can definitely turn out to be the costlier option! I’ve been lucky so far because our market hasn’t tanked yet, so I’ve been able to make money a couple times, but who knows what the future holds. Renting also means you’re usually able to get into a more expensive neighbourhood and you’re not on the hook for doing DIY.

  3. dojo says:

    I would rent only if we were to move to the US for instance (still not possible, we just have a tourist visa) or somewhere else. I wouldn’t bother purchase real estate elsewhere, unless we could pay it entirely with our money (no mortgage). We do have an apartment here, so we don’t rent. If we didn’t have it though, we’d have gotten a mortgage, just for the reason that, after 20-30 years you own something. Most of our friends have done this and they’ll leave their kids in a better position (as our folks actually did in our case – they mortgaged years ago and now we have a place to inherit). The situation with rent in my country is pretty weird, too, not fully regulated, so you’re better of with a mortgage in most cases than having to deal with all kinds of moody landlords :D

Get Income and Money Saving Tips To Your Inbox

Get Income and Money Saving Tips To Your Inbox

Want more tips on how to make more money each month? Sign up to receive the great tips and tricks to boost your income and save more!

You have Successfully Subscribed!