Moving Resources > Should I Rent or Buy?

Should I Rent or Buy?

Apartment living may not be for everybody, but it may be a smart decision for you. In fact, renting might be a surprisingly smart option for people who have never even considered it before. According to the New York Times, in the final analysis owning a home today may be much more expensive than renting throughout most of this country.

In June 2004, The National Multi Housing Council published a brochure called Renting Can Be A Smart Investment (PDF / 1MB). It's written in plain English and explores several common misconceptions about homeownership in a question-and-answer format. Simply click on the link above to read that brochure now.

Here are a few guidelines that may help you decide whether to rent or buy.

Lower Upfront Costs

When you rent, you don't have to worry about saving for the substantial down payment, attorney's fees or heavy closing costs. Homeowners are also obligated to pay insurance, property and school taxes. Insurance has been rising an average of 8-10% each year, depending upon market value. Property taxes have been increasing about 4-5% each year.

Lower Monthly Costs

Renting will generally cost you less per month than a mortgage payment for a similar size and quality space. In fact, the gap between renting and owning a house is the highest it's been in a decade. The monthly mortgage and interest payments homeowners pay are just the beginning of the financial commitment. With adjustable rate mortgages, monthly payments increase whenever interest rates rise. If you're considering a condo, don't forget about the monthly Homeowners Association and Condo fees you will be paying.

Greater Personal Flexibility

Renting gives you the flexibility to move if you need to -- if you change jobs, transfer, meet someone special or simply decide you want a change of environment. When you rent, you're not locked into a long-term financial commitment the way you can be with a house. At Home Properties, we offer even more flexibility with the Home Properties Pledge, our written guarantee of satisfaction.

Less Financial Risk

Life is full of changes. In fact, nearly one-third of homeowners find themselves moving within five years. If you want to move in 5 years, you're not tied down to a long-term mortgage. When you rent, you don't have to worry about the value of your house or your ability to sell in a buyer's market. You can leave one rented apartment home and find another quickly for less than the cost of selling or leaving behind an empty house that has yet to sell.

Increased Saving Power

Most people assume that by buying a house, they will be getting tax deductions to cover the extra costs. However, you get those tax deductions only if you itemize your taxes and only if the costs exceed the standard deductions offered by the government. In fact, only one-third of taxpayers do itemize. If you find you can itemize, depending upon your tax bracket, you may only be saving $.10 to $.35 in taxes for every dollar you pay in mortgage interest. The best way to increase your savings power is to decrease your costs and free up some money to invest in retirement, a new hobby or a dream vacation.

Fewer Maintenance Expenses

Average annual maintenance can amount to 1-2% of the house's market value. Homeowners need to budget for the unexpected: the leaky roof, the broken furnace or the garage door that's stuck closed. At any point in time, it seems, anything can and will go wrong in a house. You just need to be sure you've always got the money to fix whatever it is that's wrong this week. Renters, on the other hand, have the convenience of knowing exactly how much their housing will cost each month, month after month. Instead of spending money on property repairs, you can save for your retirement; buy stocks, bonds, or other investments; or put money into a side business or hobby.

All the Extras Included

If you rent from a community-oriented company such as Home Properties, you'll enjoy all sorts of conveniences! Depending on where you rent, your community may offer a swimming pool; concierge services; garage space (possibly even a heated garage); elevators; a barber shop or salon; theater; fitness center; media center; and other amazing features -- all professionally managed with staff ready to assist you at all times.

Congratulations!

You have chosen to invest your money wisely and maximize your returns. You are ready to give up the hidden costs of maintaining your house. You no longer want to worry about mowing the grass or trimming the bushes. You've given yourself the flexibility to take advantage of opportunities and embrace life's changes. You have decided to join a community of friends. You have decided that renting is just what you need to do.

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