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Buying VS. Renting

There can be many advantages to buying or renting a home depending on one’s needs and long or short term goals in home occupancy.  It is entirely dependent on the needs of the potential buyer/renter as to which option is more suitable for their living situation.  In this article, the advantages and disadvantages of both buying and renting are covered.  If you’re weighing your options on buying or renting, perhaps these facts can help you make the decision that’s right for you.

Buying: Advantages

First and foremost, what should be considered is a person’s budget, both monthly and long-term.  Let’s say, for example, a person has the choice of renting a home for $800 a month or buying a $110,000 home at a monthly mortgage rate of $1,000 a month.  Initially, the renting option seems to already be the better choice.  If this person intends to live in the home for less than three years, it very well may be.  But you will see that after just a few years, the buying option is a much better choice financially.

After year one, the difference between the costs of rent and the home purchase is $200 in favor of renting, but after you factor applicable tax savings for home ownership, the difference becomes only $50 per month creating an annual savings of $600 for the renter in the first year.

With renting, one can expect a 5% increase in the rent each year due to cost-of-living and inflation rates.  With just a 5% increase annually in the rent cost, the second year of the rented home will cost $840 a month while the mortgage is still fixed(and consequently will always be fixed) at the original monthly cost of $1,000 monthly.  In the second year of renting over home ownership, the rent option has now only saved the renter $10 a month and $120 annually.

With each year that passes, by year three, the homeowner is now paying less than the renter for the cost of the home that he or she has purchased.  The rent continues to rise annually while the mortgage and tax advantages are fixed for the homeowner.  At this rate, the person who purchased the home on a $1,000 monthly mortgage is saving more than $1,500 over the renter by year five and more than $2,500 by year seven with exponential increases in savings in the subsequent years to follow.

On top of it all, these savings are not even including the equity the homeowner is building in their home.  Being a homeowner, one now has an asset that is gaining equity whereas the home renter still owns nothing and is not gaining equity in an asset further creating a big advantage to those who would choose to purchase a home in the long term.

Additional advantages to buying a home over renting is the sense of community and stability one gains from being a permanent household member in the local community.  The homeowner is also free to make landscape or interior decorative changes without the consent of a landlord and do not have to rely on a landlord to fix or maintain the property for them.  And, one big advantage to home ownership is that once the home has gained additional equity over time, that equity can be put up as collateral towards a future loan to make additions to the home that can increase its value or be used for other items where cash may be needed.

Buying: Disadvantages

With the purchase of a home come certain responsibilities and liabilities that are not taken on with renting.  Since buying a home means that it belongs to the mortgage holder, any and all damages, repairs, maintenance, and taxes fall squarely on the mortgage holder to be responsible for paying.  All homeowners pay property taxes and some have to pay Home Owners Association fees as part of their community’s pool of funds to maintain common areas and enforcement of community rules to keep the neighborhood upscale and clean.  In some instances a membership fee may be associated with communities that have recreational facilities.

Someone who should not consider home ownership is someone who is often transient and needs to move from one area to another in relative short periods of time.  Selling a home is often a venture that can take months or even years to accomplish depending on the local and national markets.An additional disadvantage to home ownership can be the mortgage holder’s loss of income creating the subsequent inability to pay the mortgage and foreclosure of the home.  A foreclosure will cause bank repossession of the home and a complete loss of the equity that was gained in the ownership of the asset.  This is why the decision to purchase a home should be made with the careful consideration of the purchaser’s future income.

Renting: Advantages

There can be advantages to renting over buying a home if the circumstances of the living situation are relative to the advantages that renting has to offer.  For instance, if you are a person who moves regularly, renting is certainly the option for you.  It’s easy to pick up and go once the lease agreement ends at the home that is being rented where the home buyer has to sit and wait out the sale of their home, especially if the homeowner has all of their available capital in the home they are living.

One great advantage to renting is not having any responsibility to maintenance of the home or its appliances.  Furthermore, an additional great advantage to renting, especially in a place that can typically have natural disasters like floods and hurricanes, is that if a natural disaster causes damages to the home one is renting, the renter has no responsibility to fund repair of the damages.  Additionally, the landlord is required by law to repair the house to standard living conditions within an affixed time table for the occupant renter.

Renting: Disadvantages

Although renting can seem to be a less expensive and less hassling venture it can be more costly in the long run.  With each payment made to the landlord, nothing more is gained than the temporary occupancy.  As opposed to home ownership, no equity is gained in the home one is living in.  Also, there are no tax benefits to renting like there is with home ownership.  With renting, one also has no control over rent increases from term to term and the landlord can force an eviction after a term lease has completed causing the occupant to find a new place to live even if they do not wish to change homes.

So as you can see, there are certain advantages and disadvantages to home renting or home ownership.  They can both be beneficial to you depending on your goals in home occupancy.  Home rental is always the best option if you are unsure of whether or not you can afford or want to take on owning a large, valuable asset like a home.  At least if you rent, you are only committed to a lease of a year or less.  But if you can afford it and you can stay committed to living in one place, home ownership is most definitely the most viable option.


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Bruce Kirkpatrick

Bruce Kirkpatrick

Far Beyond Code, LLC
President & Web Developer
Cell Phone: 386-405-4643
E-Mail Bruce

113 Mariners Dr, Ormond Beach, FL 32176

113 Mariners Dr, Ormond Beach, FL 32176



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