How do you know if renting is right for you?
You`ve heard the argument against renting, but did you know about the many advantages to renting?
Cost of Renting:
Let`s start with the obvious... Signing a lease with a landlord only costs 2 months of rent on average: that being the first month of rent and the security deposit; and you`ll get your security deposit back at the end of the year if you don`t bust up the place, and if you pay all your rent. Sure, that might seem like a lot of money, but compare that to the cost of mortgaging and buying; closing costs alone will run you $4000, not including down payment.
Having the flexibility to live month-to-month and move after the end of every lease is priceless. Consider your homeowner counterparts... if they get a new job in a different city, they can`t just wait out a lease and rent somewhere else. They have to sell. Selling takes time. Preparing the property so they can get the best offer to buy also costs money... mortgage and other bills still have to be paid! Oh, and what if the property they own doesn`t sell for the price they paid for it? In the recent years, home values dropped far below the amount people have paid for their property. In some cases, the value of the home fell to less than 1/2 of what was paid to buy the home. OUCH! That left many people stuck, unable to sell, and depressed wishing they`d rented instead. Hmmm... well you know what they say about hindsight!
Now consider what happens if your income suddenly drops. Sure, you`ve had a great job, maybe your spouse/partner did as well, but it`s not like that job`s forever! People get fired, businesses shut down, pay and hours get cut. So you rented a place you thought you could afford and now the bottom dropped out from under you. What do you do? Most rational people will go get part-time jobs until they can get more stability. Many renters limp along, trying to finish a lease so they can downsize to a lower cost rental. Smart! Now consider your options if you`d bought a home/condo. No downsizing anytime soon... That mortgage is very permanent. You`ve heard of the foreclosure crisis, right? Well that`s what happens when the cost of mortgage financing exceeds the homeowner`s ability to pay. Guess where most of those foreclosed homeowners are now? Renting! Except now they`re renting with banged up credit, a foreclosure on their credit history, and a lot less money than they had before they sunk it all into buying a house.
Simplicity is the least considered benefit: Riding around on the lawn mower isn`t as fun as it looks; at least not when you consider all the other responsibilities it comes with. For starters, you have to pay for EVERYTHING. Garbage removal, water and sewer, gutter cleaning, roof repair, stuck drains, grass cutting, leaf removal (which cannot be thrown out with trash otherwise you get a ticket from local gov’t); Oh and let’s talk about all of the local gov’t costs. For starters, Property Tax always goes up and local gov`t employees who have the need to justify the salary you`re paying, are always looking for ways to hit you up for more money. They’ll fine you for everything!
- Grass too long? You get a ticket
- Tree dying? Pay to remove it, or get a ticket and then pay to remove it
- Sidewalk icy? You’ll get a ticket
- Leaves not disposed of properly? Ticket
- House looking shabby? Ticketed for having a house that’s an “eyesore”
- You want to build a treehouse? Buy a permit or get a ticket (you think I`m kidding?)
Then you still have to pay for homeowners insurance, private mortgage insurance, and it’s going to be a good decision to get insurance on all your major appliances. Why? Cause if those break, you don`t have a landlord to complain to for them to replace anything. You’re the landlord… and that’s your ice cream melting in the freezer.
So, if you’re renting, count your blessings. It could be worse!
Do you have any experience as a former homeowner?
Have you had the opportunity to rent AND own at some point in your life?
Share your experiences in the comments!
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