Is it better to rent or to buy a home? You might want to consider renting before you sign those papers.
No one in our circle bought homes in Chicago. No one even deliberated whether they wanted to rent or buy – they all rented. Period, end of story. Buying was for people who could afford insane prices on luxury condos downtown or for families who shuffled off to the suburbs. However, when we moved to small-town Wyoming, the first question people asked was almost always, “When are you going to buy a home?”
After living in about seven different rentals over the past five years, we know that renting is far superior to owning. Don’t believe us yet? Still unsure whether to rent or buy? Here’s our list of reasons why we plan to stay mortgage-free for as long as possible:
1. Maybe You Don’t Want “Roots.”
We have no problem moving. In fact, we love the opportunity to experience new cultures, live different lives, and have the freedom to call anywhere our home. And a house doesn't give you that freedom.
You can’t turn around a house like you can turn around a short lease.
2. One Bill is Better Than a Million Bills.
We love finding rentals with most of our utilities (like water, sewage, and gas) included. This saves me tons of time that I'd otherwise spend budgeting for small bills every month. Equally important — and a compelling benefit renting has over owning — is the pain of monitoring repair costs. Boiler downstairs, roofing, fences; these are all big-ticket wear-and-tear items that can get expensive over time.
Indeed, unless you master the art of DIY on repair works you could well see the repair bills adding over time.
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3. New Places to Call Home.
We often joke that we’ve moved on up as we’ve gotten more financially stable. We’ve lived in studio apartments, tiny one-bedrooms, one-bedrooms with backyards, two-bedroom complexes, and currently, a townhouse with brand-new amenities. The best part is that our rent has only marginally increased because we’ve moved to areas where rent ebbs and flows with the economy.
4. We’ve Watched Money Pit One Too Many Times.
When I was little, my dad loved watching the old Tom Hanks movie Money Pit with me. (That movie where a couple buys a fixer-upper and learns why so many marriages fail during renovations.)
We know we can’t afford anything brand new right now, so why bother with a fixer-upper home that we have no skill or patience for?
5. House Poor No More
We actually like not having to invest in a home to make it sellable or to add space on. If we need a new room in the future, we simply rent somewhere else. If something needs to get repaired or replaced, it’s not our responsibility to do it. As you can see, renting isn't always throwing away money.
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6. Taxes? No Thanks.
In Chicago, some of our friends’ property tax bills were so outrageous that they’d have to take out a loan just to pay it.
For example, the price of our rented condo ($250,000) would have cost us $5,023 last year on top of our mortgage, insurance, monthly assessments, and utilities (roughly $2,223 per month with a 20-year mortgage). Instead, we paid just $1,300 for everything but our gas bill. Taxes do vary from state to state and unfortunately it is very hard to forecast future tax rates, so it is not easy to long-term budget either.
7. If Community's Your Thing…
In Wyoming, which ranks 51st in state population and 50th in population density, the space between you and your neighbor can be miles (hundreds of them, in some parts of the state). Growing up in a similar rural town, I was always jealous of kids who could walk to their friends’ homes or who lived in a dense area with lots to see and do. Apartments and complexes tend to enable the interaction with people that we long for, while homes – at least in rural states – are isolated by vast distances.
8. That Down Payment is a Killer.
Sure, you could put zero percent down… if you can find a loan that allows it. Or you could put down less than 20 percent and deal with private mortgage insurance (PMI). But we’d rather pass on all that. Even with today's low interest rates, we don't want to pay PMI. If we’re going to buy, it’s going to be with a down payment of at least 20 percent, if not more.
So instead, we focus on our debt while renting well below our means. And we only pay that refundable security deposit for a month or two of rent.
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9. The American Dream May Not Be Your Dream.
As children and grandchildren of immigrants, we’ve been instilled with the idea that homeownership is the ultimate attainment of that American promise. We’ve also been raised to believe that it’s a status of wealth, adulthood, and responsibility. But does it have to be? The last thing we want is go into debt for a home that we may not want to keep in five years. It should be your choice entirely whether you rent or buy a home.
Like many millennials, we’re striving for a life that's less structured. That gives us and our children the opportunity to see new places, try new things, and always feel that “home” is wherever we’re together. That's our American dream – no mortgage necessary.
