1. YOU DON'T HAVE TO WORRY ABOUT A DOWN PAYMENT
A down payment for a home is going to be at least $20,000 if you want something decent. For a very nice house, it will likely be even more than that.
With an apartment, you might have to pay some initial deposits, especially if you have a pet, but that shouldn't cost more than $1000. Then, you can enjoy your new home every month while saving and investing the remainder of your earnings.
2. SMALLER SPACES ARE OFTEN EASIER TO CLEAN
A big house is great: There are more rooms to decorate and host people in, and, if you work remotely, you can change scenery every now and again. That being said, they can also be a hassle to clean.
If you are tight on funds and can't afford a housekeeper right now, it might be in your best interest to simply rent.
3. YOU DON'T HAVE TO CONTINUE PAYING A MORTGAGE FOR AROUND 30 YEARS
Perhaps you've recently graduated from college and you don't want to settle down in the state you currently live in or you're planning to move across the country—You don't want to be stuck paying a monthly mortgage for decades, so an apartment is ideal for those who are in a transitionary period in their lives.
4. MAINTENANCE ISSUES ARE TAKEN CARE OF BY THE STAFF
If the toilet is clogged or the A/C isn't working, the maintenance staff will take care of that—You don't have to lift a finger or spend a penny.
On the other hand, if you were paying a mortgage on a house, you would have to deal with every single leak and mishap on your own, no matter how expensive it was.
5. YOU CAN SAVE AND INVEST THE REMAINDER OF YOUR EARNINGS
This is probably one of the main reasons a lot of people rent, and quite a few individuals have gotten extremely wealthy as a result of this decision: If you purchase a home, it is often more expensive than renting, especially when one considers property taxes.
On the other hand, you can rent a place for a reasonable price while investing in your retirement account, putting money into the stock market, and even purchasing physical real estate properties that you then rent out to other people.
The earnings are massive.
6. YOU DON'T HAVE TO PAY PROPERTY TAXES
When you purchase a home, you have to pay property taxes each year. Depending on how nice your house is, these can really add up—Some multimillion dollar homes in Los Angeles, California come with a $30,000 property tax!
When you rent, you don't have to worry about this, although rental rates do tend to increase with market value, which can be a bit frustrating.
Nonetheless, you're looking at paying an extra $100-$200, generally speaking, which doesn't hurt as much as an enormous annual property tax.
7. THE FEES ARE MINIMAL
It's great to own your own house if you are truly prepared for the heavy financial responsibility that comes with that decision. At first glance, it might seem like it's easier to own a home in the long run, but that houses do often come with hidden fees, including the following:
- Property Taxes
- HOA Fees (especially for condos)
- Roof Issues (leaks)
- The Electrical System
- Landscaping & Lawn care
Of course, each home will be different, but it's essential to remember that, just because you own the house, that doesn't mean your monthly bill will be $0, even if your mortgage is completely paid off.
When you rent an apartment, you may have to pay some minimal fees for garbage, a tiny amount for sewage, and a bit more for your electric bill.
While these costs can certainly add up and be difficult to manage, especially for someone who is on a tight budget, you do not have to spend nearly as much as you would if you purchased a house in many cases, and you can often find apartments that include most—if not all—of these expenses in the rent.
8. YOU CAN AVOID DEBT
In the personal finance world, there is "good debt" and "bad debt." Good debt refers to taking out a mortgage because you now have a financial asset—something to show for yourself.
Bad debt refers to student loans and credit card debt because, although you do have a degree if you've graduated from college, you do not have a financial asset that you can gain wealth from. Credit card debt is thought to be the worst, because it is usually the result of careless spending.
Nonetheless, if you are someone who is averse to debt because things can change over the course of 30 years and you may be scared of owing money for that span of time, you can avoid going into it by simply renting.
When it comes to building wealth, renting is often the best decision: It allows you to accumulate financial assets and keep your expenses relatively low.
Owning a home versus renting an apartment or townhouse is a difficult decision, and the best option will likely vary depending on your circumstances: If you are planning to move soon and this is a temporary housing arrangement, perhaps it's best to opt for an apartment.
Similarly, if you are someone who is keen on building your wealth and reducing your expenses while investing and saving, renting might be the best option for you!
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