What Are The Advantages And Disadvantages Of Renting

1266 Words 5 Pages
In America owning your own home is called the “American Dream”. Some may look at it and say, what makes it a dream? Many people look at it as something that is theirs that, relatively speaking, no one can take it away or make them do what they don’t want to do. Owning a home gives some asset to the work you do and money you earn and possible leave something for your family when you pass. However, many others see owning a home as a burden and additional expense and would rather pay rent to someone. Let’s look at some advantages of renting verses owning a home.
1) Advantages of renting
a. Less responsibility: Not many people I know of look forward to coming up with hundreds and maybe thousands of dollars to make home, appliance, AC repairs.
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Tax deductions: In most cases your interest and property taxes can be deducted on your income tax, saving you money when it is time to pay taxes. Now that we have looked at the advantages of both renting and buying let’s look at the disadvantages of both.
1) Disadvantages of renting.
a. At the mercy of your landlord: At any time, the landlord can say I need you to move at the end of your lease or if you are out of your lease can give you notice to move. You have to do what they say with their property or else pay a fine to them. You generally have no say over colors, structures, etc. You lose the security you have of owning your own home.
b. No tax break: You cannot deduct your rent from your taxes like you can expenses of owning.
c. No building of equity or net worth: Making payments on property that someone else owns does not build any equity to benefit you. When you do a net worth calculation you lose the value of the house to add to your net worth. While I was renting many said I was just throwing my money away buy building equity in other people’s property.
2) Disadvantages of owning a
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Decreased liquidity: Most home loans require a minimum of 10% down and some as high as 20% of value to keep from having to pay extra insurance for the loan. Once you make the down payment the liquid money you had is now tied up in an investment that you hope holds value to recoup if you sell. Other cost would be appraisals, inspections, and title searches. These advantages and disadvantages in no way cover all the advantages and disadvantages when you start to compare buy a home verses renting. You may have to produce a chart and map out what is important to you and see which option is the best choice for you. Factor in the length of time you plan on staying at the residence, security of your income, willingness to stay where you are, and assume cost

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