The other day I asked the question, “Should you rent or buy a house?” Today I thought I’d go over the pros and cons of renting. There are plenty of good reasons to rent, and several reasons not to.
1. Pro – You aren’t tied down to an area. If you need to move for a job you don’t have to go through the hassle of selling your house. Alternately, if you just want a new place you also don’t have to worry about selling the house.
2. Con – You don’t own it. There is just something about having a place to call your own. You can paint and remodel and make changes to the yard and you don’t have to ask permission.
3. Pro – It is cheaper. In the long run it may not be cheaper, and we’ll get to that, but on a month to month cash-flow basis renting is cheaper. You don’t have to pay for the insurance, property taxes, PMI if applicable and anything else associated with owning the property.
4. Con – You have to deal with a landlord. They may or may not be pleasant to deal with.
5. Pro – You can get by with a smaller emergency fund. If the heat or AC goes out, it isn’t your responsibility to fix.
6. Con – No equity. When you are paying a mortgage, at least some of the payment goes towards owning the home. Rent is gone as soon as you pay it.
7. Pro – Can’t lose money on it. Many people consider houses to be an investment, which they can be, but in general they are a place to live. As an investment, houses can go down in value as many people have learned recently. While renting, you don’t have to worry about a house being underwater.
8. Con – Potential cost of damages. If you break something you may have pay for it at the end of the lease. There are no guarantees of how much it will cost.