When is it Worth Renting Instead of Buying?

This is a guest post from Darlene M. at Zumper Blog. We focus a lot on this site on real estate investing and the benefits of homeownership but sometimes buying is not the best decision.  Darlene shares her thoughts on why renting is sometimes better than buying.

Even in the wake of the Housing Crisis buying a home remains the cornerstone of the American dream. But with house prices doubling or even tripling in some cities, the rent vs buy argument is worth revisiting. We take a look at some compelling pro-rent arguments which might make you rethink your decision to buy.

Get Better Value for Your Money

In some cities where the cost of living is exorbitantly high, you may not be able to service a mortgage for a primary residence but rent affordability may be lower so you can live in a better house for less money. The money you save can be put into savings for a down payment on a  rental investment or a stock market portfolio that earns you better returns.

Buying a home locks you into a certain area but renting allows you to move closer to the city to save money on commuting costs. When looking at renting vs buying a home you also need to factor in hidden costs of homeownership – property taxes, maintenance, and insurance – that can leave you struggling to make ends meet.

Don’t Have to Worry About the Market

Homeowners are obsessed with the market – is it rising, is it falling? This is because they’ve invested a large sum of money in their home and they want to see capital gain. If the market falls and you’re forced to sell, the equity that you’ve built up over the years could see you losing tens of thousands of dollars.

Luckily as a renter you don’t have to worry about your home losing value, that’s your landlord’s problem. You can just get on with living your life.

It’s Not Your Problem If Something Needs Fixing

Likewise, another argument for renting vs owning is home repairs. As a renter you’re responsible for notifying your landlord or your property manager if something needs fixing, but you’re not responsible for the cost. If the repair in question has to do with plumbing or electrical systems this can be an expensive outgoing but again, as a renter, it’s not your problem.

A landlord is obligated by law to provide a suitably safe environment for a renter to live in, but if your own house that has an issue that needs repairing, and you can’t afford it, then you might have to live with it until you can.

Your Savings Remain Intact

As a renter you can pretty much guarantee your savings will be the same on a month to month basis. You pay a set dollar amount every month for rent and utility bills, so it makes it easier to save consistently for investments, travel, a new car or emergency fund.

Homeowners don’t have that luxury. A nest egg can be eaten away by surprise repairs and home maintenance, and the rising costs of property taxes and insurance can make it difficult to plan your personal budget from year to year.

You Can Move More Easily

If rent affordability starts creeping up then you can move to a cheaper place to save money. Especially when you’re young, you’ll want to experience different lifestyles, neighborhoods, and jobs. Renting is incredibly flexible in that regard, as you can pack up and move when your lease expires or, if you’re on a month-by-month lease, you can simply shift to a new rental.

Selling a home and buying a new one is much more complicated and expensive. It involves research into the market, finding a reputable realtor and knowing what current interest rates are doing. The sell-buy process can be off-putting which is why most people don’t move house once they’ve bought, unless they have a good reason for doing so. You also need to own a house for a certain length of time so you gain some equity in it.

You Can Get Some Great Perks

If you live in a city with a lot of rentals on offer, then you’re spoiled for choice. Landlords may offer sweeteners to entice renters, such as free hot water, cable TV, or parking. Many apartments also offer free use of the onsite amenities, such as a gym or sauna, which will save you having to pay for gym subscription fees, and travel time to get there.

But it’s the landlord, not the renter, who foots the bill for the cost of maintaining apartment utilities in their annual housing corporation fee.

Final thoughts

As you can see there are lots of compelling arguments for renting vs owning. So next time you’re calculating how much mortgage you can afford, it pays to ask ‘how much can I afford to rent?’. The money you can save consistently by renting will probably be a lot more than you’re giving to the bank each month in mortgage interest payments.

— Darlene 

Thank you Darlene for this great post to keep us honest in the debate between Renting vs Buying. 


  1. I’m a homeowner but I think there are a number of situations where renting makes more sense. I’ve had several friends and family buy houses because it seems to be the thing to do, but their circumstances would have been probably better suited to renting. Thanks for sharing this article.

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