10 Pros and Cons Of Renting A House
Renting versus buying has become one of the biggest questions in real estate. It becomes a large dilemma and headache when you go down a path and realize you chose poorly. This is especially true if you’re talking about a house in a major city like Atlanta. So what are the pros and cons of renting a house versus buying?
It’s a valid and important question. As a dedicated Atlanta property management solution, we know how much people worry about the rent versus buy dilemma. While there is never a single answer for all people, looking closely at the benefits and challenges of renting a house, puts you in the best situation to make an educated choice.
So let’s get into the pros and cons of renting a house and figure out just why some go down that road and some do not.
Table of Contents
- Pro: No Maintenance
- Pro: More Flexibility in Location
- Pro: More Amenities
- Pro: No Real Estate Taxes
- Pro: Low Insurance Costs
- Con: Not Building Equity
- Con: Not Improving Credit Score
- Con: Fewer Tax Benefits
- Con: Less Control
- Con: Less Stability
- Try Property Management for Your Rental Needs
Pro: No Maintenance
One of the major benefits to renting is that there is no significant maintenance costs or repair bills to worry about. When you rent a property, your landlord assumes responsibility for maintenance, improvements, and major repairs. If an appliance stops working or your roof starts leaking, knowing that your landlord is in charge of getting that repair done can be a relief.
Pro: More Flexibility in Location
When renting, you typically have much more choice in the area you would like to live. It’s that simple. If you want to live in the downtown of any major metropolitan city – including Atlanta – buying a house isn’t financially feasible for everyone. Yes, an expensive housing market can signal higher rents, however, a monthly rental payment is generally more affordable over the large expense of a mortgage.
Pro: Less Upfront Costs
One particular financial benefit of renting a house is that there is no large upfront cost compared to buying a house. Renters typically have to pay a security deposit and one month’s rent, but that pales in comparison to what is needed to buy a house. Purchasing a house often requires a down payment of 20% or more. That is a very large amount of cash that is needed upfront that is not needed when renting a house. Suddenly the pros and cons of renting a house takes a new meaning. Many people just cannot reasonably afford that initial down payment involved with purchasing.
Pro: No Real Estate Taxes
Another benefit to renting a house is that you can avoid property taxes. Real estate taxes can be significant, though they do vary from on area to the next. Being able to dodge those taxes can result in a heavy burden being lifted, which many people highly appreciate.
Pro: Low Insurance Costs
One thing to keep in mind is that homeowners need to keep up with homeowners insurance. While renters do have renter’s insurance, the cost for those policies is significantly less. Let’s look at how much of a difference the two are. According to the Insurance Information Institute, the average cost of renter’s insurance is $179 per year, while the average insurance policy for a homeowner is much more: $1,249 per year. That means there is a heavy cost savings to renting a house when it comes to insurance.
Con: Not Building Equity
One of the foundational differences between renting and buying is the fact that when you buy, you are building equity. Equity is the amount of your home that you own at any one point. What you’ll hear some people say is how much of their house they have “paid off.” That goal of paying it off is to someday not owe anything; you own it 100%. When you have a mortgage, the idea is to make payments over 30 years, for example, and after that 30 years you own that house.
Even if you do not live in that particular house for 30 years, the payments you are making on the mortgage means that you are slowly “owning” more and more of that property. Your eventual sale of that house can theoretically create a profit based on the fact that you owe the bank less because you have been making payments for years.
That is just not the case for rental property. In a rental, you will never own the house and the monthly rent payments are not “building” towards ownership of anything.
Con: Not Improving Credit Score
Another drawback of renting a house is that it generally does not contribute to your credit score. Paying off your mortgage over time, on the other hand, can help you build your credit score, which helps in all kinds of ways. As your credit score improves, you can use that to get better terms or a better mortgage type when the time is right to refinance.
Con: Fewer Tax Benefits
Owning a house makes you eligible for all types of tax benefits that you just don’t have when renting. It is complicated and it varies. Here are just a handful of the tax advantages that may be available to those who choose to buy rather than rent:
- Mortgage Interest Deduction
- Property Tax Deduction
- Home Office Deduction
- Home Improvements Deductions
Con: Less Control
Renting often comes with all types of restrictions that you don’t find when you own your home. Rentals often come with specific pet policies. They might restrict certain types of inside decor or yard decorations. Buying a home means that you own it and – except for the occasional HOA restriction – it primarily means that you have the control to do much more with your own property.
If you’re tired of pricy pet policies, limited decor options, and all the other community guidelines that renting entails, it might be time to buy. You may still have to deal with an HOA, but you’ll have a lot more freedom over decorations, landscaping, and your space in general. When you buy a house, you also get more control over the type of community you move to.
Con: Less Stability
One final disadvantage of renting a house is a general lack of stability that comes with it. That is, you are renewing your lease every year or so. Each time, your rent could be adjusted or restrictions could be added to your lease. If you buy – especially if it is fixed-rate mortgage – you will find that there is a stability to your monthly payment and the terms you have. Many people appreciate that sort of stability in their housing situation.
Try Property Management for Your Rental Needs
Going over the pros and cons of renting a house results in a lot to think about. If you’re a landlord or looking to be one, it becomes a hefty dilemma full of management tasks and responsibilities. For independent landlords, administrative tasks can add up quickly.
Bay Property Management Group are experts in all things rental management. That means tenant screening, maintenance, lease creation, rent collection, property inspections, compliance with local laws and regulations, financial reporting, and so much more. Let us handle the rental complexities for you so you can focus on having more time for the things you enjoy! Contact us today to learn more about our Atlanta GA property management services.
