Everyone wants to own a home and save on the monthly rent they pay. This raises the question, is renting a waste of money? Absolutely no. Renting helps you avoid many costly expenses that come with owning a home. Besides, renting can work well for you, and help you gain financial freedom.
Many people talk about the negativities of renting a home and this could be the reason why you feel renting is a waste of money. Sometimes, renting can be a smart decision than to buy. Here, you are going to learn why renting is not a waste of money and why sometimes you can consider not renting.
Why Renting is not a Waste of Money
Is rent a waste of money? The following are some of the reasons why renting is not a waste of money.
1. It is Affordable
Renting is by far cheaper compared to buying or building a home. Renting helps you avoid many costs associated with owning a home like building and maintenance costs. Besides, there are other costs like home repairs and improvements, insurance costs, and property taxes.
On the other hand, when you rent, you just need to pay your monthly rent. All the other costs have been catered for by the landlord like security and renter’s insurance. As such, comparing renting and buying a home, renting is by far cheaper.
2. No Property Taxes
The other reason why renting is not a waste of money is that it helps you avoid taxes. When you rent, you get to avoid property taxes, which you would otherwise have to pay if you owned a home. Home taxes are usually higher than many homeowners expect.
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3. Lower Risk
Renting a house is less risky than owning a home. A majority of people buy or build a home using a mortgage. This comes with a financial risk. As a result, you attract a huge debt into your life. Debt is risky and can make you slide into a debt trap.
On the other side, when renting, you don’t need a mortgage. As such, renting does not put you at financial risk. Besides, you also avoid other expenses like interest on your mortgage.
4. Fewer Responsibilities and Stress
Renting helps you avoid the stress that comes with buying or building a home. When you rent, you don’t have to worry about repairs and maintenance costs. You are not responsible for these tasks. For instance, when anything breaks, you are not responsible for having it fixed.
On the other hand, if you are a homeowner, you are financially responsible for everything that happens in the house. That can be very stressful.
5. Leaves You with Money for Other Investments
Since renting is affordable compared to buying a home, it leaves you with more money for other investments. As a result, you can invest more money while renting. Besides, renting gives you some liquidity.
On the other hand, homeowners tie so much of their money into their houses. This leaves them with nothing or very little for investment. As such, if you have investment ideas, it makes sense to first invest in them while renting than buying a home.
6. Renting is Flexible
The other reason why renting is not a waste of money is because it is very flexible than buying a home. For instance, if you get a job transfer, you can easily move from one place to the other anytime. Also, if you don’t like your neighborhood and look for another location you love.
On the other hand, when you buy a home, you are not very flexible to relocate. You also don’t have the privilege to choose your neighbors. Buying a home restricts you to one location. Even when you get a job transfer, you don’t have the option to move from your home.
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Why Renting is a Waste of Money
Some people believe that rent is a waste of money. The following are some of their reasons to support why renting is a waste of money.
1. Owning a House Costs 30% Less than Renting
Is buying a house a waste of money? No. Cumulatively, when you rent for a long time, you will realize the amount you will have paid is enough to have build your own house. Owning a house costs 30% less than renting and as such, you would rather own your home than rent.
2. You Have a Landlord
Since you have a landlord, you cannot enjoy making home improvements based on your preference. Besides, you will need to complain to your landlord even for minor house repairs. Owning your own house can relieve you of the stress of dealing with a landlord.
3. You Live at Someone’s Else Mercy
Renting is for an agreed period as per the rental agreement. Your landlord can decide not to renew your agreement and in such a case, you would have to look for another place to rent. But if you owned your house, no one can force you to vacate.
4. You have No Control Over Rental Prices
Your landlord can decide to increase your rental rates and you have no option to decline. When property prices increase or when the property appreciates, landlords tend to increase rental prices. But if you owned your home, you won’t have to pay rent.
Summary of Why Renting is Not a Waste of Money
Is paying rent a waste of money? Renting is not a waste of money. Renting gives you much convenience and flexibility. You can move to new neighborhoods where you feel comfortable. On the other hand, buying a home limits your flexibility. You will need to sell your house to move. Besides. Since renting is by far cheaper than buying a home, it leaves you with some money to invest. As such, if you are considering renting, it is not a waste of money.