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While conventional wisdom may hold that buying a home is the smarter move, the reality is that sometimes it actually does make more sense to rent. If you’re debating between the two, read on below.
I’ve laid out three scenarios where it makes more sense to rent a home instead of buying one. If you fall into one of these three categories, there’s a good chance that renting is the right choice for you.
If you’ve just moved to the area
When you move to a new area, even if you plan to put down roots, buying a home can be a daunting prospect. You haven’t had a chance to familiarize yourself with any of the local neighborhoods yet, and it’s almost impossible to get a sense for things like commute times and public transportation schedules without experiencing them in person. It can be hard to even know where to start.
Renting when you first move to a new area will give you some breathing room. You’ll have an opportunity to get to know your new favorite neighborhoods and to zero in on what factors will be most important to you in your eventual home search. That way, when you’re ready to buy, you can make an informed decision about what works best for you.
If you’re only planning to stay put for a few years
Likewise, if you’re only planning on staying in town for a few years, renting may end up making more financial sense. There’s no getting around the fact that buying a home comes with a huge upfront cost between your down payment and closing costs. If your plan is to pick up and move just a few years after buying, you may not be giving yourself enough time to recoup the cost.
New data from Betterment found that it takes homeowners four years, on average, to recoup the upfront cost of buying a home. If you’re not planning on staying put at least that long, you may be better off finding a place to rent until you’re ready to put down roots.
If you don’t want to deal with maintenance and responsibilities
The final reason why you may be better off renting rather than buying is if you’re not prepared to deal with the responsibilities of homeownership. Though owning your own home comes with many rewards, it can also be a lot of work and you need to be sure that you’re prepared to take that work on before you commit to buying something.
The most obvious example of this is maintenance and home upkeep. When you rent, you have the option of calling the landlord whenever a toilet leaks or the heat stops working. However, when you own your own home, those problems fall squarely on your shoulders. If you aren’t ready to deal with them, renting is a much better bet.