4 reasons to keep renting your residence
You have a stable job and a solid nest egg. Time to buy a home, right?
Although homeownership can offer financial benefits like equity, appreciation and tax deductions, there may still be good reasons to keep renting even when you can afford to buy, including more mobility and financial flexibility.
“It’s really just not as cut and dried as the famous ‘throwing money away on rent,’ especially if renting is buying you something you value, such as flexibility or consistency in terms of cost of living,” says Charlie Bolognino, a certified financial planner.
Here are four reasons renting might make sense for you.
YOU WANT FLEXIBILITY
Buying a home could easily tie you to a place for years, if not decades. You can always sell, of course, but there are associated costs — and you could lose money if you sell too soon or are forced to sell in a down market.
Renting, on the other hand, gives you more freedom to relocate as desired. Sure, you have a lease to consider, but those typically last just 12 months, and you may have the option to sublet if you can find a new tenant. So you can more easily jump at a career opportunity across the state or country or simply try a different neighborhood on for size.
That level of flexibility can also provide relief if your financial situation changes.
Homeownership is work. Yardwork. Housework. Maintenance work. All of that can be a drain.
“Owning your own property just takes more time,” says Kenny Kline, an entrepreneur in New York.
Kline previously owned a home, but went back to renting and has “never looked back,” he says. “Now, I live in a well-managed apartment building, and all of that is taken care of for me.”
YOU CRAVE AMENITIES
Renting can give you access to perks like an on-site gym or a swimming pool. But some buildings go well beyond the basics, offering next-level amenities, says Sophie Morrison, a real estate broker in Chicago.
“We’re seeing things like bowling alleys, boxing rings, golf simulators, massage rooms, salt saunas, basketball courts, movie theaters, recording studios and wine cellars,” Morrison says, noting that many of her clients can afford to buy but choose to rent because of the amenities.
Average rents may fluctuate, but once you sign a lease, your rent is fixed for the duration of the lease, if not beyond. The same cannot always be said for homeownership.
Yes, your mortgage payments remain stable, but maintenance costs can be unpredictable. Property taxes can also fluctuate, and not just because your home value increases. Cities and counties can impose higher property tax rates, and federal laws can change (and have changed) how much you can deduct from your taxes.
Buying a home comes with a lot more upfront costs, too. Between the down payment (anywhere from 5% to 20%) and closing costs, you could pay more than $15,000.