Real Estate

4 Reasons You May Want to Keep Renting

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Buying a home has been ingrained in our culture as the pinnacle of adulthood. After all, owning property is a “solid investment” and apartments rarely have the white picket fence required to live out the American Dream. However, for some millennials, home ownership may not be all it’s cracked up to be. Here’s why you might want to continue renting:

1) Renting adds flexibility. What would you do if you were laid off and couldn’t find work in your area, your current job relocated you, or your dream job called from another state tomorrow?

While you can certainly sell your home and move, it is more costly and takes more work than breaking a lease. Renting adds flexibility homeownership simply doesn’t have.

2) Saving 20% for a down payment is hard. While we’re all expert savers around here, saving 20% for a down payment is a lot of work. Especially when you consider the fact that millennials are migrating to major cities to find work.

While larger cities offer more in the way of entertainment, convenience, and job opportunity, the real estate is more expensive in cities than in the suburbs. This means it may take a few extra years to save up an adequate down payment.

Renting does not require a down payment. At the most, there is a security deposit equal to or less than one month’s rent.

3) Banks notoriously approve you for a higher mortgage than you can reasonably afford. While some people can rationally look at the amount of mortgage they were approved for and realize it’s too high, others just see an opportunity to buy the McMansion of their dreams. And that’s fine, people make money mistakes all the time, right?

Except for most of these mistakes aren’t locked in for 30 years. Renters who rent a place they can’t reasonably afford have the option of breaking the lease and paying a fee, or moving after one year to a more affordable place.

4) Home ownership costs don’t stop at the mortgage. Besides paying up to six figures on interest alone, homeowners also incur many other expenses for the privilege of owning a home -- including insurance, real estate taxes, and repairs.

Renter’s insurance is much lower than homeowner’s insurance, renters don’t owe taxes, and repairs are done on the landlord’s dime. As a renter, there are very few surprises when it comes to costs.

Eventually, home ownership is supposed to pay off. You build equity and you can sell at any time. However, your home is not a guaranteed good investment and you won’t truly be able to see any return until it sells.

Renting is a great option for many millennials. It’s usually cheaper, it’s less stressful, and it offers the flexibility that owning simply doesn’t.

Are you a renter or an owner? Why?

About Erin El Issa

Erin is the founder of Red Debted Stepchild, a blog about her journey to getting out of debt while still enjoying life in Portland, OR with her husband. She enjoys reading, eating, traveling, and crunching numbers on her numerous spreadsheets. Sometimes she remembers to tweet at @reddebted.

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