For many people just starting to live on their own or on one income, considering the best options for housing can provoke a lot of anxiety. Almost everyone has in the corner of his or her mind the goal of finally settling down one day into the ideal single home. However, for a lot of individuals, this option may currently seem like a far off or even impractical decision based on their current finances.
There are several long-term advantages and disadvantages to either renting or buying property. However, this entry focuses on how you can save money by living in a rental home. BMG Money encourages all of its customers to establish stable finances before they make any major investments or purchases. Get in touch with us today if you are seeking ways to get your finances in order, apply for a personal loan, or need advice or counseling regarding long-term savings and investments.
- Maintenance and Repair Costs Are Minimal
When you rent instead of owning a home, you have the reassurance of signing a lease under certain terms and conditions. Under most leases, if something goes wrong with the property outside of your immediate control, you are not required to pay for maintenance or repairs. If the stove stops working, the drains are clogged, or the roof begins to leak, you simply have to report the problem to the landlord in order to resolve any problems that arise. However, when you own a home and inherit a poorly maintained infrastructure, old appliances, or a dated HVAC system, it’s only a matter of time before you’ll have to drop significant payments on replacements, maintenance, or repairs.
- Renters Have Access to Included Amenities
When you rent property instead of owning, you may have the benefit of enjoying additional amenities and services that you otherwise would have to pay for if you owned the property yourself. Some apartment complexes and condominiums offer access to exercise equipment, community centers, and even a pool. Although these additional luxuries can add to the cost of rent, it’s a pittance to pay in comparison to purchasing these amenities on your own property.
- Renters Avoid Paying Real Estate Taxes
People who rent property are not responsible for paying property taxes. Instead, the landlord picks up the burden of paying these expensive taxes, which can vary within and between states. As a result, you can pocket some extra savings by renting year to year that you can use to stabilize your finances.
- Paying a Down Payment on a House Can Devour Savings
In order to purchase a house, most financial experts recommend that a buyer have at least 20% of the home’s value ready in order to make a substantial down payment and to avoid paying mortgage insurance. This can easily add up to tens of thousands of dollars and require you to possibly cash in completely on all of your savings.
In comparison, when renting most landlords require a security deposit equivalent to the rate of one month’s rent. When you don’t have a significant amount of money in savings, renting property will ensure that you have enough money on reserve to furnish a rental property in addition to continuing to bolster your savings.
- Utility Costs Tend to Cost Less While Renting
Energy and utility costs can quickly add up to hundreds of extra dollars per month in addition to the cost of a mortgage. Some landlords can include internet access, water, sewage, and trash disposal as part of the flat rate associated with monthly rent. Because utility costs continue to rise, you can end up pocketing up to thousands of extra dollars per year when you rent instead of own property.
- It’s Easier to Relocate
If you purchase property, the savings benefits of ownership do not really begin to show their face until several years of ownership. If you have not yet committed to stable employment, your future goals include traveling frequently, or even if you begin to dislike the area in which you live, it becomes much easier to move out of a rental property and relocate.
Even if you signed a lease, sometimes a landlord can be willing to renegotiate its terms, especially if the property is located in a high-demand area. Moving out of and selling a home requires more responsibilities, and you even run the list of losing money on your investment if the sales market is less than ideal.