ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Can Renting Make Financial Sense?

Updated on January 2, 2018

Most Americans want to own a home of their own so that they feel that they've achieved the American Dream. While owning a home is a big aspiration for many people, renting can sometimes make more financial sense.

Why would renting make more sense for some people? Here are some reasons that will explain why renting might make financial sense.

A New York City tenement complex from around 1900. These tenements housed many people in tight quarters.
A New York City tenement complex from around 1900. These tenements housed many people in tight quarters. | Source

Rent When Owning Is More Expensive

It is always important to make a cost-benefit analysis of any purchase. Because a home is the biggest purchase that most people will make in their lifetime, it is important that those who are looking to buy carefully weigh the cost of this purchase.

In most US markets, buying a home is actually cheaper over the long term than renting is. There are some places that renting will actually come in lower than buying a home. In these areas, it might make more sense to rent. Also, it is basically impossible to get much home for the money in some of the major urban areas, so renting might be a good idea in these regions.

Rent When Short on Cash

While renting a studio is not ideal for a family of four or more people, it can be a good financial move for a single person. Most people start out their adult lives with little cash. Therefore, renting as cheaply as possible is a great way to build up a cash reserve that can go toward a home later.

Adding a roommate can also cut down on this expense. A two-bedroom home just screams for a roommate. Those who share expenses can save some serious money in the process.

Some might argue that there are some loan programs that require little, if any, down payment. It is true that there are some options that require no down payment. Those who are buying these homes will still need to pay closing costs in most instances, so it is a good idea to save up some money for the expense.

Would you consider renting if:

See results

Rent When Planning a Short-Term Stay in an Area

Some people have jobs that move them around on a regular basis. Those who are only planning to stay in an area for a year or two might want to think twice about buying a home. Most of the money spent will go toward interest, rather than building up equity for the owner. As noted above, buying a new home will incur closing costs. So will selling a home. A person who is only in a home for a year will probably get hit twice with closing costs.

Those who will be moving within a year or two could also run into another problem. There is the issue of finding someone to buy a home. Those who have trouble finding a buyer could find themselves paying for a mortgage in a city that they no longer live in while also paying for housing in a new city. For these reasons, it is a good idea for these people to rent a home.

Rent to Avoid Paying for Repairs out of Pocket

Of course, it can definitely be argued that renters do pay for home repairs and new appliances. It is true that landlords include these expenses in the rent that they charge.

The renter will not have to pay for these financial calamities out of pocket at once. Rather than calling a contractor to replace a leaky roof, a renter can just call the landlord, and the landlord will have to deal with the problem. Additionally, the renter will not have to go into debt to fix the problem as the owner of the property will have to deal with it.

Owning can lead to massive expenses. A new roof, a collapsed sewer that requires some major digging, or a new furnace can each cost well into the thousands of dollars, and most people will not have thousands just sitting in a bank account to pay for them.

Increase Freedom While Decreasing Stress

Those who rent can sometimes find a month-to-month arrangement. This allows them to just walk away if they find a better housing option. Additionally, those who might like to travel for a month or six can do so without having to worry about a mortgage payment staring them in the face.

Those who cut their housing costs through renting should be able to build up more passive income over time as they save and invest. They don't have to worry about making massive repairs as noted above. All of these benefits should reduce the amount of stress that a person has early in their lives.

Comments

    0 of 8192 characters used
    Post Comment

    • phdast7 profile image

      Theresa Ast 

      4 years ago from Atlanta, Georgia

      There indeed times and circumstances when it makes very good sense to rent. I own a house now, but for the first fifteen years of our marriage (including three little boys) we rented. We saved money and later when our careers had stabilized we bought a house. I know too many people who bought a home in their early twenties with nothing down and then lost it during the housing bubble and recession. Great Hub/ Sharing.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)