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Rent vs Buy: Which is Better?

By Aaron Salls
October 21, 2019

You need a roof over your head and a place to call home. So, you rent.

In fact, you’ve been paying rent for quite some time. Many say that renting is “throwing money away.” You even wonder if you should stop renting and buy a home instead. 

While owning a home was once a signature of the American Dream, homeownership rates have declined since the Great Recession. Nonetheless, you’re still unsure of what’s best for you. Should you rent or buy? 

Luckily for you, we’re about to dive into the pros and cons of the rent vs. buy dilemma. 

Consider the Cost Factors When Choosing a Living Space

At some point in your life, you may wonder “Is buying a house worth it?”

When thinking about buying vs renting a home, there are a lot of financial considerations to make. For example, buying a home typically requires a 20 percent down payment or else you’ll need to get Private Mortgage Insurance (PMI). On top of that, you’ll need homeowners insurance and you’ll most likely be paying property taxes.

In addition, if you’re thinking “Should I buy a house?” ask yourself these questions, too:

  • What neighborhood do I want to live in?
  • What things are important to me? (walkability, safety, stores, etc.)
  • How long do I plan to live here?
  • Do I consider this a starter home or a forever home?

These questions are important to answer before deciding to buy a home. The neighborhood, for example, will affect your quality of life. If you want to have children, the neighborhood will also affect what school district you’re in. 

You’ll also want to consider things like crime and safety. Does the neighborhood feel safe during the day as well as the night? Also, consider things like walkability, parking, and access to public transportation. All of these things can impact your quality of life. 

On top of that, make sure your living situation aligns with your life goals. If you want to be fairly nomadic and move every couple of years, renting might be a better choice. Experts recommend  living in a home for at least five years before selling it. 

The bottom line: Consider your short-term and long-range plans before deciding to buy or rent. 

Benefits of Renting (You’re not on the Hook for that Broken Appliance)

When considering buying vs renting a home it’s important to look at all factors. For instance, renting has a lot of perks that you can’t get when you buy a home. 

If something breaks or needs repairing, you call your property manager and someone fixes it. This is the primary reason I love to rent, aside from the flexibility. A couple of months ago, my toilet was having issues and with one phone call, I got a new one. No questions asked. 

The property management company has also repaired light fixtures and windows, plus there’s someone on-call when I need support. Better yet, when you’re renting, you’re not on the hook financially to make repairs, and you don’t have to do any of the work. 

Renting also offers a level of flexibility that homeownership doesn’t. If you want to move out, you can give 30 days notice and be on your way. On the flip-side, if you have to sell your home, it may be on the market for months. 

Lastly, some rental units are rent-controlled. This means that landlords and building owners are limited in how much they can increase the rent. For example, I live in a rent-controlled apartment in Los Angeles and my rent can’t go up more than three percent each year. 

Rental Disadvantages

While there are perks to renting – like being able to get up and go easily – there are disadvantages as well. 

For example, you may have to live in an apartment with thin walls where you are forced to listen to your next-door neighbor sneezing (true story). And, if you live in a large apartment complex, get used to missing or lost packages.

Additionally, not all places are rent-controlled and you may be at the mercy of landlords who can choose to raise the rent at any time. In some cases, rental increases can be a huge blow if you’re unprepared and can’t handle changes to your budget. 

There’s also this major factor: When you pay rent, you’re not building equity toward anything. You are paying for a roof over your head, but the place is not yours and your money is not being invested into something bigger. 

When you buy a home, however, your mortgage payment is going toward building equity in the home and paying off the mortgage. When the mortgage is paid off, the home is yours. 

Benefits of Buying a Home (You Actually Own the Broken Appliance)

Buying a home can be a good move if you want to design the way your home looks and how you live. When you rent, you’re stuck with the appliances, walls and other structures. When you buy a home, you can get creative. You can buy your own appliances and even move walls around – if you want.  

Most importantly, you’re actively building equity in the home with each mortgage payment. Although I don’t necessarily believe renters are “throwing away money” (because you need a place to live), owning a home is more of an investment. 

It’s an investment because you’re paying for the home so you can own it. It’s an investment because the value of the home will hopefully appreciate over time. 

You can also take advantage of perks like mortgage tax deductions. 

According to, “You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017.”

Also, if you do decide to sell down the line and live in a home for at least two years, you may be eligible to avoid capital gains tax on the sale. (Capital gains taxes are taxes on any profit you make from the sale of your home.)

So, if you want to feel like you’re investing your money and see yourself living in the same place for a while, homeownership may be the right fit for you

Buying a Home Does Have Drawbacks (See: Broken Appliance)

Homeownership is a huge responsibility and shouldn’t be taken lightly. There are downsides to owning a home and a lot of things to consider before diving into homeownership. 

Let’s consider the situation above, where the toilet breaks or the light fixtures are broken. Who is on the hook for that? You are. You will be responsible for any repairs and will have to pay for them and do the labor to get everything fixed. If you can’t do the labor yourself, you might be shelling out hundreds of dollars to hire a professional. 

On top of that, you’ll need to consider the down payment to buy a house. A down payment should be at least 20 percent to avoid Private Mortgage Insurance. 

Seeing as many homes cost six figures or more, saving up that amount can take a while. Using Chime, however, it’s possible to save easily using the Automatic Savings feature, as well as the Round-Up feature. Even so, it will take time and discipline to save up the amount you need for a down payment on a house. 

Also, a home can feel like an anchor. If you’d like to move for a job or need to move for any other reason, you may not be able to get up and go. Selling a home can be a long, arduous process that can take months. 

And, don’t forget the additional costs of homeownership, like insurance, property taxes, utilities and repairs. It’s your home; it’s your responsibility. 

Rent vs Buy: Which is Better? 

When it comes down to whether you should rent vs buy, there are a lot of factors to consider. You can pay rent and have flexibility and few responsibilities, or you can pay a mortgage and have more freedom and more responsibilities. 

Renting gives you a roof over your head and the utmost flexibility to move anytime. Owning gives you a roof and an investment

Buying vs renting a home can be a tough decision. Think hard about how each choice will affect your lifestyle, and weigh all the pros and cons. Here’s a final pro tip: When determining whether to rent vs buy, take into account your current needs as well as your future financial goals. 


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