Why I’m A Renter, Not a Home-Owner

10 Feb 2012

The Author

Carrie Smith is the accountant and writer behind the Careful Cents personal finance blog, where there's no such thing as small ¢hange. She's passionate about all things money, career, debt and travel.

Her work has been featured in Lifehacker, the Huffington Post and Business Insider. She's also the social media and content manager for Payoff.com, a site dedicated to helping people get out of debt and achieve their personal finance dreams. Follow her on Twitter @applecsmith

Why I’m A Renter, Not a Home-Owner

Carrie Smith 17 Comments

When I was 23, I made a big mistake: I bought a house. With it came a big mortgage and a plethora of added financial responsibilities. Thankfully, I avoided a lot of the mess by realizing my mistake sooner than later and selling my house. Now, I’m a happy renter. Here’s why:

Avoid the Down Payment

The minimum down payment for a home depends on your mortgage, but many advise putting as much money down as possible to avoid higher fees and payments down the road. A VA loan, created for members of the armed services, comes with a zero down payment. But more often than not a down payment will be between 5-20% of the asking price, which could mean tens of thousands of dollars. Renters rarely have to put more than the first month down, as well as a security deposit (which, if all goes well, you may get back).

Avoid Emergency Repairs

When I was a homeowner, I discovered I had a leak in my water heater that was this close to blowing up, taking my house with it. I had to find a plumber and rely on him to be honest, fair, and fix the problem ASAP. Handling repairs while renting is much easier: When something breaks, I call the maintenance team and know they will fix whatever the problem is. No stress, no money out of pocket.

Barter For Free Rent

Some apartment managers and landlords may offer discounts on rent if you can provide valuable assistance. For instance, if you can help out with the bookkeeping, collecting rent, grounds keeping or maintenance, you can bargain for a portion of your rent to be credited every month. Any skills you have might come in pretty handy for the landlord; it’s worth asking.

Deciding to buy a home or rent/lease an apartment is very personal, and usually depends on many factors. The important thing is that you’ve thought through everything, making sure that you’re financially able to support your choice both in the short and long-term. If you overshoot your financial capacity, you may wind up with a whole new slew of problems.

Do you rent or buy? Which do you think is the smarter financial choice for you? Could the opposite be smarter for someone else? Weigh in below and keep the conversation going!

Carrie Smith is a PerkStreet Customer Columnist who has worked as a freelance Certified Bookkeeper for nine years and as a Tax Specialist for four. She specializes in small business and oil and gas accounting. She has written several finance and accounting articles at Hubpages.com, and also writes regularly on her own blog CarefulCents. Follow her on Twitter @applecsmith.

Carrie Smith 17 Comments

Bryan Marriott

I like that last tip, using your skills to help pay the bills
shanda

I bought a couple of years ago. I was 27 at the time, so I had the benefit of watching many of my friends make house-buying errors that they were paying dearly for. I didn’t and don’t do everything perfectly financially, but here are the guidelines I followed when I bought. I bought a house well beneath my current means so that if I lost my current job, I could afford to take another one at a lower wage. I live far away from my family and am a single woman, so I bought a house with newer apppliances and solid cobstuction to try to reduce surprise costs. I did not take ab adjustable rate mortgage. I overpay on my mortgage so that when I do sell, I have a better chance of getting some money back. For minor repairs that need to be done, o try to fix them first before I call a repair man. It is amazing what you can learn how to do by watching a video on youtube! I have repaired toilets, garbage disposals, and broken tiles… for basically free!
Julie Thompson

We recently bought and I still have yet to decide if it was good or bad… lol. We planned everything out. We knew we had to remodel it first and we had to do most of the work. As far as the mortgage, we got probably the cheapest mortgage out there. Low interest rates,a city grant(our town was trying to promote home buying in their city limits), and we bought a foreclosure. It was a super cheap buy. Saves us literally $600 a month that we were spending before on gas and rent combined. And we save a ton of time because we are right next to everything we need. So in that aspect is has been great. The remodel aspect… well we aren’t quite finished. That drives me crazy… and it’ll probably be that way until we move and rent it out(this was our plan from the beginning). The other issue is location. I don’t enjoy the neighborhood. We are close to shopping, work, and entertainment but the actual neighborhood, I’m glad we are here only temporarily. But all in all, we knew where we were moving to, we knew we needed to remodel, and we knew it wasn’t our permanent home and that we will have a passive income from it in the near future. I do miss being able to just call maintenance though! But I so look forward to OWNING a real home for our family.
Julie Thompson

BTW, I forgot to mention that in the long run you SAVE TONS by owning a home, even if you hire out a lot of the work to be done, plumbing, heating, ect. Think of paying $1000 rent monthly for your entire life, say 80 years… that is $960,000. For that price, you could have bought a really nice home in my area and still had about $700,000 to spend on fun things or even say $500,000 because you had to have $200,000 of repairs through the years… which that is a really high estimate. Just saying. Those are just loose estimates but for me that is enough to know that owning a home is the way to go.
http://carefulcents.com Carrie Smith

That’s awesome Shanda! I wish I was as DIY savvy as you. I also over-payed the minimum amount for my mortgage and was able to sell it with some good equity. It was a lot of responsibility though for someone as young as me. It was very over whelming too. I learned a great lesson!
http://carefulcents.com Carrie Smith

I’m all about pimping out my skills to save money (in a good way)!
http://carefulcents.com Carrie Smith

I completely agree, and I hope to own a home again later in my life, when I’m more prepared. It’s definitely an investment, with time and money always needing to be put into it. But it’s worth it once you have a family and place to call home.
http://www.facebook.com/people/Zoe-Juays/100000973494165 Zoe Juays

I LOVE this! I’ve been having this debate in my head for quite a while now. I’ve always had the mindset that renting is paying someone elses mortgage, and why do that when I can pay my own and eventually own the house. I guess renting has its pluses too!!!
http://livesimplylivethriftylivesavvy.com/ JLLopez1006

I totally agree with this post. We were pushed into buying at an early age, because people said it was the “smarter” thing to do rather than “throw money away” on rent. We quickly found out that it was not. Often you have no control over your payment throughout the buying process, not to mention your expenses when you are a homeowner. We also quickly found out that home insurance does not pay for many things. Though owning a home may be wise for some, if you do not have much disposable income or savings, renting may be the wiser option. Also, if you do not plan to be in an area for long, renting is smarter, as trying to sell can take years due to a down market, not to mention the effect of an underwater mortgage.
http://www.youngcheapliving.com/ Kraig @ Young, Cheap Living

I rent, although I do look forward to buying when the time is right. Financially, I could buy today but have decided to wait for a number of reasons:
1. I am scared of a mortgage
2. I am single and don’t really NEED my own house
3. If I don’t need it, I can just keep saving money so that when I’m ready I won’t have to borrow as much

My mom owns a home and it recently has been causing her and me stress. If I have to worry this much about her house, then how much would I have to worry about my own? I agree with you that owning is a huge responsibility and pain. I want to make sure that the benefits will outweigh the risks, costs and work it will take to own so for now, I am waiting.
Renee Mellor

My husband and I bought a house last year. We are in our mid-30′s and have 4 kids. It was the right choice for us. We looked for more than a year to find a house that we plan on living in until we die, with land, in a good school district. Now that we have 10 acres we are able to have the livestock and garden we’ve always wanted. Sure, it costs more than rent on a house in town would, but within 5 years we will be producing most of our own food. We have goats, chickens, rabbits, and ducks (with plans for a couple of cows next year.) I am planting a 1/4 acre vegetable garden and we have added more fruit trees to the existing small orchard. None of that would be possible in a rental. Is it right for everyone? No way! But it’s exactly what we want and need.
http://carefulcents.com Carrie Smith

That sounds like an amazing piece of property Renee! I grew up on a ranch with all kinds of animals and a garden. I loved it! Sometimes I miss the wide open spaces, having confined myself to a small apartment. But like you said, it’s not for everyone (or at least at this time) but it was a fantastic decision for your family.
http://carefulcents.com Carrie Smith

Yep they both have their pros and cons. I definitely want to own another house later in the future, when I’m more financially and mentally prepared. Owning a home is a lot of work and responsibility. But it does feel nice to own your own place!
http://carefulcents.com Carrie Smith

I totally agree with you Kraig! I’m at the same place you are. My house caused me a lot of stress and too many headaches. I’m single now and don’t feel the pressure to purchase another one. I just keep on saving, like you!
http://carefulcents.com Carrie Smith

You make some excellent points! I was pushed into owning a home early as well. It wasn’t the right time for me and I ended up moving so it’s a better option to rent right now.
Jrmcginnis1

I have been an owner and a renter. I am currently a renter and I have to say that it is much easier being a renter for me. I have a cute little house and a great landlord. My biggest problem when I owned was trying to get repairs done. I am single and of course work when the repair guys want to come out, I would have to take time off from work to meet the repair guys – what a pain. AND it seemed like there was always something that needed repairing. Now I just call the landlord and he takes care of it. If I want to paint or change something in the house, my landlord gives me the option of doing it myself and taking the cost off my rent or he will take care of it. Best of both worlds. I have a garden with veggies and flowers. I mow, but if I didn’t want to the landlord would take care of it – he takes care of the snow, yeah!. I have the best of both worlds and am a happy renter for now. I will say this though, If my current landlord decides to sell my house, I do contractually have the first option to buy it, so there may come a day I own the house.
guest

I bought my first house at age 20, and my second and third at 23. I’m not “rich” and have had nothing given to me. If I needed something fixed, I learned how to fix it. I will NEVER EVER rent. Half my income comes from people renting off of me. I’m frugal, I didn’t let myself buy new cars and big tv’s etc, all of my extra money goes into savings to buy more rental houses. I hope to quit my day job at age 30 making more than I do now from rental income. Renting is throwing your money away, do not be scared of mortgages! Take risks people.

The Author

Avoid the Down Payment

Avoid Emergency Repairs

Barter For Free Rent

Account