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.