It’s an age-old question: Is it better to rent an apartment or house or is it better to buy one? The question isn’t as easy as it sounds, because it can depend on a number of factors, including how big your household is, how settled you are and how much you have to spend. But it does help to weigh the pros and cons of renting vs. buying.
Cost In most markets, renting is usually cheaper than buying on a monthly basis, although there are a number of factors that affect that. For example, if you rent a furnished apartment from a corporate housing provider, it is likely to cost a lot more on a monthly basis, but you also won’t have to buy any furniture, which could cost you thousands of dollars. There also are other cost advantages to renting, including insurance. The average renter’s insurance policy costs about $12 a month, whereas a homeowner’s policy will cost you anywhere from $25 to $80 a month. Another area where it is cheaper to rent than buy is your upfront cost. To rent a house or apartment you usually just need the first month’s rent and a deposit. To buy a house, you usually need to put up anywhere from 5 to 20% of the purchase price.
Flexibility An apartment rental is much more flexible than owning a home. Most apartment leases are for 12 months, but you may be able to get ones that are for six months or even shorter. If you lease from a corporate housing provider, you may even be able to get a month-to-month lease. If you are not settled in your life and may need to move frequently, renting can be a much better option. Once you buy a home you are tied down, and if you have to sell, you may not be able to get back the money you have already put into the home.
Equity One of the big advantages of owning a home or a condo is that you build equity over time. A portion of your monthly payment goes toward paying down the principal of your loan every month, and property tends to appreciate in value over time, which means your property is an investment that builds value. When you live in an apartment for rent, the rent you pay every month all goes to the landlord, and you don’t gain anything.
Overall, there are benefits and drawbacks to both renting and owning, and your decision largely depends on your situation. When you are young, renting a furnished studio from a corporate housing provider may make the most sense. When you get older, are settled in a job and start a family, that may be the time to own a home.