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Pros and Cons: Owning vs. Renting

Delve into the pros and cons of renting versus owning to help you make an informed choice.
October 16, 2023

Deciding between renting and owning a home is no simple task. While the idea of owning your own house is alluring, it comes with its fair share of maintenance, responsibilities, and financial commitments. The thought of tending to a house might even lead you to consider the cozy embrace of a 700 square ft. apartment for the rest of your days, and is that really such a bad idea?

Apartment living can be more budget-friendly, offering financial savings and freedom from weekend lawn mowing. However, it's important to consider the flip side: your rental payments generally won't boost your credit score, and you won't accumulate equity in your rented space. Plus, the freedom to modify your living space is often restricted. Let's delve into the pros and cons of renting versus owning to help you make an informed choice.

Are you Ready to Buy a House?

Determining whether you should buy, or rent depends on your financial picture and many external factors such as where you live. Start by asking yourself the following questions:

1. Are you out of debt?

If you have any credit card or student loan debt, pay it off before taking on more debt.

2. How much have you saved?

Determine if you have enough to cover a down payment (10-20% of the home value) and closing costs (typically between 2 and 5%). You will also need to have an emergency fund set aside to cover unexpected expenses.  

3. Will your house payment be less than half of your take-home income?

Missing even a single house payment can put you at risk of foreclosure and can make it a lot harder for you to make other big purchases (homes, cars, etc.) in the future. Falling behind on mortgage payments can kill your credit score. If your mortgage is going to be half or more than half of your monthly income, you may not be in the best position to buy.

4. Do you plan on staying in the same location?

If you sell your house after living there for only two years, you’ll have to pay a hefty tax penalty. Plus, in less than two years, your house is unlikely to gain enough value for it to make sense to sell your home. It all depends on the real estate market in the area, but it is more than likely not a smart financial decision to buy your home unless you know you will be there for a minimum of two years.

If you can truthfully answer yes to these questions, buying a home may not be a bad idea. If you answered no, sticking to renting for a little while might be the safe bet.

Side note, if you answered no to these questions but you still want to buy because you found a great deal, DON’T BUY. You should never buy a house based on the market because there is no way to know if the market will go up or down. Be smart, and don’t gamble on your future!

Buying a Home: Pros and Cons


  • Equity – When you make a mortgage payment, you’re working towards ultimately owning your home outright. When you pay rent, the money is gone. It’s in the hands of your landlord, and you have no asset to show for it.
  • Appreciation – Contrary to your car, houses are typically an appreciating asset. In a healthy market, houses tend to increase in value over time (as long as they are taken care of). According to Black Knight, the 25-year average appreciation rate of homes in the United States is 3.9%. Appreciation assists in the growth of equity in your home.
  • Tax Advantages – Costs of a home, such as property tax, are deductible on your taxes. If you pay off a mortgage, you can include your mortgage interest as a deduction on your tax return.
  • Freedom and Privacy – You can do whatever you want (given it’s within the law). You can renovate, change wall colors, start a rock band in your garage (so long as you don’t have a strict HOA)…the possibilities are endless. You can do as you please without having to answer a landlord for knocking over a lamp and chipping the wall paint.


  • Moving – if you own a house, it is harder to move. Say your job asks you to move to New York, or if you want to go backpacking across Europe – owning a house makes that complicated. You may have to get a listing agent to sell your home, and if you can’t get it sold quickly, you’re often stuck paying a mortgage until you can. Or, you might be stuck trying to rent it out even though you won’t be close by to manage it.
  • Expenses – You will have more expenses when you own a home, plain and simple. You’ll have to get home insurance, which is unfortunately much more expensive than renter’s insurance. You will likely have to pay higher utility bills, property taxes, trash, electricity, etc. Of course, bills will change depending on where you live, but this is just a taste of what is to come.
  • Maintenance – The part everyone loves, maintenance. Now, if you’re a handy person and enjoy fixing things yourself, this may not be much of a con for you. However, if you’re like many people and never fixed a leaky pipe in your life, hiring a plumber can be very pricey. So, if you’re not handy, make sure you know the extra costs and have money set aside to get these problems fixed when they arise, since you won’t have a landlord or a maintenance department to help you for free.

Buying a home is not a process you want to rush. It is likely to be the biggest purchase you’ve ever made! Therefore, it is not something to be taken lightly. Be sure to weigh all the pros and cons before deciding to buy a house.


Should I Rent?

Renting is a great way to save money. Over time, renting can be cheaper than owning; however you will never be able to sell it, so all the money you put into it is gone. Renting is likely the better choice if you find yourself in any of the following situations:

  • Paying off Debt
  • Have a job that requires you to move often
  • Do not have enough saved
  • In college
  • Needing time to plan

Just like buying, renting a home or apartment comes with its own set of pros and cons.


  • Moving – Moving is relatively easy when you are renting. You don’t have to worry about trying to sell your current house while you look for a new one, and generally leaving is as easy as letting your landlord know that you won’t be renewing your lease.
  • Low Maintenance – When a problem arises in your rented home, usually the only person you need to call is your landlord. Given that you did not cause the problem, the landlord will most likely pay to resolve the issue without you paying a dime.


  • Rent Rates Rise – While mortgages are normally issued at a fixed rate, your rent can increase every year when your lease renews. Rent normally goes up with inflation.
  • No Financial Benefits – Aside from paying fewer expenses, there is no tax deduction, no equity in the home, no appreciation of the property, nothing. Once the money has left your pocket, you won’t be seeing it again.
  • Less Freedom -Usually, renters don’t have the freedom to renovate the space, and there may be other rules as well such as no pets allowed or no loud parties.

Before you make the big decision to buy or rent, there are lots of factors to weigh. The right choice varies from person to person. If you're thinking about buying a home in downtown Los Angeles, it's quite a leap, and it might seem a bit out there unless you're extremely wealthy. On the flip side, if you can afford a home in a growing rural area near a city but are currently spending money on rent, it might make more sense to buy a home. This way, you can build equity and benefit from property value appreciation.

It's crucial to understand your financial situation, but remember, you don't have to navigate this decision all on your own. Buying a home is a significant commitment, so do your homework before making a hasty choice.

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