If your neighborhood is like mine, then “For Sale” signs are popping up faster than dandelions on front lawns. That’s because spring is real estate season. Even so just because you’re getting ready to move doesn’t mean you have to buy a home. Sometimes it makes more sense to rent versus own a home.
There are many benefits to renting—financial, emotional, timeline, convenience and more. Perhaps most importantly renting is a great idea when you move to a new location where you’re not familiar with the surroundings, says Bill Golden, an independent real estate agent with RE/Max Metro Atlanta Cityside. “[Renting] gives them the time to explore the city and decide where they really want to live,” he says. “Then they can make sure that they are going to stay before they take the plunge to purchase a home.”
I spoke with a handful of real estate experts on why you may want to rent versus own a home. Here are eight reasons to consider.
Note: Portions of this article originally appeared on Parade.com.
1. Can you afford a down payment?
Most mortgage companies want 20 percent down. Even if you can scrape together that 20 percent, can you afford the monthly mortgage payments? “In today’s real estate market, especially in Manhattan, rent is almost always less than a mortgage,” explains Melaine Lessey, an Associate Real Estate Broker at Gateway Residential Management LLC. “Common charges and maintenance fees on top of a mortgage plus unexpected expenses can really add up.”
2. Are you on a tight monthly budget?
Unexpected expenses from repairs can throw a monkey wrench into your monthly budget. “Due to the fact that costs like repairs and taxes are included in a rental, housing costs can be more predictable in a rental,” adds Aron Gooblar, vice president of New York City real estate development company Washington Square Partners.
3. Does your credit score need work?
Renting can give you time to repair your credit score. (What’s your FICO® Score? Find out now for $1 with enrollment in Experian Credit Tracker! It’s the service I’ve used to check my credit score, along with the free FICO score that comes on my Discover Card statement each month.) “You can spend time renting while your credit history recovers,” suggests Joe Rand of Better Homes and Gardens Rand Realty in Westchester, New York. “It can take several years for certain credit problems to work their way out of your file, and during that time you can reestablish your creditworthiness.”
4. Do you want to pay less for insurance?
Rental insurance almost always costs less than homeowners insurance, says Douglas Elliman Real Estate Executive Manger of Rentals Luciane Serifovic, also good for someone on a tight budget. (When we rented last year, we got really affordable rental insurance through Liberty Mutual and were really happy with the service.)
5. Do you need/want flexibility?
According to Zillow.com, it takes the average American homeowner a little more than two years to “break even” when buying a house, though the time needed in more expensive real estate markets, such as Los Angeles, is more like five years. Even with this timeline in mind, Kathy Braddock of William Raveis New York City says, “If you are not planning to stay in the home at least three years, you should be renting.” A recent Trulia report on millennials and homeownership says that this demographic typically moves every five years, thus explaining their preference for renting versus owning.
6. Are you nearing lifestyle crossroads?
Whether you’re about to start a family or become empty nesters—or years away from either—renting might be right for you. “Do you want to live in an urban environment for now, but maybe move to another area with schools and amenities for children later?” asks Harry Mahon, McEnearney Associates real estate agent in Washington, D.C. “If so, you may want to rent until your lifestyle evolves.”
7. Can you fix things?
“When you own property you have to learn to be handy,” adds Lessey. “You are the one responsible for all repairs.” Of course, you can always pay for someone to do those repairs. I’ve been using HomeAdvisor for years to find contractors. (Full disclosure: I’m a paid spokesperson for the company.)
8. Do you mind yard work?
If you rent versus own a home, you don’t have to worry about mowing the lawn or shoveling the snow. It really does take a load off your mind (and your budget) when mowing, plowing and more is suddenly someone else’s responsibility. However, you still may want to engage your green thumb, such as with pretty planters on your rental’s front step or in flower boxes. For that I would suggest signing up for Home Depot’s Garden Club so you can get coupons and discounts on a regular basis. It’s what we use to keep our gardening frugal.