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Renting vs. Buying—The Right Choice for Your Family

Darren Laudenbach - Tuesday, December 08, 2015

A home is always a major decision for any family, whether you are single, married, have kids (or plan to) or don’t, but one of the biggest choices that has to be made up front is whether to buy outright or rent a home. There really isn’t a right choice for everyone because we all have different situations, so take a few things into consideration beforehand. Once you’ve weighed all the options, the best choice for your family will probably become apparent.

Key Point: Rentals are fixed by a landlord.

For instance, say that the water heater springs a leak. In many cases, this isn’t noticed for a while, and it can lead to other major repairs, such as fixing a rotten floor or wall. When you buy/own the home, it’s your job to replace these things, meaning not only work, but also money—often many thousands of dollars. On the other hand, when you rent, it’s the landlord’s job to fix the water heater and any subsequent damage, in financial and labor terms.

Key Point: Interest…rent…what’s the difference?

When the property market is flat, there really is no difference between paying interest and paying rent for a house. Both could be considered "dead money".  While this isn't as big an issue as the one mentioned before, it can become a critical factor for those needing just one more nudge in one direction or the other. Consider this: Would you want to pay an amount equal to rent just for the interest on the mortgage? If the property isn't growing in value then there's no benefit!  

Key Point: Renting isn't outdated.

Dozens of TV shows focus on home ownership and make it seem like the only viable option for singles, couples and families today. However, renting is often a much better starting point for busy people, especially those who don’t have a lot of income to spend on repairs, renovations, upgrades and taxes. In fact, although you’ll never own the home you rent in most cases, you can save thousands of dollars each year by going the rental route while you save up to buy a home, or invest elsewhere.  The big advantage of renting is that it's a fixed cost - you know how much the rent will be, whereas with home ownership the costs can easily blow out. 

Key Point: Buying a house can wait.

It takes a lot of money to buy a house, both in terms of up-front and long-term finances, and this isn't practical or feasible for everyone. For a lot of singles and newlywed couples, there is going to be plenty of time to buy a dream house later, once the debt from credit cards, short-term loans and student loans has been paid off completely. Save up for a down payment (and a nest egg) by starting with an affordable rental home, focusing on getting out of debt before taking on the problems associated with home ownership. It can wait! Too many times we've seen couples early on in their married life be strangled by a mortgage and not have the freedom to enjoy this exciting time of life.  Certainly there's a balance.   

It might seem like we're trying to promote renting over buying - that's not the case.  It's simply a matter of bringing about more balance to the argument.

So, what's right for you?