Renting an Apartment Might Be the Better Option

As long as I can remember, people have been saying that it's always better to buy a house than it is to rent an apartment. I'm not so sure that this is always true.

One of the reasons given against renting is that rent payments are similar to throwing money away, you pay to live somewhere but gain no equity in the place. But there are reasons in favor of renting as well. Let's take a look at few of those situations where renting an apartment might make a lot more sense than buying a house.

It's easy to focus on the purchase price of a house and the monthly mortgage payments that follow. Then they want to compare that mortage payment to rent. But you have to keep in mind that the mortgage is just the tip of the iceberg relative to all the payments that homeowners must make. There's also ongoing maintenance and repairs. These can start piling up the day you move in.

And then there are property taxes that home owners must pay. Depending on where you buy a house will influence the amount of taxes. In some states and local regions the property tax bills can get rather large, possibly hundreds of dollars per month that must be considered in addition to the mortgage. This can be a burden for anyone who does not plan for this ahead of time.

Renters do not have to pay property taxes. Whatever the landlord would pay is already built into the lease, so you know exactly where you stand with monthly payments.

Another serious situation for those who buy a house is the potential drop in property values. During the recent mortgage crisis, home values plummeted. This can cause financial hardship to howeowners, especially if they have to sell before the market recovers. This could destroy the investment side of home ownership. On the other hand, renters survive crises like these without even thinking about it.

I previously mentioned that home owners have to face ongoing maintenance and repairs. In addition to these potential monthly expenses, there are also rising utility costs. Home owners typically add more and bigger electric, gas, and water using devices. In a reasonable-size apartment you're somewhat limited in what you can do. This helps keep a lid on rising prices. And, in some apartments one or more of these utilities might be included in the rent.

The last benefit of renting that I will mention is flexibility. This is the number one most important reason some people prefer to rent vs. buy. If you're in a situation where you want to hold onto the ability to move quickly for some reason, an apartment can afford you that luxury. This might be especially important to the younger crowd still searching for a career or more lucrative job offers. At the other end of the spectrum, those who wish to downsize can move into an apartment or choose to rent for a while as they contemplate their options.

Of course, there are plenty of situations where buying a home is the better idea for many people. Doing so can bring financial rewards. But this is not true for everyone. For those who are interested in predictable monthly costs, controlled utility expenses, and the ability to maintain mobility of their living situation, renting can be a great option.

In the end, there is not a single right answer as to whether it is better to rent or buy. This is an individual choice based on personal situations. The key to answering this for yourself is to consider your finances and your goals, and then make a decision based on those personal conditions. If you do this, it will ensure that you are making a sound financial decision.