When Renting Is Better Than Buying?

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A large percentage of today's renters are those who have "made it," who could easily purchase a home but choose not to. They're renting apartments, and they're doing so with the intention of staying there for an extended period. With that in mind, they're choosing more luxurious options, demanding more rents, and paying higher rents. It used to be that people chose renting as a short-term solution because, after all, renters spend their money, month after month, for a home which ultimately isn't theirs. Renting was considered a waste of money. Not so anymore. Many professionals are finding that renting their homes provides them with a degree of financial freedom which actually saves them money.

The current state of the national economy also makes renting a more appealing option for many people. Apartment marketing consultant and trainer Dorothy Gourley names a few economic factors driving the multifamily surge: interest rates are increasing, homes aren't likely to appreciate any time soon, new tax rates have changed the structure of deductions, and the cost of landscaping and home maintenance has increased in terms of both materials and labor.

While many of today's renters settle in apartments with the intention of staying for an extended period, flexibility remains one of the most compelling reasons to rent. Renters may choose such options as month-to-month leases (significantly more expensive, but worth it in many cases), short-term leases of three months or six months, and long-term leases. Home owners, on the other hand, must find a buyer before they pack up and head to their next residence. If the area in which you live is experiencing lagging home sales, you may be in for a long wait. Or if you don't have the luxury of time to hold out, you're going to have to accept a less-than-stellar price for your home.

According to Gourley, rent increases for apartments -- while they continue -- have been kept to a minimum level during the last few years. Those who own homes, however, face either slow home appreciation or depreciation, which often reduces the value of homes far below their original purchase prices. Home owners must consider not only the strong possibility of their homes selling below their value; they also face Realtors' fees and on occasion, closing costs.

In contrast, apartment-dwellers may take advantage of such amenities as swimming pools, fitness rooms, and various social activities at no additional cost. Building a swimming pool yourself, and you're looking at an average of $35,000 -- and that's before the monthly maintenance costs (which are an average of $60, according to Gourley).

Home owners know too well how their maintenance costs can represent an enormous and unanticipated expense; merely having a plumber cross your threshold can cost you $45 or more. Add the cost of materials and labor costs per hour to that. Although renters occasionally have difficulty obtaining timely maintenance, it's free and available with a single telephone call.

Although a home owner's primary expense is the down payment, additional costs come from mortgage points, recording fees, title insurance costs, credit reporting charges, appraisal fees, professional inspection fees, and insurance coverage. You've also got to factor the cost of moving, utility deposits, and the cost of tools for minor home repairs and gardening. And you're not even inside the home yet; interior decorating costs, depending upon the condition of the home, may include paint, window coverings, wall treatments, additional furniture, and installation or upgrading of landscaping. And of course, landscaping and maintenance are ongoing costs for home owners. The average gardener's fee (which varies, according to the size of the yard in question) is $60 per month, Gourley says. Renters never have to consider such fees.

"I'll just care for the yard myself," you say. In that case, you can plan to spend a minimum three hours per week getting back to nature. If you face anything more complicated, such as tree trimming, you may have to hire a contractor for the job (yes, more money needed).

With that money you're probably going to save by renting an apartment, you can indulge in a few extra goodies: vacations, or savings for investments or retirement. We're all tired of hearing how stressed our population is. Living the renter's life can help. You're going to save time that you would have devoted to yard work or other home maintenance chores -- time you can spend with your family and/or friends; on recreational/sports activities (provided by your apartment community, of course); on reading or other hobbies; or simply just doing nothing.

Now how does renting sound?