You’re on the fence about whether to shop for a home. Renting is convenient and hassle-free, but buying seems like a smart financial investment since you’d be gaining equity. However, that’s not always the case. There are a number of factors which can actually make it a smarter decision to keep renting, even if you’re in a comfortable financial position to buy a home. Here are some of the situations in which you should resign that lease and put off thoughts about buying a home, at least for the time being.
You Might Move in the Next Few Years
For many people, flexibility is one of the biggest benefits of renting. It allows you to change your living situation as you see fit rather than feeling tied down to a home that you’ve purchased. And for those who aren’t sure whether they may be moving in the near future, renting is definitely the way to go.
Even if you like the area where you live now, you may want to move somewhere else in the coming years. Are you open to taking a job in another city? Have you and your partner considered moving closer to friends or family? If you want that flexibility, you shouldn’t buy a home just yet. You may even love the city where you live but aren’t sure which neighborhood you want to end up in. In that case, you should spend a year or two exploring the city and thinking about the ideal place for you to settle down.
You’re Not Ready to Take on Home Ownership Stress
It’s true that renting can be stressful in certain ways, like having a bad roommate or a noisy neighbor. But the different with renting is that you can eventually move and find someplace better. Home ownership is often discussed as though it’s a “release” from the burden of renting, but many people gloss over the fact that owning a home comes with plenty of stress on its own.
At any given time, homeowners have to be prepared to shell out the big bucks to cover an unexpected repair. Things will eventually break or wear down, and unlike in an apartment, you can’t just call the landlord to take care of it. That can lead to some stressful periods, especially for big issues like roof replacement or foundation issues. Homeowners have to learn a lot about DIY repairs or pay professionals to get the job done, all without the help of someone like a landlord who is well-versed in home maintenance.
You Want Your Expenses to be Predictable
As mentioned above, unexpected home repair costs can be a major source of stress for homeowners. In addition, it creates some added financial risk. But when you rent, you pay a set amount each month regardless of any maintenance issues that might come up. If you like sticking to a budget, you’ll appreciate that unexpected costs aren’t threatening to derail your plans to be frugal.
If you’re not in a place to suddenly fork over thousands of dollars for a home repair (or if the idea of that simply sounds unappealing), you’ll probably prefer to keep renting. When you sign a lease, you know exactly how much you’ll pay for housing costs in the coming year, creating a more predictable financial situation.
You’d Rather Invest Your Money Elsewhere
The most commonly cited benefit of home ownership is that it functions as a smart long-term investment. The idea is that the value of your home will continue to increase over the years, thereby increasing the value of your investment with each mortgage payment. However, that’s not always the case. There are some situations where homes depreciate in value, or a home just may not increase enough to deliver the returns an owner would hope for. While it’s usually a safe investment to buy a home if you plan to live there long-term, it’s by no means a risk-free investment.
People who aren’t eager to buy a home could potentially get the same return on investment by putting their money in the stock market instead. Even a conservative portfolio of stock investments could provide strong returns. If you choose that option over renting, you could potentially get those strong investment returns without having to deal with stressful home repairs and unexpected expenses relating to home ownership. Plus, stock investments can usually be liquidated quickly if were to need access to those funds. Homes, on the other hand, are not a liquid investment; you won’t be able to sell overnight, so it will take a while if you want access to that money.
To be sure, home ownership is a smart investment for many people. But it’s important to remember that it is not necessarily the smart investment for ALL people. If you love the perks of renting, don’t be pressured to buy a home. Consider these situations to see if you fall into one of the categories where it’s smarter to rent than buy.