For some, owning a piece of the American dream means renting it instead. If you've always dreamed of enjoying property that's low-maintenance and low-responsibility, you may be more suited to renting your home than buying it. Home ownership comes with more than just a big price tag; it also comes with home repairs, lawn upkeep, and regular maintenance on the major systems that keep it running. If you're not sure whether you're up to the challenge, consider the advantages and disadvantages of each before making any important commitments.
Home Ownership Builds Equity
Except during the very worst years of the housing market, most homes build equity over time. One exception to this rule is the mobile home which tends to depreciate over time just like the cost of a vehicle. But if you purchase a stick-built or modular home, apartment or condo, it's likely to appreciate over time -- and when it comes time to put on a new roof or remodel the basement, hopefully you'll have enough equity to fund your project.
A rental property will build equity too, but for the owner, not the tenant. If it's equity you're after, then ownership is the way to go.
Home Ownership Means Maintenance Costs
When you purchase a home, you purchase everything that can go wrong as well. And this can mean big bucks in costly repairs when something major fails. Wells go dry, furnaces conk out, and septic tanks fail over time. If you're renting your property, none of this comes out of your own pocket. Repairs typically fall on the person who owns the home -- so long as the tenant reports the issue promptly.
If you're worried about having to cover the costs of maintenance and repair, then renting is a better option for you.
Taxes Take a Big Bite
Depending upon where you live, property taxes vary. They also have a tendency to raise over time. And these taxes are the responsibility of the person who owns the home. Of course, if you rent, your landlord may figure the cost of property taxes into the cost of the monthly rent, but as long as you agree to an arrangement that you can afford, taxes shouldn't be a hardship to the person renting the home.
If you're still wavering between owning and renting, talk with a licensed real estate agent or broker in your area to find out more about which situation may be the best one for you.