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    If you’re trying to decide whether to buy a house or remain a renter, it’s important to consider factors that matter to you such as your personality, planned life events, and financial capability.

    Ask yourself questions like . . .

    “Is owning a home a practical move now?”

    “Can I keep up with mortgage payment, or will I just get myself into trouble?”

    “Is it possible to build my net worth even as a renter?”


    A house is a tangible asset that grows in value over time, but the associated costs of owning it are huge and burdensome.

    The overall cost of renting is only a fraction of the cost of homeownership, but all the money you pay toward it is considered as “money thrown away”.


    Here’s a rundown of the advantages and disadvantages of buying and renting that can help you decide between the two.



    Owning a Home


    Owning a home has always been a part of the American dream. It gives a sense of stability and a feeling of accomplishment. Despite the challenges a homeowner faces, 84% of Americans still consider buying a home a major goal to achieve and set it up high in their priority list.


    couple in their new rental home


    A recent survey conducted by Forbes Advisor also revealed that 57% of expert respondents in the field of real estate and finance agree that buying a house is a smart financial move.



    Sound Long-term Investment. Home values appreciate over a long period of time. The National Association of Realtors reports that median existing-home prices increased by 14% from October 2019 to October 2020. And for the next decade, it is expected to further climb in value. This makes real estate a suitable investment for retirement and creating passive income.

    Higher Net Worth. A homeowner’s net worth is 40 times greater than a renter’s,  according to the Federal Reserve Survey of Consumer Finances. In comparison, a homeowner’s median net worth in 2019 is worth $255,000 while a renter’s net worth is only $ 6,300. More business, credit, and financial opportunities open up to people with higher net worth.

    Equity Growth. Your equity grows in value as you pay down your mortgage. As this builds, you get more of your money back when you sell it because of less money you now owe on the asset. You can leverage your positive equity to scale your property holdings, spend for education and medical expenses, or use for home improvements.

    Tax Benefits. Your closing costs, property taxes, mortgage interest, and home equity loan interest are deductible from your tax. These deductions increase your ROI on your investment.

    Fixed Payment. Unlike in renting where your rent payment escalates annually by 3% to 5% upon lease renewal, a fixed mortgage payment allows you to budget your finances by paying the same monthly amount for 10, 20, and up to 30 years.




    Not Readily Convertible to Cash. Regardless of its value, your home is not cash-convertible at a time that you might need cash. Be well-equipped financially to cover for emergency situations when they arise.

    Higher Costs Involved. The high costs involved in homeownership include the down payment, mortgage payments that could run up to 30 years, homeowner’s association fees, property taxes and insurances, and upkeep costs.

    Potential Loss in Value. Your home can lose its value when a sudden economic downturn strikes. This is an important factor to consider when you are planning on selling your home after a certain period.


    Renting a Home


    Proponents of renting agree that it makes more financial sense to rent. The huge costs associated in homeownership are not something most middle-income renters can afford. With the rising cost of housing, many are now recognizing the advantages of being a renter.


    woman unboxing a box in her new rental home



    Major repairs are landlord concerns. Your landlord is responsible for ensuring that your rental home is habitable when you rent it. On the other hand, renters are expected to be respectful of the property to avoid any damages that may result from neglect, lest you pay for it.

    No property taxes to deal with. Property taxes can cost thousands of dollars annually and is a financial burden among homeowners.

    Less upfront fees to move in. The amount of your security deposit and move-in fee is lesser than the down payment and closing costs.

    Flexibility to downsize or relocate. Certain life events could force you to downsize or relocate. Renting offers you the flexibility to do both with no strings attached to your rental home.

    Lower insurance and utility cost. Rental apartments are typically smaller than most homes and therefore have lower utility costs. Renter’s insurance cost is minimal as it only covers items in the property.



    Limited choices. In cases where you urgently need a place to rent and there’s not enough vacancy, you may end up renting a place with a price that is beyond your budget.

    Landlord might decide to sell. Even if you’ve comfortably lived in a place for a long time, you can be forced to move out with only a 30 to 90 days move-out notice when your landlord decides to sell the house.

    Rent escalation is high. Rent prices increase annually by 3% to 5%. For an average monthly rent of $1,124 (as of February 2021) that percentage increase translates to an amount between $34 and $56. A low to middle income renter may be cost-burdened over time as a result.


    To put to rest your mental debate of rent vs. buy, you need to ask yourself these questions and see where your answers lead you.

    Both buying and renting have valid positive points to consider, but try not to pressure yourself to come up with a decision unless you are in that stable stage in your life and career. It’s good financial discipline to plan for  wealth-building while you’re still young or with lesser responsibilities. But you can always take the rental route now and buy later. This way you’ll have enough time to focus on your career and explore a variety of lifestyle options that will eventually help you make better decisions.

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