11 Reasons to Not Rent a Home

11 Reasons to Not Rent a Home

I recently read a great article by Forbes contributor Kelly Phillips Erb on the 11 reasons why one may not want to own a home.

(11 Reasons Why I Never Want to Own a House Again)

You would think that as a CEO of a mortgage brokerage, I’d recommend that everyone buy a home. As a matter of fact, I don’t.

When people tell me they want to buy a home because they think it’s a good financial move, I recommend that they reconsider why they want to buy a home. You see, you should buy a home because that’s where you want be – for whatever reason: you’re close to your family, you want your children to grow up there, it’s 10 minutes from your job, you have access to public transportation, you love the community, etc. etc.

Buying a home is not always a smart financial move – for many of the reasons Erb points out. When you buy a home, you’re buying a physical asset – an asset that can take years to appreciate in value or, as many of us have discovered, depreciate in value through no fault of your own.

But, as in any discussion, a list can easily be made for the 11 reasons why someone would not want to ever rent again either . . . for instance:

1. Your landlord could be a complete jerk and make your life miserable.

He or she can stipulate that you not make any changes to your home or apartment or that you not have pets (even a hamster or fish!). If you live in the same building as your landlord, he or she knows your (intimate) business.

2. You can get kicked out at any time.

A landlord can sell the property and or tell you that you have to move because his daughter and her husband need a place to live. Or, if you become pregnant, you violate the “no children” lease clause the minute your baby is born.

3. There’s always the thought that you’re making someone else “rich” by paying rent.

The building appreciates in value – but you don’t benefit financially from this appreciation.

4. You have to deal with the stigma that something is wrong with you because you “rent” –

Even if you travel a great deal or you’re an empty nester or you simply can’t afford right now to buy (and that is ok!), or you don’t want to deal with maintenance, or [add your own personal yet valid reason]. Let’s face it, when you don’t own a home, people think something is wrong with you, which is how the whole, “buying a home makes financial sense” meme got started. It’s also why too many people buy homes they can’t afford.

5. It is more difficult to “rent” that lovely close-knit neighborhood.

When you rent, you’re subject to the market and available inventory. And, if you do luck out and find a great house, your landlord could sell it or tell you it’s time to move . . . just as your kids have become settled into their schools.

6. You may spend money to improve someone else’s property.

Some landlords are perfectly fine with you making minor upgrades to their property – as long as you pay for them. This scenario leads to a damned if you do, damned if you don’t outcome: if you don’t make the upgrades (and your landlord refuses to), you’re stuck living in an ugly home. Damn.

7. You don’t get the mortgage interest deduction.

A few states, such as California, give you a renters credit, but otherwise, you get nada. In the early years of a mortgage, that interest deduction is considerable.

8. Your rent can go up.

If you lease your apartment or home, you’re rent is stable for the year – but when you renew your lease, your landlord can raise your rent – to whatever she thinks she can get for your apartment. Don’t like it? Move or suck it up.

9. A rental is not an asset from which you can borrow.

Now, I’m not advocating you use your home as an ATM, but you can borrow from it in case of an emergency (if you have equity built up). When you rent, don’t have an asset from which to borrow, and thus can’t take advantage of home equity loans or cash out refis. You also have no collateral to help you obtain other loans.

10. You don’t have a home you can leave to your heirs.

You don’t need to be John D. Rockefeller to leave behind an “estate.” If you have young children and/or a spouse, one thing you can do is set up a trust and put your house in it. Think of trust as a suitcase: should something happen to you, the suitcase (and everything in it) is passed to your heirs intact without having to go through probate – which means, your children and spouse can continue to live in the house. You can’t do this when you rent.

11. Your quality of life is different.

Now, you can have a wonderful quality of life when you rent – but it does depend on why you’re renting and where you live. But, if you’ve dreamed of owning a cozy home on that wonderful tree-lined street, having parties in your backyard as you grill burgers, and walking your children to the local elementary school, then your quality of life is not what it could be if you rent.

Renting vs. owning — Do what’s right for you

Renting is good – especially if you don’t want to be tied down and you want freedom – or your empty nester and you simply want a smaller space without having to deal with the maintenance a house entails.

But, when you’re making the decision between renting and owning, take the “it’s a smart financial decision” off the list and instead consider all the other reasons listed in this article and the one by Erb. You’ll find that whatever you choose, you’re doing so for the right reasons.

Need help with deciding if owning a home is right for your situation? Call one of our financial advisers. We do more than simply quote mortgage rates – we’re here to help make the right decision for you.