Homeowners and renters both pay for upkeep
Rent or Buy?
When someone asks me any question, my most common answer is “I don’t know.” When I do know (or think I know) a good deal about the subject, more often my answer is “it depends.” So, when it comes to the question of buying or renting a home, my response is, “it depends.”
What does it depend on? To start, consider what it costs to own a home. Obviously, there’s the price of the home. If you take out a loan to pay for it, there is the price of interest. We’ll ignore both for a bit. Because first I want to look at the cost of the home after you own it.
When you own a home you have to pay taxes on it. Unless you are stupid, you will buy insurance for it. You’ll want to maintain it. This might include plumbing, electrical, the roof, and a host of other issues. Oh, and you might want to paint it now and then. We won’t talk about the yard…mine’s looking bad these days.
When you rent a home, you have the exact same expenses. “No way,” you may say, “I thought the landlord was responsible for all of that.” You are right. But if the landlord has to pay for it, don’t you think he’ll pass that on to you in your rent payment? So just because you don’t own the home doesn’t mean you aren’t paying to keep it up.
Add to that the landlord has to prepare for potential problems like foundation issues, mold, and termites. A renter might trash the place on their way out. The property might not rent for several months. All of these possibilities will not happen. But the landlord knows that if he rents long enough eventually something will happen that will take extra money. So he adds a bit to the rental charge to cover it.
The landlord also needs to make a profit, adding even more to the rent. This is why, over the long term, renting will normally be more expensive than buying. And it should be. After all, you are paying for the convenience of not having to worry about all that stuff. That convenience might not make renting cheaper, but it may make it a better option for you.
Don’t want to worry about painting? Rent. Don’t want to worry about the hot water heater leaking? Rent. Don’t want to worry about what the hail storm did to your property? Rent.
Then there is the time horizon. Depending who you ask, when you purchase a home, you should plan to be in it at least 3-5 years to make sure that the gains over time cover the buying and selling expenses. Only going to be around a couple of years? Rent.
Now, before all my real estate friends get mad at me, I’m a home owner and want to be. While it’s not the most fun in the world, I don’t mind being responsible for house upkeep and repair. My plan was to be in my home a long time. So far that has lasted two decades.
This article was published under the title "Renters pay same costs as owners" in the Wichita Falls Times Record News on November 10, 2013.