The Top 4 Disadvantages of Renting
Most people would say that owning a home is better than renting, but are they right?
Renting is the most affordable alternative if you desire the flexibility or cannot afford the up-front costs; however, buying a home can be 45% cheaper than renting! Undecided?The following are the disadvantages of renting to help you better weigh your options.
1. Rules and Regulations–As a renter you are subject to the owner’s rules or rules of the lease agreement, which can impact the freedom to use or renovate the property. Rules may include:
· Refraining from making changes to the rented property without the consent of the homeowner
· No pets
· Limitations on home decor
· Restrictions on the amount of people on a lease
· Smoking and certain habit restrictions
If you choose to buy a home or unit space, the rules are your own. You can customize the look of your unit, renovate rooms to make the home more valuable, have pets and decide who lives there.
2. Lack of stability–As a renter there is no guarantee that a lease will be renewed on the same terms and conditions when it expires.This may result in an unplanned rent increase or having to vacate the property. Issues may include:
· Your family is living in a rented house on a temporary basis. Any infraction allows a landlord to remove you with a 30-day notice.
· The owner can remove you if he/she wants to sell the property.
· As inflation pushes up the cost of living, your rent goes up as well
Homeowners are permanent residents and their families will not be forced to leave unless their mortgage defaults. Fixed rate mortgages also offer stability to homeowners who cannot afford purchasing a home upfront. Fixed rate mortgages are comprised of consistent monthly payments, regardless of the economy or your paycheck.You'll have a stable family environment knowing that you won't have to move unless you want to.
3. No Equity–Renters don't get any equity gains in the property they’re renting.
· Your rent money goes to paying someone else’s mortgage.
· Any changes you make toward the house increases the value of the landlord's property.
· If new shops open near your apartment, the property value will increase as well as the rent price.
· You have no control over annual rental fluctuations which are directly affected by inflation.
Home ownership is an equitable long-term investment. When you’re a homeowner, every house payment you make typically builds up more equity in your home.
4. No Financial Incentives–Of all of the disadvantages of renting, this is the most painful part because there is zero return on your investment for rent payments.
· No incentive to improve or decorate the property from a financial perspective as any gains go straight to the landlord.
· Real beneficiary is the landlord who earns an income and has his or her debt paid off by you.
· Monthly rent payments consist of money that is not being invested in long-term security nor is it building up savings.
· You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.
In home ownership, paying off your mortgage is like contributing to a compulsory savings plan. As your loan balance goes down, your equity in your home goes up thereby increasing your personal asset base.
Other perks of home ownership include the inclusion of profits from capital gains and energy-saving rebates or tax incentives from companies or your state government if you install green appliances.
Don’t want to experience any of the disadvantages of renting? Home ownership is a long-term investment that provides tax incentives and financial equity. When your home loan is paid off you'll be able to live in a home debt-free and rent-free!
There is a lot to think about when deciding whether to buy or rent. To help decide what is right for you, weigh the individual considerations like affordability, lifestyle needs and your personal goals and objectives. And don’t forget to learn about disadvantages of renting so you can plan ahead.
Are you a first time home buyer? Read these important guidelines with all the information you'll need to make this important purchase.
At DSEAYCOM, we’re happy to answer any questions you have about buying and selling in the Alabama area. Call us now or and feel free to share our contact information with someone you know that needs expert help buying or selling their home.
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