At first, renting does seem like the right option for living, but it’s just a short-term solution. It’s a significant part of one’s life, nevertheless.
Among the many benefits of renting, there are still some drawbacks. You will help make an informed decision for yourself or your family by knowing the pitfalls of renting.
If you want flexibility or cannot afford up-front expenses, renting is an economical choice, but knowing the downsides of renting can help you weigh your choices better. Read on to learn about the downsides of renting.
The Cost of Renting
You would have to make a monthly rent payment to your landlord for the privilege of staying there whether you rent an apartment or a stand-alone home.
This rent payment does not buy you anything, but the right to stay in the home for another month, unlike with a mortgage payment, where you are eventually paying off a debt for the home you own and stay in.
Consequently, your rent can go up over time based on the terms of your contract and the policies where you live. This means that after the current term of your lease, it is hard to accurately foresee and plan for your housing costs.
While there are rent control laws in some cities that state how much your rent will increase, many do not, putting you at the hands of your landlord and the demand.
No Equity
Monthly rent payments are comprised of income that is not invested in long-term security or savings are not built up. Homeownership is an equitable long-term investment, despite common belief.
It has risk, like with any investment mainly with the value of the property. To raise the value of your home and property and reduce risk, you can take measures.
If you pick a place where there is new development or increasing economic activity, the value of the property increases. Your house value also goes up if you invest in renovating your home.
If you rent, the value of the landlord’s property is increased by any improvements you make to the home. If new shops open near your apartment, the value of the property will increase, and the rental price will eventually rise.
No Financial Incentives
It also has financial benefits to give up renting. You cannot only have a stable residency and the ability to create equity, but you will also collect incentives and tax credits by becoming a homeowner.
Over the span of six years, the monthly cost of a typical homeowner would be less than the monthly rent of a tenant. For homeowners, the government often offers tax incentives. The interest on a house loan as well as property taxes are tax-deductible.
The deduction of capital gains profits and energy-saving rebates or tax incentives from companies or the state government when you install green appliances are other benefits of homeownership.
A Waste of Money
It really doesn’t feel like it is just dumping money without getting something back when a tenant pays the rent. But, the amount of rent payments could be equal to the purchasing price of a decent house over a lifetime.
It is real that if you rent a house, you usually spend less per month compared to paying a 30-year mortgage with a 4% to 5% interest rate, but it is your home after 30 years. You help others to pay off debts when renting, but get nothing for yourself.
Conclusion
It seems that renting is synonymous with temporary. If you want to build a household, because of the drawbacks listed above, renting an apartment or a home may not be the best way to do it.