Does it make sense to rent?

That’s a question we in the real estate business get asked a lot. Of course, our answer is simple. It’s ALMOST always a good time to buy. While helping people buy and sell homes is what we do for a living, it’s our sincere, honest answer to the question. Why the “almost”? Because there are circumstances when buying a home isn’t a good idea and I cover that in a separate blog.

Now with the supply of available homes at an historic low and with interest rates set to rise, this question is coming up again.

To help me answer it, I sought the opinion of Cliff Coble at Land Home Financial Services. Cliff is a good friend and one of my go-to mortgage lenders. Rather than a few lines saying what you would expect him to say, he provided ten excellent reasons that owning is always better than renting – with one exception.

1   No landlord can kick you out.
If you are renting a home the landlord may suddenly decide to sell the home, rent to someone else, or otherwise end the lease.

2   Apartments are getting hard to find.
Due to the number of people moving to Tennessee the demand for housing is currently skyrocketing. This means there are fewer and fewer apartments available and rents are increasing. It is a simple matter of supply and demand.

3   If it breaks, you better be patient.
If renting and you have a repair issue, you are at the “mercy” of the landlord. Will they correct the issue right away or will it take weeks or even longer to get them to respond? If you own you are in charge as to when you get the repair completed.

4   It’s always the same payment.
A fixed rate mortgage is not subject to inflation. The principle and interest never goes up, even if the cost of everything else does!

5   Finally, the tax laws work in your favor.
You can take advantage of the tax laws if you own. Both interest and real estate taxes can be used to reduce/eliminate you tax liability. This is not permitted, or available when leasing. Many would be surprised that after the deduction for principle and interest they actually end up with a mortgage payment less than what they were renting for.

6   The opportunity for additional income.
Owning a home allows you to possibly create a second income stream ie, renting out a spare bedroom or driveway space for commuters.

7   Make money while you sleep.
You have the potential of gaining equity in your home which is not available when renting. Historically, (with a few exceptions) homes appreciate in value. If you decide to sell, equity in the current home can be used for a new purchase.

8   Lower furniture costs.
Surprisingly, homeowners typically need less furniture if you stay in your home for the long haul. Renters need furniture that fits the space. This may mean renters need room dividers or furniture for a loft or basement apartment, and additionally if you need to move and rent again, this cycle may start over.

9   Do with it what you want.
When owning a home you have the freedom of making changes without a landlords permission. You may choose to knock down a wall for a larger master bedroom, redo a bathroom. Owning means you have the freedom to do so if you choose.

10  Don’t be scared by the downpayment.
Don’t have the money for a down payment? There are a number of programs available that can assist both first time borrowers and borrower who have owned homes recently. Some of these programs are grant programs which mean they have no payment with them and are forgiven from the start. These programs are however, subject to qualifying as they have their own set of program requirements.

Those are all excellent reasons but I noted there is one exception to the rule.

Otherwise, home ownership is a solid choice.