While buying a house was once a sign of prosperity, in today’s economy many adults choose to rent an apartment instead. Is this a sign that housing prices have increased? It is a little about the pricing, however for many renters the decision actually makes better sense for them financially. When you consider that on average people move housing about 12 times during their life, the choice to rent instead of buy does have merit.
I Thought Buying Was a Smarter Investment Than Renting. What’s Changed?
One survey on apartment renters found that about 25% of participants preferred their current living arrangement over buying a house of their own. This percentage of those surveyed lived in an apartment by choice, not necessity. An adult might choose apartments over houses for a number of reasons: maybe they plan to move around frequently; perhaps they hate doing their own home maintenance; or maybe they enjoy luxury amenities.
Why Is Renting an Apartment Considered a Smart Financial Move?
Buying a house requires money, more money than many people have in their current bank account especially if they are younger than 25 years old. First, there’s the down payment, which is recommended to be 20% of the total value of the home. Then, there are the closing costs, inspection fees, and of course the taxes. Sometimes it is not the mortgage payment so much as the added costs that make buying a home out of reach for many adults.
Renting an apartment is different. Sure, there is the security deposit, but some apartment complexes will waive the deposit or lower it for some categories of renters, i.e. veterans. A security deposit on an apartment is a much lower amount than a down payment. For many adults, saving up for a down payment doesn’t seem worth it. Some get discouraged by the amount of time it might take, and instead choose to make do in a decent apartment.
While monthly rent payments won’t go towards eventually owning the place, a rental agreement gives the tenant the option to go somewhere else if they choose to. Renters who need a short term lease are some of the worst candidates for buying a home. These are the people who have a job that requires frequent relocations or similar circumstances.
If I Want to Rent an Apartment What Do I Need to Know to Get a Great Deal?
One perk of apartment living is being able to enjoy amenities you might not otherwise be able to. For example, most apartment complexes offer their tenants the use of a pool. Luxury apartments might offer tenants the use of a small gym or fitness room, a sauna, a wine room, or complimentary coffee. Some complexes offer game rooms with pool tables and darts.
To find the best deal, it is smart to shop around. If possible, visit each location you’re considering and ask for a tour. Keep notes on what the leasing office offers, and don’t be afraid to mention that you’re shopping around for a new apartment. Some locations are able to offer competitive pricing on the deposit or the monthly rental price. Some complexes may offer to throw in a garage or parking if they are really serious about winning you over.
Is There a Downside to Renting Over Owning?
Renting an apartment over buying a house has its benefits, and its downsides. For one, you’ll always have a rotating cast of neighbors. Secondly, parking can be a complication depending on the layout of the apartments you choose. Some locations have unmarked or unreserved parking, while others have an underground parking garage. Do you want to haul groceries up an elevator or worse, stairs?
Renting instead of buying might make sense for you at this time in your life. Perhaps you plan to move around and don’t want to be tied to a mortgage. Maybe you like the idea of routine maintenance being someone else’s problem. Either way, make sure you shop around before deciding on a place. And if you end up hating it, you can always move when the lease is up.