Making the transition from renting an apartment to buying a home is a big step that can impact your finances and your lifestyle, so it’s important to understand the pros and cons first.
You may want more room and autonomy over your living space. Or you may prefer the conveniences of apartment living, particularly in a complex that provides many services and features, like gyms, pools or media rooms.
There are many things to consider as you decide between owning a home and renting an apartment.
Advantages of renting an apartment
There are many reasons why some people prefer renting an apartment versus owning a home. Some renters love the flexibility to move when they want and not having to deal with expensive repairs. Others want a turnkey lifestyle, where they can lock their door and go without worrying about their property. Let’s review a few key advantages of renting.
- Maintenance: As a renter, your landlord or property manager is typically responsible for the repairs and maintenance of items that break down or wear out. This can include tasks such as fixing a broken dishwasher, replacing a hot water tank or keeping the landscaping trimmed and tidy. However, this often means you’ll be on a property manager’s schedule instead of your own. Repairs and maintenance may not be completed as quickly as you’d prefer.
- Amenities: Apartment complexes today offer a wide variety of coveted amenities. These can include state-of-the-art gyms, swimming pools, pickleball courts, dog parks, running trails and more. Some buildings in large cities may even include a doorman, which can be a welcome safety feature.
- Fewer financial compromises: Renting means that your monthly expenses are fairly predictable, and you don’t have to worry about unexpected costly house repairs. You also have the flexibility to move when your lease is up without the expense or hassle of selling a home. [1]
Disadvantages of renting an apartment
Renting an apartment also has its disadvantages. For example, you won’t be allowed to update the apartment without the permission of the landlord. If it has outdated countertops or a wall color that’s not appealing, you typically can’t make a change without prior approval. Also, while you won’t owe separate property taxes, the landlord may include them within the monthly rent. And the landlord may be able to raise your rent at the end of the term of your rental agreement. Plus, there’s the deposit you need to pay up front. Let’s review a few key disadvantages of renting.
- Less flexibility on updates: When you’re renting, you typically won’t have the freedom to make significant changes to the property, such as removing and installing new carpet or renovating the bathroom. You’ll usually need to get landlord approval before certain updates. However, once your lease is up, you do have the flexibility to move to a newer apartment that’s more updated.
- Competitive rental markets: If you live in a bigger city or an exciting part of town, it may be more difficult to find the right apartment. If the market is especially competitive, desirable rentals can be quite expensive. On the flip side, if the economy is in a recession or the apartment is outdated, the landlord may be willing to offer a reduced rate for the unit.
- Landlord control over rent and availability: One of the biggest downsides of renting is that the landlord has much of the control. They can raise the rent when your lease is up. They can even sell the building, causing an unexpected move for you.
- Cost: It’s important to think about upfront costs when renting. While renting doesn’t require the same kind of down payment that a mortgage does, you’ll typically pay a deposit when you sign an apartment lease. And you may have to put down the first and last month’s rent. Deposit amounts vary, and they might not be refunded at the end of your lease if the terms of the deposit are not met. If you have a pet, you’ll likely have to pay a pet deposit, which can be nonrefundable. These costs can add up. [1] [2]
Advantages of buying a home
The advantages of owning a home are numerous, but there’s a common misconception that homeownership is always better than renting. One option is not always better than the other. People have to take into consideration many factors, including their goals, financial situation, location and lifestyle. However, owning a home can provide stability and the pride of ownership, not to mention tax deductions! Let’s review some key advantages of buying a house. [1]
- Flexibility: Homeownership often comes with its own kind of freedom and flexibility. After all, if you own your home, you can paint the walls any color, refinish the floors, remodel an outdated kitchen or update your bathroom tile. You’re pretty much free to reinvent the space however your budget allows.
- Storage: When it comes to space and storage, homeowners almost often win out. They can have the advantage of having attics, garages, more closet space and basements. Also, many homes have more square footage than an apartment.
- Building equity: Owning a home is an investment, and a big reason for that is because homeowners can build equity. Home equity is the difference between what you owe on your mortgage and the current value of your house. Greg McBride, CFA®, Bankrate’s chief financial analyst, says, “The benefits of homeownership accrue over the long term through the accumulation of home equity.”
- Possible tax benefits: Homeowners traditionally can deduct their mortgage interest thereby lowering their federal tax liability every year. Don’t use the tax deduction alone to determine whether the long-term investment of homeownership is right for you. Consider how high your property taxes would be along with mortgage insurance requirements and maintenance costs and weigh them against your overall goals. [2]
Disadvantages of buying a house
While some consider homeownership to be the pinnacle of the American dream, owning and maintaining a home isn’t always so simple. You’ll deal with insurance requirements, pay for home repairs, handle maintenance, and may have to pay for HVAC systems and appliances when they break. Let’s review some key disadvantages of buying a home.
- Cost: When considering purchasing a home, it’s advisable to review all of the costs. It starts with the down payment, real estate agent fees and any additional costs you pay the day you sign the closing documents with the bank. But that’s just the starting point. Part of your monthly mortgage is going toward paying off your interest, which you can deduct on your taxes, but it can take time until you see significant equity. Additionally, as a homeowner, you may also have to pay homeowners association fees, depending on where you live. Compare these costs with your current rent for the bigger picture.
- Maintenance: If you’re a homeowner, the day will eventually come when you’ll need to make a substantial investment to repair or replace mechanicals or appliances such as a furnace, air conditioner, refrigerator or oven.
- Market fluctuations: You’ve heard of a buyer’s market and a seller’s market, right? These come into play when you’re considering a home purchase or sale. In a buyer’s housing market, it may be quite difficult to sell your home for the price you want, and the sale may take longer than expected. A hot seller’s market, on the other hand, can be difficult for buyers, especially when homes go into contract after just 1 day or the buyer is faced with a bidding war. In addition, real estate isn’t a liquid asset. You need to be sure you’ve chosen the right home and neighborhood before you make a final decision. [1] [2]
Questions to ask when considering renting versus buying
There isn’t one perfect answer to the question of should you rent or buy. You’ll need to review your finances, your future goals, your lifestyle and other relevant factors. Here are several key questions to ask yourself and your family if you can’t decide whether to buy or rent.
- Do you prefer stability or flexibility? An apartment is flexible for last-minute travel and job changes, while a home may mean you’re putting down roots and plan to stay there for a while.
- What can you afford? Analyze your current monthly expenditures. Consider additional repairs, maintenance and insurance costs. Would a home purchase put too much strain on your budget?
- Do you have a neighborhood you’ve dreamed of living in? Can you afford that now or would you need to expand your search? Some people want to wait out the perfect place, while others want to get into a home right away and are flexible about the neighborhood.
- How do you feel about long-term investments? A home isn’t a liquid asset. You may not be able to easily sell it, but if you stay for the long term, you can build equity to reach your financial goals.
- What are your goals? This can include your career, finances, family and more. Would a house or apartment be a better fit for those goals?
The decision to rent an apartment or buy a home depends on a lot of factors, but regardless of your choice, you’ll need protection from the unexpected. If you’re considering an apartment, see how Nationwide® can protect you with renters insurance. If a house purchase is on the horizon, understanding your homeowners coverage options is a great next step.
Sources:
[1] “Renting vs. buying a house: Which is right for you?” Michele Petry, bankrate.com/real-estate/renting-vs-buying-a-home (Accessed January 2025).
[2] “Renting vs. Owning a Home: What’s the Difference?” Christina Majaski, investopedia.com/articles/personal-finance/083115/renting-vs-owning-home-pros-and-cons.asp (Accessed January 2025).
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