Tips & AdviceRenting vs. Buying -- What Are the Pros and Cons?

Renting vs. Buying — What Are the Pros and Cons?


You have likely weighed the pros and cons of renting or buying property at some point in time. This hot button topic presents itself at various points in most people’s lives, predominantly in younger Americans when life and family planning.

For many adults, whether to rent or own relies heavily on their current financial situation and ability to save for the upfront cost of acquiring a home. While the American dream may be to own the place you call home down the line, the immediate moment calls for renting. However, an increasing number of Americans, typically those classified as Millenials and Gen Z, are shifting away from owning homes and instead choose to rent their entire lives.

Even those who want to purchase homes may face the reality that renting is the only possible option for the foreseeable future. As salaries disproportionately inflate compared to the increasing prices of homes and mortgage rates, putting money toward a down payment and closing costs grows further out of reach. For major cities like Miami, New York City, and Los Angeles, owning is quite expensive, as homeowners spend around 80% of their income on housing. However, that is not to say that renting is the fiscally obvious answer. While rent prices continue to rise, specifically in metropolitan areas like New York City putting your money toward ownership may make more sense.

In this article, we’ll evaluate both sides of the coin for renting versus owning a home, so you can make an informed decision.

Pros of Renting

1. Limited quantity of bills

When renting a home from someone else, you will likely have fewer bills than when you own property. Renters pay their rent, utilities, and renter’s insurance every month. You can enjoy your time in your unit as long as you continue to pay your bills on time. Homeowners, on the other hand, have to be worried about a lot more expenses, including homeowners insurance, which is often a lot more expensive than renter’s insurance.

Learn more: What is renter’s insurance, and why should I get it?

2. Freedom to move around

There are many reasons you may not want to secure yourself to one location for a prolonged time. Perhaps your job requires you to switch places, or maybe you are simply unsure of where you may want to live a year into the future. Whatever the case may be, renting allows you significantly more flexibility when picking up and moving locations.

As long as you fulfill the agreement of your lease and pay rent for the duration of your lease, you can move wherever you would like. Most lease agreements last for a year, so you do not have to stay tied down for too long. Some lease agreements may even allow you to sublet, meaning someone else stays in your unit while you embark on your adventure. Short-term leases may prove appealing for those who often move, as you can sign to live in a unit for less than a year.

3. No stress about maintenance

Renting a home means that your landlord adopts the responsibility for maintenance and repairs. This living situation can be ideal for many individuals, especially if you are not confident in your maintenance skills. Your landlord will tend to everyday problems like shoveling snow, putting down ice, etc. You simply have to reach out to them and allow access to the unit should you need something done inside.

4. Financial flexibility

Typically speaking, renting allows you to hold your cash in a place of your choosing instead of tying it up in a home loan. You do not have to incur the financial responsibilities of owning a home, such as maintaining savings for severe housing situations like flooding, storm damage, and other costly expenditures. This type of flexibility proves appealing to renters who prioritize other financial goals.

Cons of Renting

1. Rent is still expensive

While you may save money on maintenance, repairs, and sudden housing costs, renting still racks up the bill, and over time you may spend more on rent than a mortgage payment. In the fourth quarter of 2021, the median rent for a one-bedroom apartment in New York City reached $3,450, a significant price to pay every month. Over a year, an average NYC renter spends $41,400 on property they do not own, which they could instead spend on mortgage payments and building equity in a home.

Additionally, in places like New York City, you must have income at least 40x the rent price to qualify for housing. This requirement can be challenging to meet and serve as a financial barrier to entry for potential renters. While guarantors are allowed for many applications, those without a personal guarantor will pay more money to hire a guarantor service. Additionally, landlords typically require accepted applicants to simultaneously submit their first month of rent and security deposit. Even though this upfront cost does not compare to the price of a down payment on a multi-thousand dollar home, it still involves a large amount of money.

2. Outside factors influence your living situation

Sometimes things happen, and your landlord may decide to sell the building. You may have to pack up and move out if they do sell. When you rent instead of buying, you lose the ability to control all aspects of your living situation and therefore grow susceptible to adhering to others’ choices.

Additionally, when you approach the end of your lease, both you and your landlord have the opportunity to evaluate your situation, which may result in a rent increase. Since your first lease expires, your landlord has the option to raise your rent, possibly pricing you out of your home. From 2021 to 2022, 90% of one-bedroom apartments near MTA stops in New York City witnessed rent increases, sometimes increasing by 34.4%. You, therefore, do not have the benefits homeowners have of fixed housing costs and may find yourself amid a rent increase every year.

3. You must abide by the terms of your lease

Renting means your face the possibility of forfeiting certain luxuries you have when you own property. When you buy a home, you have the freedom to complete repairs, cosmetic upgrades, and tend to other features at your leisure, depending on whether you need licenses and approvals from your municipality. If you rent, you will need permission from your landlord to make changes, and sometimes your lease may flat out not allow them. Examples of changes you may not be able to make include painting walls, picking appliances, and hanging large fixtures. While you may not have the explicit right to make decisions on your own, you may be able to negotiate renovations with your landlord.

Another important term that affects many renters includes the ability to own pets. Some landlords flat out refuse pets, and you will face fees and the consequences of breaking your lease should you decide to acquire one during your tenancy. If your landlord does allow pets, they may require additional fees on top of your rent and utilities. When searching for a pet-friendly apartment, you will notice fewer options.

Pros of Buying

1. Your home can appreciate

Generally speaking, owning a home is the best way to accumulate wealth as the property value appreciates.

Depending on how long you stay in the home and the market conditions leading up to when you sell, you may be able to make money on the transaction. While your home appreciates, your mortgage payments remain the same, meaning the deal on your home gets better over time.

Currently, housing prices continue to rise, and sellers can recoup even more on their investment than in years prior. The median sales price of a New York City home in June of 2021 was $960,000 and has increased to $975,000 in June of 2022. The 1.56% price increase throughout one year means a home seller can make money on a property they purchased twelve months ago.

2. You can receive rental income

Owning a home means that you can rent your property in various ways. The amount of space you rent and the duration you rent are entirely up to you. Through leasing, you can increase your income and potentially offset the course of your mortgage payments. Should you decide to rent your property, ensure that you maintain organized records of all transactions regarding income and expenses, as you will have to pay taxes on your rental income.

Learn more about renting your home: A Guide to Rental Income and Expenses

3. Ability to make changes and develop a community

Homeowners have the freedom to make their own decision regarding the maintenance and design of their homes. Furthermore, by knowing that you can stay in your home for as long as you want, you may have an easier time engaging in your direct community and building relationships with those around you.

It is important to note that you may live in an area with a Homeowners Association (HOA). If that is the case, you will have to abide by their rules, which may include restrictions on the type of improvements you can make to your home. While your HOA cannot evict you for breaking their rules, you may be subject to financial consequences.

4. Benefit from tax credits and other programs

To help offset the cost of homeownership, the federal and many local governments offer programs and credits. First-time homebuyers can receive down payment assistance, lower interest rates and a mortgage credit certificate to help finance their purchase.

Homeowners can also deduct mortgage interest, property-related expenses, and property tax payments. Though owning a home may be expensive, several ways to cut costs and save money. You may pay less per year than you would if you rent.

Cons of Buying

1. Buying is expensive

Purchasing a home can be a daunting endeavor when considering the upfront costs. Most Americans will not pay for their house in full and instead take out a mortgage loan and make a down payment. However, that down payment can still prove costly, ranging between 3 to 20% of the purchase price. If the average New York City homebuyer wants to purchase a home at the median purchase price of $975,000, they must make a minimum down payment of $29,250. According to our June 2022 Affordability Index, homeowners in 65 of the top 100 U.S cities spend at least 30% of their income on housing. After the down payment, homeowners must also cover their closing costs, including title and attorney fees, inspection fees, and property taxes.

Between a down payment and closing costs, many homebuyers will need to save their money to afford the purchase of a home. This barrier to entry keeps many people from affording the price of a home, especially as mortgage rates increase to 5% and affect how much house a person can buy. Those who currently own a home may be able to acquire a lump of money when they sell their property and then put it towards the purchase of a new home.

2. Responsible for unexpected costs

When you own a home, you must stay vigilant with your savings account, as you never know when you will have to spend hundreds or even thousands of dollars on repairs. If disaster strikes and destroys the quality of your home, you will likely have to pay the total cost of repairs to get your home back to living condition.

People who live in areas like flood zones are even more likely to spend money on costly repairs. If you live in a high-risk flood area, your mortgage lender may require you to acquire flood insurance. While the insurance helps recoup losses from flooding, you will still bear the emotional cost of dealing with the repairs.

3. You risk foreclosure

While a landlord does not have the power to force you out of your home, your bank does. You become at risk of foreclosure if you fall into financial hardship and fall behind on your mortgage payments. The bank takes possession of your property, and you lose ownership.

Of course, most homebuyers follow budgeting guidelines and try to take out a mortgage they can afford. But if you live in a city like Los Angeles, where 85.15% of your income goes toward your homeownership, a slight decrease may affect your ability to make a mortgage payment.

Learn more: How to Avoid Foreclosure?


There are strong arguments on both sides regarding renting or buying your home. While this decision remains personal, it is essential to consider the above and how it relates to your current and future financial situation. Perhaps you love the low-maintence lifestyle and enjoy your freedom. If that is the case, make sure to budget and calculate how much rent you can afford to ensure you can afford monthly rent payments. If it’s time for you to take the plunge and purchase a home, see if you can use federal and local programs to help finance your transaction. There are thousands of properties for rent and sale for whichever you decide.

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