It has always been the American Dream to purchase a home and turn it into the house of your dreams. Depending on your current financial situation, the cash to afford a mortgage or take on additional costs associated with buying a home may not always be the right fit or the ideal choice.
Luckily, other options, such as renting an apartment, can be highly beneficial depending on your circumstances.
Sometimes, patience and building up reserve cash flow for a large down payment can be more beneficial.
Renting an apartment is a great option and it is 100% possible to make an apartment feel like home.
It can even be less troublesome and reduce some stress.
What are Some Advantages of Renting an Apartment?
Homeownership is typically the goal for most individuals. While not all individuals will purchase a home at some point during their lifetime, the idea of it has crossed their mind at one point or another.
For most, many will try or ultimately purchase a home, whether today or several years later. It is perfectly understandable, and we are not here to argue against purchasing a home.
In this discussion, we are here to cover some of the advantages of renting an apartment that is often overlooked.
Here is a look at some of the best benefits of renting an apartment.
Not Needing a Substantial Down Payment
Buying a home may seem like the right thing to do; and with current financing offers, it can be easy to sign paperwork locking you into payments for 30 years.
That is what most new homebuyers believe.
However, it is not always that easy. Depending on credit and the financial lender you choose to work with, other costs that can add up substantially will be involved.
The first of which will be your down payment on the home. Most lenders in 2022 will require a down payment equal to a percentage of the home’s purchase price. According to U.S. Bank, the average down payment for 2021 was 6%.
However, many consumers still strive to put 20% down on a home purchase because it provides further benefits that save additional money, including eliminating PMI (Personal Mortgage Insurance).
Assuming you intend on purchasing a home for $200,000.00, 6% is an additional $12,000.00 cash you will need on hand at the time of purchase. Not to mention the additional cost to furnish a home that is larger, more significant utility bills, and other costs, such as closing costs.
When you rent an apartment instead, you do not have to worry about these costs.
Sure, you may opt to or be required to purchase renter’s insurance. You may also be required to pay a security deposit and an additional month of rent, but, outside of these costs, the expenses incurred to rent an apartment are minimal compared to purchasing a home.
Apartment renting will require less income and have less stringent requirements to rent compared to purchasing a home. Learn how much income is required to rent an apartment here.
Avoiding or Delaying Mortgage Payments
Mortgage payments are something that most will undoubtedly experience at one point.
An argument can also be had that renting an apartment is still a monthly rent payment. Still, no ownership and equity are being established when renting an apartment.
However, you must remember that paying rental payments and paying a mortgage are two separate concepts.
A mortgage is essentially a promise to pay for 15, 20, 25, or 30 years.
A lease on an apartment is going to be much shorter. Usually 6 months, 1 year, or 2 years.
Life has a lot of unexpected changes, especially in a fast-paced world dominated by technology and even working remotely.
The desire to remain capable of quick change and move to a new location on short notice has begun to trend up and become more popular.
If you are early in your life, it may not be the best idea to jump straight into a mortgage that requires a full-home sale before you can exit the agreement with the lender.
An apartment while finishing school, starting your family, or building investments can be a great option that keeps you capable of accepting change more fluently.
The point being, if you are not 100% sure if you want a house or are not quite ready for that commitment, consider the advantage of renting instead.
You can remain capable of moving and get out of your apartment typically with more ease than you can once you purchase a home.
Not Being Responsible for Property Taxes
While homeownership is excellent, it is not always the cheapest route you can take.
In fact, homeownership ends up with other expenses such as pay property taxes that cost thousands in most situations.
Real estate taxes vary based on the home value and the area. Real estate taxes can also be escrowed into your mortgage payment.
It is not uncommon for individuals to pay their real estate taxes separately to avoid the monthly mortgage payments being higher each month.
On average, in the United States in 2021, real estate taxes cost about $4,527.00.
You get to avoid these costs as someone who opts to rent an apartment instead.
The property taxes will be the responsibility of the rental property owner and/or management company.
No Concern with Home Values or the Potential of Losing Money
Homes come with a lot of excitement and potential.
However, great things in life typically do not come without some risks. Purchasing a home instead of renting an apartment is one of those examples.
Renting an apartment may not present the upside in financial gain that a home can, but renting an apartment is definitely advantageous from a risk standpoint.
Homes can fluctuate in value. Sometimes values can even drop heavily, like they did in 2008. While this is not super common and does not occur with any regularity, it can happen.
The upside of renting an apartment is to remove this stress and not have to worry about it. Especially until you are ready and know the home you want and plan to stay in for a long time.
The Potential of Reduced or Eliminated Utility Bills with Apartments
Do not get us wrong, there are certainly apartment monthly expenses.
However, the savings can usually outweigh the expenses when renting an apartment.
Utility bills can add up quickly, especially with home ownership.
In addition to other required expenses with home ownership like homeowners insurance, you also have utility bills such as electric, water, and gas.
You may even have additional bills for trash pickup.
An advantage of renting an apartment is that these utility bills will be cheaper.
Not only will the apartment bills be more affordable, but a few may even be covered by your apartment complex property management team/ownership.
Sometimes, you can enjoy covered utilities for an apartment, such as water and gas in many complexes.
In most situations, the renter will require a few utility bills, and almost always, electricity is not included.
However, in many circumstances, and if you shop around enough for your apartment, you can find an apartment that will include a few of the other utility bills in the rent.
If you are trying to save money to eventually purchase a home, having a few of your utility bills covered while you rent can be highly beneficial.
Maintenance Costs and Major Repairs are Not Your Concern
Another significant benefit often overlooked when renting an apartment is the amount of free time you can gain and the hassle you can avoid.
Things break and need to be replaced eventually. With homeownership, the cost, and potentially even the labor, is on you.
Owning real estate means that if a furnace, air conditioner, or even a major appliance is your responsibility if it becomes faulty.
Repair bills can become a significant financial burden when you own real estate.
Renting an apartment typically shifts this responsibility and the cost to the landlord or property owners.
If you rent an apartment and an appliance or your heating stops working, the property owner will have it fixed.
The property management teams often do everything from getting the apartments leased and occupied to handling all service and apartment maintenance requests and getting a technician on-site to fix the issue.
The Cost for Repairs that May Arise if You Choose to Purchase a Home
If it is your house that needs repair, you would either need to fix the problem or hire someone to fix the issue out of your pocket.
Not to mention the cost you would incur to purchase parts or the necessary items to complete the said fix.
Other Costs or Common Repairs and Upgrades on Homes to Consider
We mentioned some areas where you could save money and headache when renting an apartment.
While the list could certainly be much longer than this, we wanted to point out some of the primary upgrades, fixes, and repairs that come with homeownership:
● Roof Repairs
● Flooded Basement
● Yard Work and Landscaping
● AC and Furnace
● Major Appliances
● Electrical Upgrades and Repairs
Additionally, renting an apartment can be beneficial and timesaving for smaller tasks, such as snow removal.
While this is not the first thing that many think of when deciding whether to rent an apartment, it is certainly an added benefit to enjoy as opposed to going outside in the cold and taking care of it yourself.
Apartments can Create Reduced Distance to Favorite Places
One of the last notable advantages of renting an apartment vs. buying a house is the reduced amount of travel needed in many cases to the desired locations in the town or city you decide to live in.
To find the perfect piece of real estate or the most desirable neighborhood, you may need to look at the outer parts of cities.
Sometimes, you even find a home in a rural area 10, 20, or 30+ miles from the city.
This could cause additional drive time for work, grocery shopping, or even visiting your favorite restaurant.
While it may cost extra to be in the prime locations for an apartment, you may be able to save money on transportation and save yourself a reasonable amount of time.
Not needing to travel 10+ miles can make it easy for you to get to your favorite restaurants, activities, and even work.
Renting an apartment presents some unique benefits and advantages, but homeownership can also have its own fantastic upside.
Renting an apartment is an excellent option if you have not found your forever home. Renting an apartment can also be highly beneficial if you are not ready for the time commitment of purchasing a home.
Renting an apartment is also an excellent idea if you still need additional money for a down payment, closing costs, or even specific renovations you want to complete after purchasing your home.