In the United States, we’ve been conditioned to think of homeownership as the financially superior option to renting, with the latter usually done out of necessity. But what if it’s not that black and white?
If you’re a renter you’ve probably asked yourself whether you are wasting money by renting. Well, not necessarily.
While it’s true that you’re building equity with homeownership, there are a variety of factors that come into play when comparing the two.
Here’s what to consider
Renting provides flexibility. Are you willing to pay for the convenience of on-site management and maintenance? For community utilities and services? And would you like to be able to travel without worrying about leaving an empty house?
Some also appreciate the ability to move without managing the complexities of a home sale—especially young professionals who are focused on careers and delaying family formation, participating in the nontraditional gig economy and who often require flexible living situations as the demands of their careers dictate where and how they need to live.
Nielsen found that, to be closer to their jobs and all of the amenities they desire, 62% of Millennials prefer to live in urban centers. These areas typically command more expensive median rent prices, meaning younger adults are unable to build savings and equity in the same way as past generations.
All this flexibility makes renting advantageous, and some may be willing to pay a premium for this.
Community. Some people simply enjoy the sense of community that comes with renting in an apartment community. It’s hard to put a price on a comfort like that.
There are fixed costs to homeownership that are often overlooked. Maintenance, homeowners association dues, property taxes, insurance payments, and interest on mortgage payments should all be accounted for in comparing homeownership to renting.
Homeownership comes with risk. For one, home prices don’t always go up. Remember, just because renters aren’t building equity doesn’t mean they’re missing out on guaranteed wealth appreciation. The 2007–08 financial crisis proved this. Additionally, there are substantial costs associated with irregular upkeep, like the replacement of a furnace every 15 years or so. That alone can run upwards of $5,000. But when you’re a renter, you don’t have to consider any of these costs.
The bottom line
In conclusion, it’s fair to ask, am I wasting money by renting? But perhaps the better question to ask is, why can’t I have the perks of renting with the financial benefit of homeownership?
At Rhove, we wondered the same thing. We believe everyone has the right to invest in their home. And that’s why our mission is to expand access and opportunity for everyone to own in their community. Today, we’re providing a way to make money on rent, but we’ll continue to expand our offerings to advance our mission.
We’re upending the status quo by completely reimagining everything about renting vs. owning and the paradigm that has made them mutually exclusive.
Like with owning, Rhove gives you cash for investing time and money into your home — but with the freedom and flexibility of renting. That cash allows you to save for homeownership or whatever matters most. Rent wherever Rhove is offered and earn 2.5% cash back, all with the ease of a mobile app. It’s the very first cash rewards program for renting.
Plus, when you decide that the time is in fact right for owning, Rhove helps you get there, too.
What if you could maintain the flexibility and other benefits of renting while accumulating significant savings for important life events? It shouldn’t be unrealistic.
If you do it the right way, renting is certainly not a waste of money.
If you’re interested in learning more about Rhove, check out our website to see if we’re available in a property near you.