Renting vs. Owning Your Home

When it comes to living anywhere, you have two choices: rent or own. You can rent an apartment, house, or condo, or you can buy a place to live. Of course, if you can stay hidden in the forest while avoiding the tax collector, you can live for free there.

The decision to rent versus own your home is one that should be carefully considered. Your decision depends primarily on financial goals, lifestyle choices, and accessibility.


Advantages of Renting

  • Flexibility—Most leases are 12 months, but some can be month-to-month, meaning you can move to a different place far more frequently. You are not as financially locked to a location when you rent.
  • Cheap in the short-run—All you have to do is pay rent each month. Conversely, homeowners have to pay a large down payment at the beginning in addition to property taxes and maintenance. Sometimes you do not even have to cover utilities yourself when you rent! It can be much easier to control your monthly expenses as a renter.
  • Convenience—Since you do not own the building, you do not have to take care of it outside of your own specific unit (though some leases specify that the tenants must upkeep the property themselves). All common areas are almost always the landlord’s responsibility to take care of. That’s less stress for a renter.


Advantages of Homeownership

  • Equity—Unlike renting, you own equity in the building, and this equity grows as you make mortgage payments or as the property appreciates. When you sell the building, you get whatever equity you have in it. You can also borrow against your equity with a home equity line of credit. This is the single greatest financial advantage of owning a home over renting.
  • Customization—Since you own the building, you can technically do whatever you want to it (within the law, of course). You can remodel a home or make upgrades to it.
  • Tax advantages—You can deduct interest paid towards mortgages along with other things like property taxes; you cannot deduct rent payments from your federal tax bill. Check with a licensed financial professional to be sure that you are using your optimal tax strategy!
  • Rentability—If you decide to move out of your home, if you own it, you can rent it out to other people and continue building equity and multiple streams of income.


Disadvantages of Renting

  • Expensive in the long-run—If someone rents forever, they continue paying rent forever. Rent typically rises over time as well. Alternatively, if that person instead buys a home with a 30-year mortgage, mortgage payments are done after those 30 years based on the purchase price. With a fixed-interest mortgage, monthly payment will not increase during all of those years either.
  • No Equity—When you pay your rent, you do not get any money back. What’s paid is paid to your landlord, not into anything that you own.
  • No tax advantages—While homeowners enjoy several tax perks, renters generally do not get any of them.


Disadvantages of Homeownership

  • Expensive upfront—It can cost a lot to buy a home in the first place, even with a mortgage. You still need to provide a significant down payment in most cases. Closing costs can be high as well. Buying a home with all cash is even more expensive at the start.
  • Property Taxes—On top of the expenses of the buy price, homeowners are almost always subject to property taxes which can be very high depending on your area.
  • Maintenance—Homes do not take care of themselves. Someone has to maintain the building. When you own your home, that person is almost always you. This can be expensive, especially if something like an HVAC or roof needs to be replaced. Large expenses like this will come up at some point, so homeowners must be prepared.
  • Market Risk—With any investment, there is a risk that it will lose money. Homes are no different, even over the long-haul. An area might lose value drastically over a few years and your equity will have been wiped out. This is generally rare over the long-run, but it can happen!


Putting it All Together

Obviously, the decision between renting vs. owning your home is not necessarily as cut and dry as many people make it out to be. There are many factors that go into making a sound decision.

If you are a businessperson who needs to move to new cities frequently, renting is probably a better option for you to stay flexible. If you are someone settling down in a neighborhood with good schools for your newborn children, it probably makes more financial sense to buy a home there and sit tight for the long haul.

Whatever your decision, it is imperative to keep housing expenses well within your means. Housing costs often make up a person’s single largest expense. House-hacking can be a great way to mitigate your housing costs.

Regardless, always tread carefully and be sure to take your housing situation seriously! When in doubt about a particular strategy, consult with a licensed financial professional.



The decision to rent versus own your home is one that should not be taken lightly.

Your decision on renting vs. owning your home can translate into thousands of dollars (or more!) over the long haul. It can also give you access to the lifestyle that you are looking for. Maybe you want flexibility; renting is probably a better option for you. Maybe you are trying to build wealth over the long run; homeownership is probably your ideal housing strategy.

Each person’s decision is not going to be the same. Look at your own situation carefully to figure out what you should do. Every decision has costs, after all. Even so, always remember that no decision is permanent, and you can adjust your situation accordingly. Patience is key in the search for your ideal home!


Jack Duffley

Jack Duffley is a real estate investor and attorney based in Houston, TX.

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