While a lot of people might feel pressured to buy a home with home ownership a major milestone representing stability and the freedom of reaching adulthood to many, home ownership isn’t always the right answer; in some cases it makes more sense to rent.
If you don’t live in your house long enough, you can end up losing money when buying with much or all of the equity erased by closing costs and other fees. Maybe you have to travel frequently for work or just want to enjoy your hobbies and won’t have the time to maintain it.
The truth is, there are many reasons why people choose to live in apartments. According to the National Apartment Association, most are those who are single and just starting out, but there are plenty who prefer to rent permanently (averaging in their early 40s) as well as baby boomers, working families, and young couples who are all living in apartments. People often choose to rent apartments because of the cheaper costs as there are multiple financial benefits for doing so.
No Repair Bills and Maintenance Costs
When you own your own home, you have to take care of and pay for repairs and maintenance. But living in an apartment, if the roof starts to leak or an appliance fails, all you have to do is call the landlord and they’ll be responsible for fixing or replacing it. You won’t have to shell out a dime. As a homeowner, maintenance can be costly, and it’s even worse when something major breaks like a septic system or central air conditioning which can run thousands of dollars.
It Costs Less to Move In
When you buy a home, you not only have to pay closing costs but a down payment which typically runs about 6 percent of the mortgage loan value. That means on a $300,000 home purchase, you’d have to bring $18,000 plus closing costs from $6000 to $15,000, along with other fees to the table before getting the keys. When you rent an apartment, most of the time you’ll just need to come up with the first month’s rent and security deposit.
Insurance is Cheaper
Purchasing a home means purchasing homeowners insurance which can run over $1000 a year. But renters insurance is very affordable, typically under $200 annually which includes a minimum of $100,000 in liability coverage and $25,000 for personal property.
Lower Utility Bills
Unless it’s one of the trendy tiny houses, in most cases apartments are cheaper to heat and cool than homes are. That compact floor plan can make a significant difference in the cost of your utility bills, especially in areas where summers tend to be hot and winters often bring temperatures below freezing. You might even be able to find an apartment with rent that includes utilities.
No Property Taxes
One of the biggest financial benefits of living in an apartment is that you won’t have to worry about paying property taxes every year. They’re based on the estimated property value of the home and land, and with newly built homes becoming larger and larger, so does that financial burden, which can be thousands of dollars a year in some areas.
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So very true, my boomer generation struggles with this but your logic, as usual, is impeccable. We stayed in one job for decades quite often, and in that case buying a house makes more sense than it does for millennials who may have 20 different jobs in many different locations. We’ve been in our one and only house for over 40 years. It worked out great for us, but nobody lives like that now. Always enjoy reading and listening to some Penzo!
Ha ha! Thank you, Steve. But I can’t take any credit for this one: the article was written by Sabado!
Good stuff. If I lived in a house, it would cost me an extra $9k a year. Plus, I’d be tempted to fill it with stuff.