©iStockphoto.com/UmbertoPantalone Credits: ©iStockphoto.com/UmbertoPantalone
Financially, it can be more rewarding too. While you won't make money on a home's appreciation as a renter, with many people predicting a real estate crash, homeowners may not see property values rise anyway.
There are a few good reasons to consider renting a home instead of buying one. Here are four of them:
1. Renting a home can be cheaperâ€¨
In many cases, you can save a lot of money by renting. Rental costs are often lower than a monthly mortgage, but even if they're comparable -- you could pay the same or more to rent a large home than you would if you owned it -- you don't have to worry about property taxes or fixing the heat if the furnace breaks down. It's the additional costs that drive homeowners nuts. Roof starts leaking? Call the landlord.
2. You can move more easily
For homeowners, moving can be a complicated and potentially expensive prospect. Homeowners often have to do repairs before putting their house on the market and real estate agent fees eat into potential returns. Renters don't have to worry about any of this. After the lease is up, they're free to live somewhere else. The only costs they have to cover are the movers.
3. Get into a better areaâ€¨
Nicer areas come with more expensive houses. For many Canadians, it's impossible to buy a house a trendy locale -- the homes are just too pricy. Renting allows people to live in a hot spot for a fraction of the homeownership costs. If you want to live in a sought-after condo, for instance, not only will you not have to pay the hefty mortgage payment, but you may not have to cover the expensive condo fees either.
4. Less economic worries
If the real estate market does crash, as a renter you'll have nothing to worry about. It's homeowners who bought their house to fund their retirement that will be sweating. You'll continue paying your monthly rent as is. It doesn't matter to you if the place you're living in is going to affect the landlord's nest egg.
Saying that, there are two possible downsides to renting during a real estate crash: Housing prices may fall so much that renting may become more expensive than home ownership. If it gets to that point, you may then want to consider buying.
The other concern is that the landlord may try to raise rents to make up for the lost value. In that case, start looking around.
While renting can make a lot of sense, you still need to save the money you're not spending on homeownership. If you can sock away the difference and build your retirement fund, then renting may be the way to go in today's economy.