Advantages and Disadvantages of Renting
Renting an apartment or a house has several advantages. As a renter, you do not commit large amounts of financial capital to housing. You make no large down payment although you will probably be required to make a security deposit or damage deposit (for example, you may have to pay the first and last month’s rent when you move in). Thus, if you have surplus funds, you can invest them elsewhere.
Furthermore, because you do not own the property, you are not responsible for repairs and maintenance or property taxes. Renting is less risky than owning because if you do not like the rental property, you can simply move elsewhere when the lease expires without penalty. In some areas, rents are controlled, which means that if you choose to renew your lease when it expires, your rent can be raised when you renew your lease.
In particular, rents may go up where there is strong demand rental property and a limited supply of rental units. Rental payments do not build equity, and renting provides no tax benefits to the renter. In addition, as a renter, you are generally very limited in what changes you can make to the rental property. Even if the owner would allow it, you would probably not want to invest in expensive changes that would stay with the property when you moved. Finally, rental units often offer less living space than what is available through the purchase of a home.
Advantages and disadvantages of buying
Buying a home has several advantages. A portion of each mortgage payment goes toward reducing the outstanding debt and building equity in the property. The home may also appreciate in value, building additional equity on a tax-deferred basis for the owner. Indeed, numerous tax advantages are associated with the purchase of a home. One of the most resents tax deductible interest. In addition, as a property owner you can borrow against the built-up equity in your property.
Your mortgage payments will not be subject to increase at the whim of a landlord, and you are free to change the property to suit what your tastes. You can rent the property or a portion of the property to generate rental income. Finally, you often get more living space for less money by purchasing real estate than by renting.