Should You Buy or Rent a House?

Should You Buy or Rent a House?

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Buy or Rent a House?

Should you buy or rent a house? There are plenty of financial and convenience factors to consider, and things aren’t always as simple as they seem at first glance. You may think you can afford to own a home if the mortgage is the same as your rent payment. In many cases and areas of the United States, like California, homeowners have more expenses than renters.

Costs of Renting a House

If you choose to rent a house, the landlord is often responsible for building upkeep. For example, if the water heater busts, the cost to replace it comes out of your landlord’s pocket, not your own. Considering many of a home’s appliances and systems can costs hundreds or thousands of dollars, renters enjoy a different level of financial security. In fact, renters don’t have nearly as many expenses as homeowners.

Renters Insurance

Renters insurance is a cheap way to protect your belongings. If your home or apartment is broken into and your belongings stolen, renters insurance covers the cost to replace almost everything. On top of that, it’s usually less than $20 per month!

Utility Costs

Costs of Buying or Renting a House

Both renters and homeowners have utility costs, but one is often far more expensive than the other. Renters typically don’t cover all of their utility bills. For example, some landlords may cover gas while renters will cover water or electricity.  Apartments are typically smaller than homes which means it costs less to heat and cool them, thus cutting down on utility costs.


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Parking Fees

While many homes for rent have driveways, most apartments don’t. As a result, renters may face parking fees. Whether the fee covers a reserved parking space or simply permission to park in the lot, the cost of the fee may vary and is up to the landlord.

Pet Fees

Most apartments and homes for rent don’t allow pets at all. If they do, there’s often a cost associated with keeping them in the dwelling. On top of that, many landlords have a cap on how much pets can weigh. Renters who plan to have their pets move in with them would do well to have pet fees ready.

Security Deposit

Regardless of where you choose to rent, you’ll have to provide a security deposit. In many cases, landlords require renters to pay the first and last month’s rent in addition to a security deposit. In many cases, this can amount to over $1,000.

Costs of Owning a House

Owning a house isn’t cheap. There are more expenses, often ranging into the thousands of dollars, that come with owning your home. Homeowners who walk in blind could find themselves in the red and at risk of losing their newly purchased home. If you plan on owning a home, it’s wise to have plenty of money tucked away in a savings account, just in case!

Property Taxes

Property taxes are another expense renters won’t have to handle. Considering these taxes scale based on the value of the home, it isn’t uncommon for this expense to reach into the thousands. High cost-of-living areas often have high property taxes too.

Property Taxes

For example, the average home price in Los Angeles, California comes in at just under $900,000. Property taxes amount to more than $7,000, and it’s worth noting California has a lower property tax rate than much of the United States.

When buying a home, it’s extremely important to take property taxes into account! You can use a property tax calculator to get an idea of what owning a home will cost you.

Home Insurance

Home insurance covers a variety of vital things, including accidents and liability claims. Depending on the home and your insurance company, home insurance can run upwards of $1,000 per year! That can be a major dent in any homeowner’s bank account.

Keep in mind home insurance doesn’t cover replacing major systems, like air conditioning, if they run their natural course. Unexpected problems, however, like a broken pipe flooding a bathroom, are typically covered by home insurance policies.

Home Repairs

Homeowners are responsible for all home repairs. There’s no ifs, ands, or buts about it! Fortunately, most home systems last 10 or more years. Many air conditioning units, for example, can last upwards of 15 years. In fact, our first home’s air conditioning unit croaked at 27 years old!


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On the downside, replacing our old air conditioner with a new, off-brand model cost us $4,400. A brand-name unit crossed the $7,000 mark. Replacing other major parts of a home, like the heating system, costs thousands of dollars too. That’s not to mention replacing a roof, which costs over $5,000 in most cases.

Buy or Rent a House

Any pest control services and leaking pipes will need to be attended to as well. Both of these issues can lead to larger problems down the road. That’s not to mention the cost of repairing a bowing basement wall ($6,000, speaking from experience) or high moisture levels in crawl spaces ($2,000).

Utility Costs

We’ve already touched on how utility costs are significantly more when you own the home. Not only do homes cost more to heat and cool, but you’ll likely use more lighting and water too. Make sure you budget accordingly or utility bills could leave you house poor.

Homeowners Association (HOA)

Depending on where you buy a home, you may have to pay homeowners association fees. Typically, you’ll have to join an HOA as a part of your purchasing agreement. In most cases, HOA fees won’t exceed $1,000 per year. Even so, it’s still worth looking into before you sign a contract.

Other House Options

Renting and buying aren’t the only two housing options available to you. You could have the best of both worlds with a rent-to-own agreement. If you’re located near a large body of water, there’s an entire third housing option that doesn’t require a stationary structure at all!

Rent-to-Own Homes

Rent-to-own homes aren’t a too common find, but if you do manage to get into one, it’s well worth taking the deal. In a rent-to-own contract, your monthly payment goes towards equity in the home, not just payment to live there.


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In other cases, you’ll pay rent to stay in the home with the option to buy the home before the lease expires. In most rent-to-own contracts, you’ll need a hefty sum of money.

Living on a Boat

Marina Living

If you live near the water, living on a boat can be a great, more affordable alternative. Although you’d have to purchase the boat, doing so is much cheaper than financing a house. Keep in mind living on a boat comes with several sacrifices in terms of convenience. You’ll also have a few other costs, such as a docking fee. It would be wise to purchase boat insurance as well.

Tip: Regardless of whether you buy or rent a house, make sure to have at least six months worth of expenses available at any given time. 

Buy or Rent a House?

As you can see, there are plenty of factors to consider before you decide whether to buy or rent a house. Renters often have less expenses and more financial security, but lack the independence of owning a home. Homeowners, on the other hand, need a higher income in order to afford the additional expenses houses bring to the table. Make sure to evaluate your financial situation before you make a final decision!

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