Owning a home has long been regarded as an integral part of the American Dream, but the economic crisis of the late 2000s has led many more people to consider the various benefits of renting.
Depending on the rental property, certain amenities may provide social, business and fitness opportunities for tenants. Some apartment complexes offer an extensive list of amenities intended to entice and retain renters while improving the tenant's quality of life. These amenities may include:
- After school programs for children
- Better storage options
- Business centers with video conferencing capabilities
- Community gardens
- Concierge services
- Courtyards, playgrounds and nature trails
- Fitness centers with spa facilities and personal trainers
- Game rooms with billiards and game tables
- Juice and coffee bars
- Movie screening rooms with theater seating
- On-site ATMs
- Outdoor fireplaces with seating areas
- Resident social activities
- Swimming pools
Renters are not locked into a location if the job market or economy shifts, or if a new job opportunity arises. Certain leases contain language, often called a termination clause, which allows tenants to terminate a lease early in exchange for a specified fee. A termination clause may specify acceptable reasons for early termination, such as a job transfer that is more than 50 miles away. In some cases, the tenant may not be liable for any payment if the unit is re-rented within a particular time period.
Sense of Community
Many rental properties offer resident social activity programs to enable neighbors to get to know one another while enjoying a planned activity. These programs can help foster a sense of community that tenants may find desirable. A sense of community provides opportunities for developing friendships, as well as a certain amount of security in knowing that neighbors will watch out for one another.
Renters enjoy a degree of financial flexibility unavailable to those with mortgages. If one runs into financial trouble, it is much easier to reduce monthly expenses without the added burden of being locked in a mortgage. In addition, money that would have been used towards a down payment and homeowner expenses (including the mortgage) can be applied to investments such as retirement plans, life insurance or a stock portfolio.
A renter's monthly expenses tend to be very predictable. Rent payments will be the same each month, and utilities are similar, if not equal, each month. Even more importantly, renters do not have the unexpected expenses associated with owning a home, such as servicing the furnace, fixing a leaky roof or replacing an appliance.
Lower Maintenance Costs
Landlords are responsible for maintenance issues both inside the individual unit and in the common areas. This includes repairing or replacing broken or non-functioning items, as well as the labor to conduct such maintenance. It is in the landlord's best interest to maintain the property in a manner that will attract and keep tenants. In addition, under most state and local laws, landlords are required to fix major problems, such as broken steps and pest infestations, as well as maintain properties in a manner that satisfies basic habitability requirements, including clean and structurally sound premises, adequate weatherproofing, and available heat, clean water and electricity.
SEE: 7 Homeowner Costs Renters Don't Pay
No Cash Outlay
The down payment and closing costs associated with buying a house are often cost prohibitive and prevent individuals and families from making a home purchase. An important benefit of renting is that there is no cash outlay required other than the first month's rent and the security deposit.
No Market Risk
A home purchase can be thought of as an investment just like putting money in the stock market. The money that is invested in the home – through down payments and mortgage payments – is at risk. The home's value could increase, resulting in favorable gains. The value, however, could also decrease, leaving homeowners with an underwater mortgage, where more money is owed than the current value of the home.
Renters' Guide: Considerations When Finding A Rental
Financial AdvisorAlthough renting by the room can increase returns on rental property, it does come with a few caveats.
Personal FinanceIf you own your home, but temporarily can’t afford the payments, and can’t a find cheaper place to live, temporarily renting your home may be the solution for you.
InvestingRenting out your home can be a great way to ride out a real estate slump - if you do it right.
RetirementIf you have the money to buy them and the energy to run them – or the funds to pay a good manager – rental properties can help pay for your retirement.
InvestingFind out how to profit from your property when the housing market dips.
Personal FinanceWhen a housing crisis strikes, the big winners are often the renters.
InvestingLearn how to find suitably priced rental property and the right rent level. Determine what maintenance costs to expect and what tax breaks are available.
InvestingOn the surface, being a landlord seems likes like a surefire bet, but it's usually more headache than it's worth.