Rent vs. Buying A Home

• Overview

  Many types of people choose to rent rather then buy a home, enjoying freedoms and advantages that homeowners must sacrifice. But renting is not without its own drawbacks. Understanding rental housing terms is essential for tenants who must choose between buying and renting or determine where, and from whom, to rent.
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• In large apartment complexes, tenants often live in close proximity to one another.

• Types

  Tenants have the option to choose from several types of rental housing in most regions. Cities and villages often feature large apartment complexes where tenants live in close proximity to one another. Renting a stand-alone home or half of a duplex in a suburban or country setting is another option. Some landlords offer a rent-to-own option, which gives tenants the right to purchase a home for a previously agreed-upon price once the rental agreement expires. Tenants can also rent vacation property in a resort location, which may be an apartment or home.

• Advantages

  Renting has its advantages over home ownership. Renters aren't responsible for maintenance or property taxes, which landlords handle instead. A renter is also only charged with keeping the rental unit itself in good condition, with a landlord hiring a cleaning staff or gardeners to handle the building, grounds and common areas. Renting often gives tenants an opportunity to live in a city or neighborhood where they wouldn't be able to afford a home. It also supplies low-cost housing for individuals without the savings or good credit needed to get a mortgage.

• Drawbacks

  Renting housing does have certain drawbacks that would-be tenants need to be aware of. Unlike homeowners, who pay a monthly mortgage bill and gain equity in a home, renters have no equity to borrow against. When a tenant vacates an apartment, there is no recovery of the money paid in rent. Renters are also unable to profit from any value the rental property gains over time. Renting an apartment often means living in a smaller space or closer to neighbors than buying a home, arrangements which may not appeal to everyone.

• Tenancy Agreements

  It's vital that prospective tenants understand the tenancy agreement, or lease, a document that the landlord and tenant both sign. It outlines rental policies, including the cost of rent, the term of the lease (usually at least one year) and the duties and obligations of both the tenant and landlord. Some tenancy agreements require the tenant to waive the right to pursue legal action against the landlord, while others state that the tenant may not sublease the rental unit to anyone else. Tenants and landlords must come to a mutual agreement and understand the terms of a tenancy agreement fully before signing.

• Problems

  Problems can arise between tenants and landlords. While landlords may be willing to renegotiate a tenancy agreement or compromise to keep a tenant's business, it sometimes becomes necessary for the tenant to pursue legal action against the landlord. Each state has its own tenancy laws on the books, which outline the rights and responsibilities of all parties in a rental scenario. Contacting a lawyer with experience in tenancy law is the best first step should a serious disagreement arise. While some states may allow tenants to place money in escrow in lieu of paying rent while a dispute is resolved, no tenant should withhold rent without first contacting a lawyer. Failing to follow the process set out by law may be grounds for an eviction and can permanently damage a tenant's rental history, making it more difficult to rent or buy a home in the future.