Freedom and Flexibility
Being in a career transition phase, its really nice to have the freedom and flexibility to go anywhere at will, without having a house tying me down. The job market here is not too hot right now – if we can find jobs somewhere else, all we need to do is give two months notice and we can pick up and go anywhere we want.
Financial Freedom and Flexibility
When you own your own home, the buck doesn’t stop at your mortgage payment. There’s property tax, insurance, utilities and if you live in a condo, maintenance fees. Then if anything breaks or needs repairs, you’ve got to fix it. Renting comes with none of that (except a small amount of tenant insurance). All of the money that a homeowner would put into the home, a renter has the freedom to do other things with it, such as travel or invest.
Homeowners typically wind up with a large portion of their net worth tied up in the value of their home, which goes against the often repeated mantra of diversification. Since a renter has so much more free cash for investments, they can achieve a much better diversification which may help them get through tough times. And in good times, a well diversified investor is more likely to take risks, which could pay off in a big way (and if they don’t, it won’t hurt as much).
More Time to Do Things that Matter
How many times does a homeowner mow the lawn or shovel the driveway, wishing that they could instead be spending their time in a way that was more fulfilling to their lives. As a renter, all that necessary maintenance is done for you, so you can spend your time exactly as you want to.
Rental Properties Can Be Just as Nice as Owned Properties, if Not Nicer
Renting doesn’t have to mean that you live in a dump (though it can if you want to save money). There are rental properties covering the entire spectrum of the real estate market. In some cases, renting might give you the opportunity to live in a place that you wouldn’t otherwise be able to afford if you were buying. When we first moved to Toronto, we lived in a condiminium apartment that had all the amenities we could ever dream of – a full gym, indoor heated pool, a rooftop patio with hot tub and community BBQs overlooking the entire city, a party room to host friends, etc. There’s likely no way we could have had all that if we were buying.
Renters are Just as Happy, if not Happier
Some will say that renters are not as tied to their community and that the overall community feeling of a neighbourhood is lessened by renters. The article I read highlighted a study conducted in the US that concluded that renters were just as happy as homeowners, and contributed to society in just as many ways, albeit differently. While they are not supporting the housing market, all their extra, disposable cash allows them to be greater contributors to the dining and entertainment markets in their communities. They found that renters had lower stress levels and actually spent more time engaging in community-building activities than their homeowner counterparts.
If You Invest the Difference, You May Come Out Ahead
Many people will say that renting is just paying someone else’s mortgage, and that you’re just throwing your money away. That may be true, but total housing costs for renters are nearly always lower than for homeowners. If you invest all that saved money, you may be able to come out ahead in the end, especially because the opportunity cost of owning a home can be large in the first few years (where much of your money is going towards paying for interest, which is in essence just renting anyways).
So with all this in mind, do I still want to buy? Eventually, yes. But not anytime soon. When I’m settled in a career and a location, I have a stable income and I know I’m not going anywhere, then I will likely buy a place as long as it is affordable and makes financial sense. But until then, I’m all for renting!