Buying Versus Renting: How to Choose the Option That’s Right for You

Two ladies discuss outside and gestures with their hands. In the background may be seen alleys and several trees.

To rent or to buy, that is the question. When it comes time to make that decision, it takes some real self-assesment.

Homeownership has long been viewed as the American dream — and still is for many — but renting is a legitimate, and often preferred, option for many. 

Both have their benefits and a variety of factors can inform a person’s decision of whether to buy a home or to rent one.

Choosing which path is best requires some serious self-assessment of where you stand on certain key factors, such as the local housing market, your budget and lifestyle, the amount of flexibility you want and the level of commitment you want to put into a home.

Level of Commitment

“Homeownership is a rewarding proposition, but it may not always be the best thing for people,” says Kathy Braddock, managing director at real estate brokerage William Raveis New York City, adding that renting is a suitable option for many people, especially those who choose to do something different with their money and assets. “You have to do what’s right for you.”

If you are considering buying rather than renting, you need to ask yourself 
why you want to buy a house — do you view purchasing a house as a long-term residence or as an investment or income property? 

Owning a home can be appealing because of the tax advantages involved, such as deducting your mortgage interest and property taxes from your income taxes, as well as the opportunity for appreciation in value, although that’s no guarantee, as the housing market crash in 2008 showed.

If buying a house to make it your primary residence, you should plan to stay at least five years, according to Braddock. “You need to stay at least that long to recapture the money you put into the purchase, from closing costs to moving and decorating.”

Budgeting and Affordability

Depending on your local market, the cost of homeownership versus the cost of renting may make your decision for you. Renting may be more economical in some areas, or the housing market combined with low interest rates may make buying a home more appealing. Regardless, it’s important to make sure you 
know where you stand financially and what you can truly afford.

“Complete an average monthly budget,” says Liz Recchia, broker/owner of We Sell Real Estate, LLC, in Phoenix, Arizona. “Make sure you account for every dollar you spend.”

Recchia added that if you are thinking of moving from an apartment into the larger space of a home and yard, it’s important to take into consideration the extra expenses that can come along with such a move, including extra utility costs, new appliances or additional furnishings, lawn care equipment and other household tools, homeowners association fees and so on.

Recchia sits down with her clients before they ever go look at a home to ascertain what they want in a home, where they want to be, what they can afford, and future goals. “Figuring out what you want ahead of time can help you be rational about your purchase and happy with your decision,” she says.

A good way to check the feasibility of buying versus renting is to get a good lender to do a rent/buy analysis, Braddock says. She concurred with Recchia regarding the importance of figuring out how much disposable income you will have after monthly costs, and advised not to forget important lifestyle expenses such as vacations, school tuition and so on. “Put pen to paper and decide what you cannot live without. You don’t want to be house poor for the long term. It can create a great deal of stress.”

If you decide to further investigate buying a home, you can have your real estate agent run a sample net sheet for the purchase price and loan type you are considering before you start looking at houses, Recchia says. A sample net sheet includes estimated closing costs, as well as estimated monthly payments including property taxes, homeowners insurance, principal, interest, HOA fees and so on. 

“Frequently, buyers will look at that monthly number and realize they need to purchase a less-expensive house,” she says, adding that the next question people should consider is whether they can rent a similar house for less money. Or, even if owning means spending more up front, does owning a home give them a greater sense of security?

Stability or Flexibility

When people think about the benefits of renting, an important reason that immediately comes to mind is flexibility. Some people don’t want to be tied down to one place for very long, or like having the ability to relocate more easily if a job opportunity opens up in another city or state. 

“Renting gives you both mental and physical flexibility,” Braddock said. “You’re not locked into anything.”

The issue of flexibility also ties in to how much effort and money you want to put into a property. By renting, you generally don’t have to worry about repairs, plumbing issues, yard work or snow removal.

“Are you willing and able to invest time and money maintaining your own house? Some people just don’t have the desire to own property because they don’t want the responsibilities, and that’s OK,” Recchia says. “Decide if you want to spend that time and money on your house or if you would rather have someone else do that.”

But, if you’re in a good place career-wise and financially and have decided you’re ready to have a place that’s truly yours, the stability that comes with buying a home can be rewarding. It’s an opportunity for you and your family to put down long-term roots in your community.

If buying is right for you and you’re ready to start your new-home search, check out 
New Home Source for the largest collection of newly built homes and new-home communities.


Judy L. Marchman is a freelance writer and editor, with 20 years of magazine and book publishing experience. She covers a variety of subjects, including home-related topics. Her work has appeared in Kentucky Monthly, Keeneland Magazine and the Official Kentucky Derby Souvenir Magazine, among other publications.

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