Rent vs. Own: Breaking Down the Costs

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(photo: Phil Sexton)

Think it’s cheaper to rent? Afraid of the high cost of home ownership? Worried you’ll have to do a bunch of work when you become a first time home buyer? Get over it and get into a home!

Actually, there are costs involved in renting AND owning. But the costs differ. Here’s a breakdown of the costs of owning a home. 

1. Property taxes and insurance. Owning a home means you’ll pay taxes to the city, township or other local government. You’ll also need homeowners insurance to protect your house and belongings in case of fire or other disaster. 
2. Tools. From a lawn mower to a snow blower, there are several tools and such you’ll need for your home. Of course you can hire out many things, but that will cost you, too. Some basic tools include screwdrivers, a hammer, pliers, a lawn mower, a rake and a garage broom. Depending on where you live, a snow shovel or snow thrower could be important. Can you think of other items you’ll need? Share them with our readers in the comments below. 
3. Utilities. Owning your own home means you need to take care of things like garbage, cable, water and other utilities that may have been covered while renting. These costs need to be figured into a budget.

Now, there are other costs probably "hidden" in owning a home. But let’s turn to renting. Here are a few things you’ll pay for while renting you may not have considered costs. 

1. Storage. An apartment can be great when you don’t have many possessions. But as you add to your life, or if you’re downsizing from a house, you’ll need a place to put your stuff. Many apartments come with a little storage like a closet or two. But you may need to get a storage unit off-site. 
2. Deposits not returned. When you move into an apartment, you’re often required to pay some kind of deposit. Most places tell you that they will refund it when you move out, as long as the apartment is in good order. But we hear from friends, family and others how often these large chunks of cash end up lining the landlords pocket. 
3. Equity. Paying rent means all that money every month will never be seen again. Even with the costs of owning a home, you’ll see the value of that house go up over the years. Someday you can own that property and make NO MORE PAYMENTS. Renting means you pay and pay and pay and pay and… well, you get the idea. 
4. Improvements and decorations. Painting, decorating, new floors…long term renters can often make changes to their apartment. The problem is, any work you do will not be rewarded with added value. In a home these things could help drive up the "worth" of your home. In an apartment, they could actually cost you TWICE as the landlord may keep your deposit in order to pay for returning the place back to a neutral look.
5. Don’t forget the emotional cost. If you’ve ever lived below a herd of stampeding elephants or bullfighters, you know what I’m talking about. Renting often puts you in the company (and at the mercy) of other people, with whom you have no relationship. This is a nice of way of saying "I don’t know these people and I don’t like them." Spending any length of time with annoying neighbors can wreak havoc on your sleep patterns, your mood and the rest of your life.  

(photo Bexy Wood)

It looks to me like the list of owning costs is better than the one about renting. I think it's time to become a first time home buyer! What do you think? Leave comments below!

Thanks to Tara at Trulia for the inspiration!