Home Equity

4 Advantages of Renting: Why More Households Are Renting

By Meela Imperato
4 Advantages of Renting

Buying and owning a home—isn’t it part of the American dream? Not necessarily. Home ownership can be a joy and a significant financial move for some, but it can also be a drain on your time and wallet that holds you back from other dreams. The responsibilities of property management and maintaining property value amongst other things can be overwhelming for homeowners.

Just like the move away from a single, life-long job with a pension toward more flexible career growth and opportunity building, there is growing awareness of the advantages of renting as a deliberate housing plan rather than a stopgap. 

The Financial Benefits of Renting

Comparing a rent payment to a monthly mortgage payment can be a bit of an apples-to-oranges situation. There are both visible and hidden costs of buying a home and renting one. Discover the charges that can bump up homeowners’ monthly housing costs significantly: 

Lower Upfront and Ongoing Costs

Signing a lease agreement and moving in comes with monthly rent plus some upfront costs. These upfront costs can include: 

  • Application fee, usually $30 – $100
  • Move-in fee, typically equal to 33% – 50% of one month’s rent
  • Refundable security deposit, usually equal to 1 – 2 months’ rent
  • Pet damage deposit or fee, typically equal to 40% – 85% of one month’s rent

Using these rates, a new renter with a $1,500 monthly lease who has one pet will need an average of $3,883 in addition to first month’s rent, $3,188 of which may be refundable. 

On the other hand, the average single-family home closing costs for a new homeowner in 2021 were $6,905 nationwide, and as high as $29,888 in high-cost Washington, DC.

Plus, unless they can put at least 20% down, new homeowners will likely pay private mortgage insurance (PMI) of 0.58% to 1.86% of the original conventional home loan amount annually. For a $250,000 home loan, that’s $1,450 to $4,650 on top of monthly mortgage payments.

Freedom from Maintenance Costs and Repair Bills

A minor fix might entail a trip to the local hardware store and $50 in materials, but homeowners are on the hook for thousands for major repairs. Many parts of a house have a decade or two lifespan, so owning a home for any amount of time means covering: 

  • Roof, window, and siding replacements
  • Appliance repairs and replacements
  • Heating and air conditioning system breakdowns
  • Drain cleaning and sewage pipe repair and replacement

Renters may need to find a temporary place to shower or sleep during a serious issue, but typically repair responsibility and maintenance cost belongs to the landlord.

No Real Estate Taxes

Property tax is the single largest source of nonfederal tax collections—72.2% of local tax income and 32.2% of combined state and local tax income in 2020. For a single-family home, that calculated to an average of $3,719 nationwide and over $10,000 in high property tax counties.

While property taxes are a factor for landlords in setting rental rates, you won’t pay property tax directly as a renter or have to worry about increases that come with each year’s property assessment.

Lower Insurance Costs

Renter’s insurance is a fraction of what you pay for homeowner’s, since insuring a property and building along with its contents is much pricier than just the contents. The average annual cost in 2023 for renter’s is $174 vs $1,428 for homeowner’s insurance on a $250,000 dwelling.

The Economic Factors Driving the Renting Trend

Recent years have seen a spike in residential real estate values nationwide, but the 2020 – 2021 interest rate drop that bottomed out at 2.65% in January 2021 jumped back up above 5% in 2022, peaking (so far) at 7.8% in November 2022.

Those numbers mean that a $250,000 house (if you can find one in your preferred location) bought with a 20% downpayment and a 30-year fixed mortgage will cost you approximately: 

  • $1,079.76 monthly mortgage payment and $90,134 total interest paid at the 2.65% rate
  • $ 1,713.57 monthly mortgage payment and $318,307 total interest paid at the 7.80% rate

For some, the high upfront cost and long-term financial burden don’t align with their financial goals, and just don’t add up to a wise investment.

The Role of Residential Sale-Leaseback Programs

Already a homeowner? Consider learning how to sell your house and rent it back with a sale-leaseback solution. It allows homeowners to convert their home equity into cash while continuing to live in the home as a tenant. This arrangement can be particularly appealing for those looking to simplify their financial situation or eliminate the cons associated with homeownership, such as maintenance costs and property taxes. By selling to an investor-landlord—instead of packing up and finding a new place to lay your head, you stay on as a renter. The many sale-leaseback benefits include:

  • The legal right to remain in your home
  • A locked-in monthly rent payment and limits on future rent increases
  • The cash value of your home equity to invest in travel, business expansion, or family goals
  • No more property tax or homeowner’s insurance payments
  • Freedom from the work and cost of covered repairs and maintenance

For current homeowners, a sale-leaseback provides a bridge between owning and renting that allows you to offload homeownership costs and responsibilities without a move-out deadline. The comforts of home plus the flexibility of rental living—you can provide notice and move on when you choose. 

For those interested in exploring more about the various methods and strategies in real estate, understanding the different types of real estate transactions is crucial. Whether you’re buying, selling, or simply looking to understand the market better, knowing these options can provide valuable insights.


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Written by Meela Imperato
Senior Director of Brand and Content, Real Estate & Finance Journalist

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.