that's right sometimes it just makes more sense to rent versus buying so let me share with you 10 reasons why renting might be the right choice for you the number one reason why you should consider renting instead of buying lower upfront cost this is probably one of the biggest reasons why it makes sense for many people to rent versus buying buying a home no doubt is one of the biggest purchases we'll make In Our Lifetime not only do many of us need to take on a big mortgage it requires big upfront cost if you want to avoid private mortgage insurance you need at least 20% of the home value as down payment then you have the transaction cost appraisal fee title fee application fee Etc and what if the home is a fixer upper and not moveing ready you have big renovation cost new appliances new flooring and a new paint job and that is if your home only requires surface level cosmetic updates anything more could cost you 10 if not hundreds of thousands of dollars th when you add up everything The Upfront cost to purchase a home can range from minimum tens of thousands if not hundreds of thousands of dollars amount that requires a lot of saving and waiting however the initial upfront cost to rent is less much less most often when you choose to rent the only major upfront cost required is a security deposit equal to one month's rent maybe slightly more for a high-end property but once you have that down that's pretty much it and with the security deposit as long as you take care of the property well and don't have major damages it should be returned to you when you decide to move out so if you're concerned about the high upfront cost of buying a home renting might be the right option for you number two reason why you should consider renting instead of buying in the line of cost lower ongoing cost when you rent you don't have to worry about big ongoing expenses like property tax and homeowner insurance that homeowners have to worry about property tax varies by state and the county you live in but these can range from 0.5% to 2% of the property value yes you can move to a state with a lower property tax but do you know what state is known to have the lowest property tax in the US according to Rocket money Hawaii with effective property tax rate at 0.32% but for those of you who ever visit a Hawaii know it also has one of the highest home value in the US average homes going for $1 million plus which kind of negates the benefit of having a low property tax rate well when you rent you don't have to worry about this at all everything is baked into your monthly rent as long as the monthly rent works for you the property owner has to deal with the big ongoing cost such as tax and when it comes to Insurance while the homeowner needs to maintain a homeowner's insurance policy in order to protect your property you as a renter only needs renters insurance policy and renters insurance compared to a homeowner insurance is much cheaper because only covers the stuff that you own not the property itself for example according to bank rate while the average homeowner insurance for a $250,000 dwelling is approximately $1,800 in the US the average renters insurance is 1110 St similar to the big upfront cost of buying a house if you're concerned about ongoing cost of housing renting is definitely a better option leaving you more cash in your pocket number three reason why you should consider renting versus buying in some places especially high cost of living areas you get more bang for your B buck in high cost of living areas like coastal cities when you calculate the monthly expense of ownership and compare that to the rent of a similar siiz space it is much higher for example near where I live in Orange County California on Zillow I was a to find a decent three-bedroom 2.5 bathroom, 1600 ft condo renting for $3,800 a month in the same neighborhood there is a similar Place three-bedroom two B 1,700 ft on the market for $999,999 yes $1 shy of $1 million Maybe the owner thought six digits would attract more potential buyers than a flat $1 million regardless if you to purchase this $1 million property with a $800,000 mortgage because you put 20% down with a 30-year fixed 8% your monthly payment will be close to $6,000 and we're not including property tax homeowner insurance and other ongoing cost such as maintenance with that you're close to paying two times more for the same square footage yes I know you own the property so that is fundamental different However the fact is that if you to go out to the market right now to find a place with, 1600 ft for your family especially in a high cost of living area it is cheaper to rent you get more bang for your buck and this is a part where I get a lot of counterarguments yes I know I see renting is cheaper here but I don't have any Equity I don't own the property how can I build wealth don't the majority of Americans build wealth by owning versus renting yes it is true that the majority of Americans wealth by the time they retire is in their property but most often this isn't as intentional as it might look most often it was by accident forced saving if you know where to invest and have the discipline to do it there are other ways to build wealth which leads to the next reason number four reason why you should consider renting versus buying freeze sub cash for investment that money that you save by renting instead of buying it is now free to be invested in appreciating assets yes owning your home is a way to build some wealth when you're locked into a 30-year mortgage you're forced to pay your Banker every month because they lend you the money and this forcing has allowed many Americans to build equity in their home however there were costs to paying down that mortgage for the past 30 years you had to upkeep your property and you continuously paid high ongoing expenses such as property tax and homeowner insurance and you didn't have the flexibility to move and to be frank owning a home especially your primary home shouldn't be your only or the main strategy to Building Wealth with more cash freed up from renting versus buying you can invest more into other assets such as lowcost broad market index funds into yourself to build career capital or even other real estate Investments the theme of why renting could be better than buying do you know that there are actually ways you can capitalize on people favoring rent versus buying as an investor which is why I'm excited to talk to you about today's video sponsored fundrise Flagship fund if you watch any of my other videos you know I highly value investing in real estate in addition to investing in the stock market this is because real estate provides great long-term earning potential and effective diversification beyond the stock market and if you've been scratching your head on how to invest in real estate especially without doing all the headache work of being a landlord look no further and check out the fundrise flagship fund the fundrise flagship fund is a well Diversified Real Estate fund that holds 1 plus billion real estate properties including over 4700 single family rentals that they built from ground up to rent it incorporates fund Rises most favor rate investment strategies all in a single portfolio the exposure to build for rent is quite exciting given all the benefits to renting that we discussing in this video as more and more people are choosing to rent build for rent also known as bfr for short has become one of the fastest growing asset classes in the world bfor rent refers to the strategy of developing residential communities specifically for the rental market rather than for sale it's perfect for people who are looking for larger spaces that traditional single family homes provide but don't want to buy it provides greater affordability and flexibility and thus not a surprise that it hasn't been popular especially in regions such as the sunbell cities like Dallas and Atlanta where many people have been moving to have extra space and the fundrise flagship fund is designed to take advantage of this trend as of right now the fun Moniz Flagship fund holds approximately 4,700 single family homes across 29 us markets primarily in the US Sun Bel area with plans to expand so if you've been thinking about ways to diversify your Wealth Beyond stocks and gain greater exposure to real estate you can check out the fundrise flagship fund and with a $10 minimum the flagship fund makes it easy for investors of virtually every size to invest in institutional quality real estate at the touch of a button so make sure to use my special link I'll have in the description below to get started today all right with that said let's get back to the video number five reason why you should consider renting versus buying and this is my personal favorite minimal maintenance I shared with you before in my other videos but I'm a total buffoon when it comes to Home Maintenance I feel I do more harm than good most of the time for example a few months ago we had a water leak in our roof a water pipe that ran across our bathroom ceiling had a small hole me despite knowing nothing about leaky water pipes and how to fix it thought I'd be mcgyver and give it a try unfortunately it didn't work work out too well not only did I not fix the broken pipe I made the situation worse the attic floor under the broken pipe had weakened with all the water and meing the fool that I am decided to step on it I almost fell through the ceiling if it wasn't for the 2x4 that saved me without that you might have seen the last of Mr Financial tortoise thankfully no one got hurt but my wife who happened to be in the bathroom at the time got a pretty big scare and she Banned Me from ever going to the attic again now if we were renting versus owning I would have never gone up into the attic I would just call the landlord and tell them that we had a Le and can you send someone immediately to fix it and they would need to coordinate everything however in this case we had to do everything and to be honest even finding the right handy man is a lot of work finding someone who has the right skills who is reputable as well as being available that is a lot to ask for when you have water dripping all over your bathroom floor but when you rent you don't have to worry about any of that you either call or these days you just fill out a work order form on your phone and it's their responsibility now not yours which leads to a next reason number six reason why you should consider renting versus Pine it saves time as you saw in my example when you rent you don't have to worry about trying to fix something or finding someone reputable to fix it the landlord is responsible for all of that thus if you're in a high demanding career or have life responsibilities like family you have more time to focus on those things your career yourself and spending time with loved ones you don't have to deal with the stress associated with dealing with a broken pipe or a busted electrical outlet and let me tell you getting my feet stuck in the ceiling of my bathroom was stressful and this also applies to the initial phase when you're looking for a place to live buying property not only requires finding the right place but lining up the financing and finding contractors if the property requires renovation so much energy and time goes into buying and getting your property ready for move in but when you choose to rent after a quick credit check in a security deposit you can move in right away the landlord is responsible for making sure the property is moveing ready and you're responsible only for the things that goes in the new place the number seven reason why you should consider renting versus buying lower overall risk as I stated earlier many Americans have much of their wealth in their home by the time they retire because they got in the habit of paying their mortgage every month thus it feels nice to own their property the feeling that they have equity in something some money to retire however there is risk to the strategy for one home values fluctuate constantly yes not as volatile as the stock market but home values are constantly going up and going down and many times this doesn't have anything to do with the property itself macro events such as rising interest rate tough job market new schools opening up and New Roads being built right next to your house these all have the abil ility to both increase and decrease the home value and if you have the majority of your wealth tied up in your primary residence your wealth is also at the mercy of these external forces that are completely out of your control however when you rent the home value fluctuations doesn't affect you it affects the landlord and they might choose to increase or decrease your rent but that is about it if you have your money Diversified and invest in many other different assets outside of your primary residence your risk profile is mitigated the number eight reason why you should consider renting versus buying flexibility this isn't one of my favorite reasons why renting at times makes more sense than buying renting provides the ultimate flexibility where to live what kind of property to live in and for how long new events happen constantly in our lives we get offered a new career opportunity in a new city we want a bigger place because the family is growing or we go through a midlife crisis and we want a change of scenery well if we own our property it's hard to respond to these events quickly we have to decide if we're going to sell and buy in a new city if we decide to keep our current property renting it out and all these require a tremendous amount of coordination and work not to mention the added cost but when you rent you can just decide to pick up and go yes if you're in middle of your contract and you're leaving before it ends you would need to pay a penalty most often 2 months of rent but that is surely less than taking a $50,000 loss in your property because you're forced to sell at a down Market bottom line one of the biggest benefits to renting versus buying is the flexibility that it provides so if you see yourself going through a life transition or a major life event in the next couple of years it might best serve you to rent versus buy a quick reminder before we move on to the next reason make sure to download your free onepage pdf companion guide that goes along with this video it has everything I'm covering in a simple to digest onepage format go to the link I'll have in the description below to download your free copy number nine reason why you should consider renting versus buying in the theme of flexibility access to desirable neighborhoods let's say you want to live in a specific neighborhood because it has great schools or is closer to your work most often the homes in these desirable neighborhoods as you can guess are quite expensive without a sizeable down payment and the ability to handle large on costs it would be extremely hard to live in one of these neighborhoods as an owner but if you're looking to rent more doors open up the entry and the ongoing costs are much lower thus renting offers an enticing opportunity to live in a desirable neighborhood that may be financially Out Of Reach or let's say that you do have the money if you're looking at a neighborhood just because of the kids schools would you feel comfortable putting so much of your financial resources based on that desire alone what happens after they've grown up and moved out would you still want to live in that neighborhood you'll be at a completely different phase in life 10 years from now well by renting you can experience a lifestyle and the amenities of these neighborhoods without the long-term commitment and financial cost and if you do come to love that neighborhood you can always choose to buy later number 10 reason why you should consider renting versus buying seg going from an earlier Point access to amenities amenities such as a pool a private park or fitness center comes as a standard at many midscale to upscale Apartments condo complexes and some communities and the nice thing is that these complexes or neighborhood management is responsible for maintaining these amenities no need to worry about pool maintenance or cleaning no need to get a separate gym membership if you as a homeowner want to have regular access to these amenities you likely need to spend thousands if not tens of thousands of dollars imagine the work and the cost of installing a new pool in your house the work the permitting the ongoing costs are no joke so if you value amenities but don't want to pay Crazy Prices renting could be a better option compared to buying thank you guys for watching in the line of talking about homes and renting if you want to get smart about some commonly used real estate terms please check out my video here until next time I'll the best
