To Rent or To Buy? That is the Question

Ideally, buying a house is the way to go. A house can be a great long-term investment, especially right now, when prices are low. However, buying a house isn't always feasible.

Aside from the mortgage and down payment for it, there are a lot of costs involved with buying a house. The mortgage itself will often have different fees attached to it, and property taxes may also get included into the mortgage, increasing the price of the loan. There's also closing fees and the cost of the inspector (a must for anyone buying a home or condo).

And then, there are costs that aren't included in buying the house, but are necessary nonetheless, especially if this is your first house. You might have to buy some or all of your appliances, a lawnmower, and either a shovel, snowblower, or snowplow blade for your mower (if you live in a snow-prone area). These necessities can range from a couple hundred dollars to a thousand or more.

Utility bills also need to be taken into consideration. Gas and electric can range significantly not only based on where your new home is, but also how big and how old the house is (older houses are less likely to have good insulation, which increases energy costs). Other utility costs that you may have to deal with, but didn't use to, is sewer/water and trash pickup. These are often not very expensive, but can be easily overlooked by new home buyers. And don't forget about homeowner's insurance. While many of these costs are, individually, small, they add up quickly. Make sure you have enough income to cover all of your expenses.

In addition to these upfront costs, there are also long-term costs to keep in mind. As a home owner, you are now responsible for any and all repairs, maintenance, and renovations to your home and property. These costs can range from a few dollars a month for gas for your lawnmower, to several hundred for an exterminator contract, to several thousand for renovations (renovations may be eligible for a renovation loan, or an equity loan, so they're not necessarily out of pocket expenses).

If, however, you are able to pay for these upfront and long-term costs, your rewards can be significant.

As I mentioned at the beginning, housing prices are currently extremely low (some of the lowest prices in decades), which means the value of your home will increase substantially in the coming years. You can make tens of thousands of dollars from just the increase in property values, and possibly even more if you've done renovations and improvements (things like solar panels will not only decrease your energy bills, but also increase your property value).

Even if you don't sell your house, you're still earning credit and building equity. Credit from having a house will make getting financing for other things, such as cars, even easier.

You also have the luxury of being able to install things like solar panels and rainwater reclamation systems, which can save you substantial amounts of money on utilities. If you gain enough energy from your solar panels, you can even make money by selling your unneeded electricity back to the electric company (which they, in turn will sell to other consumers, often under their "alternative energy sources" programs).

Having a house also allows you greater freedoms that you can't always get in a renting situation.

Do you like dogs and have or want to get one? That will limit your choices and probably increase your cost. Do you like/have a large dog, such as a Lab or German Shepard? Then you're probably down to half a dozen different places you could rent in your city, and maybe even less if your area or the leasing companies consider such dogs as German Shepards as "aggressive dogs," which are often banned from apartments.

Unlike buying your own place, with rentals, you can't generally do any kind of renovations. Even something like painting a room has to be done with extreme consideration, as you're usually expected to get it back to a shade that they can paint over with one coat when you leave. This means that if you want to paint a room with darker colors, you'll have to also take into consideration the cost of getting it back to white. The level of concerns such as this may or may not be high, however, depending on how long you plan on staying in that apartment.

You're also, physically, significantly closer to your neighbors than you typically are with your own house. In the best situation, you have a neighbor on one wall, in the worst case, you have a neighbor on three walls, as well as above and below you. Sometimes you might get lucky and have quiet neighbors, other times, you might end up with neighbors that like to party at all hours of the night. These dynamics might also change (for better or worse) as your time there goes on, as neighbors might come and go.

Outside-facing decorations are also typically frowned upon by lessors. So if you like to celebrate the holidays, you might have to confine your decorations to the inside of your home.

In addition to having to abide by various rules of those you're leasing from, you also have to consider that your monthly rent isn't going to anything that will help you in the long run. Unlike a mortgage payment, which builds credit, your monthly rent only goes to maintaining the property. While this does benefit you while you're renting, it doesn't give you anything in return when you're ready to leave.

After looking through the cons of renting, one may think that renting is a waste of time and money. However, there are a number of pros that are worth considering.

In many apartment complexes, you have ammenities that you wouldn't be able to have without buying and maintaining yourself. Such ammenities include things like one or more swimming pools, a fitness center, jogging trail, WiFi, and tanning beds. These are available to residents at no extra cost and are maintained by the staff or a professional team.

You also don't have to worry about landscaping of any kind. Lessors will take care of mowing, trimming hedges, clearing out leaves, and plowing the drives. This means you don't have to spend time doing things like this.

Maintenance is another thing you no longer have to worry about. All you have to do is make a phone call or put in a ticket, and the lessor's maintenance crew will come and fix what needs to be fixed, again at no charge to you.

Some complexes will even let you do some upgrades and may even reimburse you for them. New knobs on the doors? You might get money back for them after you leave. Even if they won't reimburse you, some of the freedoms you might have might be worth taking advantage of, if you plan on staying for a long time. For example, my complex (townhome complex) allows renters to do things with the 15'x5' (or so) area in front of their sliding back doors, next to their garage. The end units have it especially good, as their width isn't as limited. Some tenants have built full decks, where they keep a number of things, such as their grill. Others simply do little walkways, while others build fences, which create a mini yard for their kids or pets to play in.

So far, my coverage has been over houses vs apartment, as though these were the only two options in some sort of home dichotomy. That's not really the case, however. Condos will often combine the autonomy of home owning with the convenience of renting.

While it is possible to buy a condo that is stand-alone and not in a complex, it's far more common for them to be in a complex and part of a community. The mortgages for condos can be cheaper than for a house, but can also run as high as some houses. Depending on what you're looking for, it might be worth it.

There are, however, costs that aren't included in the mortgage. While you might not have to pay to repaint the outside, or pay for general maintenance like you would if you owned a regular house, you are still, essentially, paying for it through monthly dues to the homeowner's association that runs that complex. The dues, like the rent for an apartment, help pay for maintenance of the grounds and upkeep of the amenities. The amount of the dues varies greatly by complex, but one can get a general idea by looking at the available amenities. A condo where the only amenities are mowing the grass, plowing the drive, and keeping the outside looking presentable should have much lower dues than a condo in the same city that has two heated pools, a parking garage, a concierge service, fitness center, and continental breakfast. However, the dues even for two complexes with the same amenities might not have the same dues, as they're determined also by the people that live there (the association is typically an elected group of people from the complex) and can be affected by the number of people actually living in the complex. If you're considering a condo, always ask how much the dues are and what they pay for.

You also have a similar neighbor issue as in an apartment, though renovations to individual units may mitigate the sound issues that one experiences in a rental. This is, in part, because some condo complexes are actually former apartment complexes that were "converted" to condos and sold, instead of rented out. For example, there are a number of complexes in my city that have the same buildings and floor plans as the complex I'm in (I think one big company once had a bunch built or something and something happened to that original company and they all got sold off to different companies). At least one of those complexes is now being used as condos.

From the research I've done, some condos may have rules about pets, but they seem to be more lenient than apartment complexes. So far, I haven't found the weight/breed restrictions that rentals have. Some, however, may have restrictions such as one dog, or two cats. Usually, though, you're still expected to clean up after your dog when they relieve themselves, particularly if it's on the communal area (which many yards are likely to be). If you have or plan on getting a pet, it would be worthwhile to see what pet rules the complex you're looking at has.

Sometimes, the dues include certain utilities. Often, fixed-rate ones, such as sewer and trash pickup. Sometimes, they have deals with the water company for water, as well (often, cost of water per unit is based on the number of occupants in the unit), so that may be included. You should find that out when you ask about your dues. Utilities included in the dues provide the convenience of one or two fewer bills you'd have to worry about.

Condo residents typically have two particular demographics -- first-time home buyers (often younger couples) and older people (generally, the "empty nest" age and up, where they've decided to get something that's smaller and requires less work) -- though individual complexes may vary. It might be worthwhile to take a look at the demographics of the complex you're considering to see if it would work for you.

So, to rent or to buy? The answer to that question rests largely on your financial abilities. From there, it becomes a matter of taste and desire for the conveniences and freedoms that each has to offer. Do you mind the potential for noisy neighbors if it means you never have to mow your lawn or fix the dishwasher? Or would you rather mow your own lawn if it means you get some more room between your home and your neighbors'?