Buying Versus Renting: Which Is Right For You

Buying Versus Renting

It is not as simple as mortgage costs versus renting costs.

I am a real estate agent. Obviously, I am biased towards selling you a house opposed to searching the world over only to see the best rental option for you could be no commission for me. That sucks but in some cases there are very good reasons to rent, but there’s also ways to go about buying that can help you reach your financial goals and maybe even save you money. I went through this last year. As an agent, it was painful to have to resort to looking at rentals but there are options available that you really should be evaluated before coming to a decision.

Why Rent?


It is not the same commitment as buying. If you are unsure about an area whether it be you like it, the economics of it, its safety, or other variables, sometimes renting really is the way to go. It guarantees you the flexibility of being able to reevaluate every year or so depending on your agreement. The guarantee of having the escape option can be worth it. You are spending the money on housing either way so the flexibility of renting for a year can help you make a well thought out decision of where you want to be, what your living expenses look like, and your expectations going forward. This cannot be argued, it is a pro of renting. If the flexibility of renting is your top priority, rent. If you are not in an area you plan on being for at least two to three years minimum, you have to make a very savvy decision with real estate to even make it worth your time to not rent. It is not as simple as renting or building equity, the first few years of a mortgage are less principal and more interest so while you are building equity, I say it has to be savvy because to actually make money on your home purchase, it has to grow in value faster than the average US home (more on this in the Buy section).

Price Stability

People like the comfort of not having to worry about variable costs. There are two sides to this. One, some rentals have all the utilities included, not having to think about that and the burden that comes with not thinking about if your electric bill is late is worth to some people. Two, if there is a major issue, you probably are not liable to replace it. You do not have to have a few thousand dollars set aside if the furnace goes. Not having to keep that in mind with your money can be worth it alone to some people.

Why Buy?

Building Equity

Yes, instead of your money going to the landlord, it goes towards the interest with a little bit trickling down to start building equity. It is a start though. You are building equity and if you are savvy, you buy in an area that will be on the upswing. If you are in a position of thinking about renting versus buying, you probably do not have a lot of previous equity built up and you are not looking for your “forever home”.

You are not going to build that much equity within the first couple years of a mortgage so that should not the deciding factor but you can really help your future self out by buying a house in a neighborhood that is on an upswing. It can put you in a great position going forward. If you are content living in the same place for at least a few years, the equity on a good mortgage rate can start to be worth it by itself. If it is your first house, buying in a growing, developing neighborhood you like can turn out to be a great decision (a worthwhile agent can really help here, wink wink).


You can make changes, improvements, etc. as you see fit because it is yours. I am not even necessarily talking about the “pride” of homeownership, although that can be fulfilling, I am talking more about turning your place of residence into your home. While most rentals can be painted, sometimes that simply is not enough to make it yours. When you live there and you own it, you can mold it to fit your lifestyle.

What should you do?

So now I have basically stated what makes people choose what they already do but nothing too insightful to actually help. So here is what my advice would be; be prepared for headaches, risks, and find a neighborhood that works for your lifestyle while the statistics show that it has room to grow, then buy a house that is sitting on the market. That goes against conventional wisdom but there are deals to be had and often times if a property has been sitting, people are ready to negotiate. It is super helpful if you can point to exactly why it has been sitting, then the solution is easy. Those reasons can be anything from a bad layout (very common) to an expensive issue people do not want to deal with like a bad roof or furnace. I get into this more in Nine Tips Before You Flip but similar rules apply. It does not have to a full fledge flip (say that five times), but there has to be an opportunity to add value at a cheaper cost than the value it brings, then it is worth exploring. There are loans that are specifically built to help you add value through renovations, I will explore a little more next but I want to do a full post on 203k loans soon.

Is there a secret?

Now the next obvious barrier in this is, “if I am deciding between renting or buying, I probably do not have the thousands of dollars laying around ready to bankroll a flip”. Which is completely understood but there are ways to go about this to really make it work to your advantage. If you want to email me I can really get into this more but I do not want to go the whole way down the rabbit hole of rehab loans in this blog. I include them because they can be the “ace in the hole” and really sway your decision between buy versus rent. I was scared of them for a long time, mainly that they are a little bit higher of an interest rate. My view of them changed when I realized that with many variations of rehab loans, a reassessment when the work is done is part of the process. Which, in normal terms, means if you find the right property and do the right work, there is a great opportunity to immediately build equity in your house. I have worked with clients that have ended up going from an FHA loan with a 3.5% down payment to doing a conventional loan 20% down payment with the value added based on the rehab done before the reassessment. That can set you up great financially plus in a lot of ways you get to make your home how you want. I will get into these details more in a future blog post specifically about the types of loans and how to best utilize them but for now, I will leave them at that. If you are in a position to put 3.5% down on an FHA loan, it is definitely worth exploring. Best case scenario is adding that 16.5% through the renovations to turn into a long-term conventional loan that comes with fewer fees and generally a lower rate.

BUT WAIT, WHAT IF SOMETHING BREAKS!? On average I have seen maintenance costs can be around 5% a year and some years can be worse. With my own house, I went into it knowing that the furnace was old and the outdoor AC Unit was working hard- but they worked. A good home warranty can cost around $30 a month and can give you peace of mind with appliances and mechanicals. All home warranties are not created equal though so do your research (or email me, I’d love to put you in touch with good ones). You still should be putting money aside monthly to cover emergencies not covered by a home warranty (or instead of a home warranty) and major expenses like a new roof if need be but in the end, if you do your research and look what your desired area has to offer, you might just make a great financial decision and be happy with your living situation.

In conclusion,

there are benefits to either route. Buying versus renting comes down to what you want. It depends on the market in a particular area, some areas could be in a bubble and not being invested in real estate long term can be the smartest financial option. Simply understanding how taxes and insurance affect your monthly costs, you go into this decision with so much more information and in the end, you might actually save money on a monthly basis while still building equity if you buy a house. In other regions, you might dodge an economic bullet by not being invested in real estate.

If you’re thinking about this question, email me, seriously, I would love to help. If you are in Pennsylvania I can help you directly and if you are not, I can still help with your particular situation over the internet.

Rob Sulava is a licensed real estate agent with Broker 1 Realty based in Pittsburgh, PA.


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