Looking at the big picture of our move from owning a house to renting an apartment, I have found two key benefits that have most contributed to our overall wellbeing. Either way you look at it there are advantages and disadvantages of owning a home and advantages and disadvantages of renting an apartment. We had to weigh the various pros and cons on each end of the own versus rent spectrum.
We’ve been on both ends. In our college days and in our married before children days we rented apartments. Jobs were changing, our wants were gradually increasing, and settling down in a house wasn’t the right move for us. We got to a point where everyone says we should own a house. I had a stable job and we were planning to start a family, so the next logical step was to buy a house.
We owned the house for ten years. We were happy with the house, but we quickly realized that owning a home takes a lot more effort to maintain. It also tied up a lot of money which I’ll talk about in a minute.
We decided to sell the house and return to renting. It was a big decision, and it took us nearly a year and a half before we finally decided to put our house up for sale. We sold our house eleven months ago and have been renting since that time.
At this point I’m able to look back and see two main benefits of renting versus owning.
The first is money. Home ownership comes with many costs that aren’t apparent before you buy your first home. I’m not necessarily talking about the mortgage either. Our mortgage (including taxes and insurance) was $1200 per month; our apartment rent is $1200 per month. On first glance you’d be like, “Where’s the savings in that?” The savings is primarily in utilities and maintenance.
Our power bill went from $400 per month to $120 per month. Our water bill went from $150 per month to $25 per month. Our natural gas bill went from $30 per month to zero (no gas in the apartment.)
The smaller apartment costs less to heat and cool. We also don’t have a pool pump to run in the apartment; the apartment takes care of the cost to run the beautiful community pool. We don’t have to pay (directly) for irrigation either. Irrigation was the major component of our water bill.
In the house we also had something we referred to as the Home Depot tax. I added up our yearly home improvement store expenses and it averaged $1000 per year. That’s for things like mulch, flowers and shrubs, as well as other interior home improvement and repair items. I have made a single trip to Home Depot since I lived in the apartment, and I didn’t even buy anything as they didn’t have what I was looking for.
Maintenance was another expense in the house that we don’t have in the apartment. I am loving that we now have maintenance guys to fix any problems that arise. In the house, any time anything went wrong I had to pay out of pocket for the fix. We also had to maintain the lawn, which included costly pest and weed control, gas for the mowers, and equipment to mow, edge, and fertilize. Later we got a lawn service so that included even more cost.
We’re also saving a huge amount on the cost of commuting. Our house was 30 miles from work. By renting, we were able to easily find an apartment closer, only 10 miles from work. We’re saving about $300 per month in gasoline, not to mention the savings in car maintenance costs.
Any time the topic of money comes up when discussing the cost of owning a home, someone inevitably chimes in that a home is an investment and you get to keep the money you put in. At the end of 30 years or so, you’ll own your $200,000 home. There are a number of ways to refute this, but I’ll leave it at this one:
We’re saving $400 per month on utilities alone. If we take half of that ($200 per month) and invest it in a mutual fund that averages 8% apr, at the end of 30 years we will have $293,630.08. Even if you want to consider a lower than average interest rate, you could put in the full $400 at 4% and come up with nearly the same amount. You can check the math yourself if you’d like, I used this site: http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
Between utilities, maintenance, and commuting costs we’re saving a bunch of money, roughly $1200 per month.
The other benefit is more valuable than money… Time. Time is a limited resource. You can always make more money, but you can’t make more time.
In the house we ate up nearly one full day each week taking care of home maintenance activities. Maintenance is a double whammy – time and money. Most Saturdays were spent taking care of the house. I’d mow, edge, and trim. We had to spray for bugs and fertilize. We had to take care of the pool, take the water to the pool store to get it checked, add chemicals, brush and vacuum, and scoop out leaves in the fall and bugs in the summer. Inside the larger space took longer to clean, straighten, and vacuum. Sometimes we’d spend entire weekends on maintenance activities, for instance in the spring we’d spruce up the outside with new plantings and mulch.
If something broke in the house I’d have to spend time to fix it. I’ve spent time fixing toilet flushers, repairing roof leaks, re-grouting tile, replacing pool pumps, fixing the ice maker, and more time than I care to think about repairing leaky and broken sprinkler heads. Now we have a guy for all that stuff and the cost is built into our rent.
My commute was also a double whammy. I spent between one and a half to two hours every day driving to and from work. Now I spend thirty minutes. That freed up one to one and a half hours per day. (We were able to take that time and spend it improving our health with exercise; much better than spending it sitting in traffic.)
Since we freed up our weekends, we spend that time doing things together as a family. We visit theme parks, we bike to local parks and playgrounds, and we attend local art shows and other community events. Our weekends are completely open for whatever activities we’d like to plan.
Time and Money, that’s where we’ve found the biggest benefits when comparing renting to home ownership.