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If I'm Not in the Position to Buy a Place, Are There Still Benefits to Renting?

There’s an old saying that renting is “throwing money away,” but this simply isn’t true. There are both pros and cons of renting a house to keep in mind.

March 21, 2022

We’ve all heard it: “renting is throwing money away.” After all, a mortgage builds equity in a home, while rent payments simply go to your landlord’s pocket. 

Does this old adage have any truth to it? 

The reality is not so clear-cut. Sometimes buying a home makes more financial sense, while sometimes renting is superior.

Like anything else, there are both pros and cons of renting a house.

This guide will explain the rent vs. buy decision using data and hard numbers, instead of relying on old sayings and anecdotes. 

Pros and cons of renting a house

First, let’s take an at-a-glance look at the pros and cons of renting a house or apartment. Then, we’ll dive deeper into the aspects that are most important to consider closely. 


  • Renting keeps things flexible – you can move for a new job or any other life change

  • In some cases, renting can be cheaper than owning

  • Rent costs are predictable  – there are no surprise roof repairs or broken appliances to pay for

  • Requires far less in upfront costs (no down payment, closing costs, etc.) 

  • No property taxes


  • Renting doesn’t build equity like a mortgage would

  • Rent prices can rise over time (mortgage payments are typically fixed)

  • You must follow the landlord’s rules when it comes to pets, modifications, etc. 

  • There are no tax benefits to renting

Renting vs. owning: The finances

There are significant financial differences between owning and renting. Here’s what to keep in mind. 

Upfront costs

Most rentals require a security deposit along with first and last months’ rent. This could be several thousand dollars, depending on the cost of the rental. 

But buying requires a huge upfront investment:

  • The down payment will be between 3% and 20%+ of the home’s value. On a $400,000 home, that’s $12,000 to $80,000

  • Closing costs add another 3% to 6% of the purchase price ($12,000 to $24,000) on a $400,000 home

  • Miscellaneous costs for upgrades, moving expenses, etc. Hiring movers alone costs an average of $1,400

Overall, buying a home typically requires a bare minimum of around $20,000 upfront – and far more if you want to save up a larger down payment. 

Related reading: How much should I save before buying a house?

Maintenance costs

For renters, maintenance costs are handled by the landlord. However, you’ll be at the mercy of the landlord to actually take care of repairs. 

For owners, maintenance costs can be quite significant — so much so that 45% of homeowners underestimate the cost of home maintenance. 

On average, maintenance costs add up to between $950 to $9,820 per year. A common recommendation is to budget 1% to 3% of the home’s value for maintenance annually. On a $400,000 home, that’s $4,000 to $12,000 per year. 

Monthly costs

Renters pay monthly rent, while owners will pay a monthly mortgage. In many cases, this monthly amount is similar with both renting and buying – though this depends on the rental market and the mortgage term and down payment amount. 

You can use a mortgage calculator to estimate your monthly mortgage payment and compare this to rental prices in your area. 

Eventually, mortgage costs will end once the mortgage is paid off. For most people, this is after 30 years. On the other hand, rent payments never end. 

Homeowners will still have some ongoing costs even once their mortgage is paid off. Property taxes, home insurance and maintenance costs can add up. But eventually, a homeowner’s monthly costs will be far lower than a renter’s. 

Tax costs and tax benefits

Renters won’t pay any property taxes or other taxes directly. However, the landlord will factor in property tax into the cost of the rental. Renters also receive no tax benefits when it comes to filing taxes. 

Homeowners will pay property taxes. The average American pays $2,471 per year in property taxes. However, property tax rates greatly vary depending on the location. 

On the other hand, there are significant tax benefits to owning a home. Homeowners who itemize their taxes can deduct the cost of interest on their mortgages and can often avoid capital gains tax when they eventually sell their home. 

Opportunity cost

Opportunity cost refers to the cost of the alternative options you are giving up when you make a decision.

In this case, the opportunity cost of buying a home could be flexibility or the alternative uses the down payment amount could be used for. For example, a renter could choose to keep renting while investing the down payment amount in the stock market. 

Because the stock market returns close to 10% per year, on average, this is a significant opportunity cost. 

$50,000 invested in the stock market earning 10% per year would result in $872,470.11 after 30 years. 

For a more conservative estimate, $20,000 invested earning 7% per year would result in $152,245.10 after 30 years. You can use an investment calculator to calculate potential returns and your own opportunity cost of buying a house. 

Note: Home values also tend to increase over time — so there is an opportunity cost to renting, as well. 

Renting vs. owning: Lifestyle considerations

Renting pros and cons also include lifestyle factors that should be considered. 


Renting allows you to be more flexible with where you live, and for how long. 

Owning is less flexible. However, once you own a home, your equity will grow along with the overall housing market. This can make it easier to buy a home in another area, as you’ll have equity built up for a down payment.

First-time homebuyers tend to stay in their homes for 11 years, on average. And experts recommend that buyers should stay put for at least three to five years.

Peace of mind

Renters enjoy the peace of mind that repairs and maintenance aren’t their responsibility. 

Owners enjoy the peace of mind that they’re in full control of their own living space and that they’re building equity in an asset that should appreciate over time. 

Is it better to rent or to buy?

Here’s the truth: there’s no simple answer.

In some situations, buying a house makes more sense. In others, renting is a better option. You’ll need to do the math and weigh the lifestyle factors for your specific situation.

If you decide to buy, learn how to save for a down payment

If you decide to keep renting but eventually want to buy, you can start saving for a home while renting

And if you decide to rent for life, that’s okay too! There is no right or wrong answer when it comes to the rent vs. buy debate. 

Either way, use this time as an opportunity to assess your financial situation. Are you on track towards meeting your financial goals? 

Improving your financial situation should start by paying off high-interest debt. If you have credit card debt, check out Tally†. Tally is a personal finance app that may help qualifying Americans get out of credit card debt faster. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.