Renting an apartment vs. buying a home is a huge decision that can affect the next several years of your life. Think about the pros of renting an apartment vs. buying a house, and decide which option is better for the kind of lifestyle you have and want to live. There are plenty of resources online that can teach you more about what it’s like to live in an apartment versus a home. There’s a lot to consider when deciding to rent or buy, so go over the following and make an informed decision.
Should I Buy a Home or Rent an Apartment? – Financial Analysis
Your lodging is one of the biggest expenses you’ll have throughout life, so it’s important to weigh the cost when it comes to homes vs. apartments. Some people say that buying a home is the smart financial decision because it helps you build equity, and you actually own the property. On the other hand, putting a down payment on a house zaps a ton of money that you could otherwise invest, so it’s hard to say for sure that buying a house is really smarter in the long run.
Here are all of the costs involved in buying a house:
- Down Payment
- Earnest Money
- Home Appraisal and Home Inspection Costs
- Mortgage Insurance
- Maintenance Costs
- Real Estate Fees and Closing Costs
- Homeowner’s Insurance
- Monthly Mortgage Payments
- Yearly Personal Property/ Real Estate Taxes
Of course, renting an apartment has some costs of its own. Depending on where you rent, these costs may include the following:
- Application Fee
- Security Deposit
- First Month’s Rent Up Front
- Monthly Rent Costs
- Renter’s Insurance
As you might imagine, these costs for renting an apartment are significantly lower than the cost of buying a house. The application fee is much less costly than putting a down payment on a house, and the maintenance costs for a house can be a real killer. You never know when a house is going to need a serious maintenance project that could cost you thousands of dollars, and this is one of the biggest cons of buying a home.
On the other hand, when you rent an apartment, you know up front exactly how much everything is going to cost. The financial savings are one of the greatest benefits of renting an apartment. While you’re not necessarily buying equity in a property, you’re able to save more easily and create a clear plan for how and where you want to invest your money.
Difference in Upkeep for House and Apartment
While it’s clear that maintaining a home can be much more expensive, it can also be more time-consuming. If you live in an apartment and something goes wrong in your unit, you can simply call the management company, and they’ll get it taken care of in a timely manner. In a house, you’re on your own.
This extends to the rest of the property as well. A management company will take care of all the common areas including the landscaping. Pretty much all you have to do is keep your own unit clean, so there’s not as much of an area for you to maintain. In a house, you can end up spending a good amount of your free time mowing the lawn, pulling weeds, and taking care of the landscaping, and that’s only on the outside of the house! The bigger your home, the more upkeep you’ll have to do and the more difficult it will be to stay on top of everything.
Some of the best apartment complexes are remodeling and improving their properties almost constantly. That means you can count on having the latest styles and the newest amenities without having to put in all the work yourself. Homeowners are always struggling to update their house and keep it modern and stylish.
Apartment or House for Flexibility
Homes do offer one significant advantage in the area of flexibility: you can change it to almost however you want. Since you own the property, you get to decide when you’ll upgrade your appliances or repaint your bedroom. While some apartment complexes are more flexible than others, these kinds of changes are not typically allowed. This is one area where buying a house gives you greater flexibility, which is nice because houses take away your flexibility in a lot of other ways.
Houses demand a huge investment, so it strips away some financial flexibility. You no longer get to decide exactly how you invest your money because you’ll end up sinking so much of it into the house. You better keep a lot of your money liquidated, too, because you might need thousands of dollars for a sudden repair at any time.
One of the biggest ways houses rob you of some flexibility is that it makes it way more difficult to move around a lot. Thanks to loans, interest, property taxes, and real estate fees, it isn’t as simple as just buying and selling a house quickly. You could be on the hook for a lot of money if you try to move within the first couple years of buying a new home.
Apartments, on the other hand, make it very easy to move around. Typical leases are only a year long, so you can bounce around and try a lot of different areas. Once you find an area and apartment complex you really love, you can renew your lease as long as you want to stay in the neighborhood.
Buy or Lease for Different Life Stages
An apartment is the ideal first step for people living on their own for the first time. As people get older and potentially start families, they will begin to need more space. There are some big apartments in nice, family-friendly complexes, but many decide to buy a house at this stage of life. Houses can be nice for those who want to raise a lot of children and need a lot of space.
In that scenario, parents find that they have a lot of excess space in their home after the children move out. These aging parents often prefer to enjoy their golden years instead of constantly caring for a big home they no longer need. In this case, it often makes sense to downsize to a nice apartment. This allows older residents to reduce the amount of upkeep they’re responsible for while also reducing their expenses.
Risks of Home Ownership vs. Leasing
The biggest reason so many people glorify home ownership is because they say, “it builds equity.” This is true, but equity and profit are not the same things. Not all homes become more valuable over time, and some are actually depreciating assets. Homes can lose value for several different reasons:
Homes in your neighborhood lose value over time
The house develops serious problems such as foundation issues
Your neighbors don’t take good care of their properties
While apartments don’t allow you to build equity, they also don’t carry the significant risks that home ownership does. If your neighborhood or specific apartment complex starts to become less valuable over time, you can simply move somewhere else.
Credit Requirement for House vs Apartment
Most apartments require at least some proof of income or credit history to make sure that you’ll be able to pay your monthly rent. That said, the requirements aren’t especially demanding or complicated. To buy a home, on the other hand, you will have to deal with mortgage lenders who have extremely high credit standards. If you don’t have superb credit, the lender will offer you a worse deal on your mortgage to protect their interests. This can cost you thousands in additional interest payments. If you don’t have a great credit score of 700 or more, it’s best to rent an apartment and avoid getting gauged on interest.
Utility Costs in Houses vs. Apartments
While some apartment complexes may include all utilities in the cost of rent, it’s much more common that the renter will have to pay at least some of their own utilities. In most cases, though, the apartment will cover at least some of the utility costs, so renters only have to meet the property management company half way. Even if the property management company doesn’t pay any of the utility costs, renters in apartments can still count on much lower costs compared to those who live in houses.
Houses use more utilities because they’re large standalone buildings. The person paying the utilities is responsible for heating and cooling the entire home. You’re exposed to the elements on all sides, so your house loses the hot or cold air through multiple different surfaces, which can do a number on your electricity and gas bills.
In an apartment, you have the benefit of only having one or two external walls in most cases. That means you’re only losing your hot or cold air through very few surfaces because the rest of your unit is connected to other indoor areas. The hallways and common areas are all taken care of by the property management company, so they’re spending on utilities that help keep your specific unit comfortable.
Best Apartments to Rent West Phoenix
Once you’ve decided that apartment living is right for you, all that’s left is to look for the best apartments near West Phoenix. Heers Management has multiple different properties in this area, so you’re almost guaranteed to find something that’s a great fit for you. Our excellent communities have a lot to offer, so we encourage you to spend some time in the surrounding neighborhood after you come take a tour of our apartments. Contact us today to set up a viewing!