Your lease is almost due to expire: should you renew it, or consider entering the world of homeownership?
It’s not uncommon for Americans to begin life on their own as a renter when moving out of their parents’ homes or graduating from college. Student loans can make it tough to start out as a homeowner right from the get-go, and housing prices aren’t exactly cheap.
There are obvious advantages to renting over owning, such as the flexibility to move when the need arises and the freedom from added financial responsibilities, such as paying property taxes and maintenance fees.
But there are benefits of homeownership as well. When your lease is up, it might be a good time to start contemplating whether or not to continue renting, or to take the leap into homeownership.
Reasons to Renew Your Lease
If live has been good thus far living in your current unit, you might have little reason to make a change. Here are some reasons why it might be best to stay put and renew your lease.
If you love the property you’re living in and the surrounding neighborhood, you’re close to work and all daily amenities, and the landlord treats you very well, you might not want to mess around with a good thing. Establishing yourself in a place that you’re comfortable and familiar with is huge and is something that everyone looks for in a rental. If life is good where you are, there may be little reason to move, and renewing your lease might make sense.
You’re Respected and Appreciated
If you’re a good tenant who pays on time and takes care of your unit, your landlord will value you and will probably want to you stay. When the expiry date of your lease approaches, you’ll be more likely to be offered a lease renewal, which shows that your landlord appreciates you and wants you to remain a tenant.
It can be challenging to find good tenants, and once landlords do, they want them to stick around. If your landlord values you as a tenant and treats you accordingly, that may give you more incentive to renew your lease.
It Offers Flexibility
One of the beauties of renting is that it provides you with plenty of flexibility that homeownership does not. If you’re not the type to commit to any one specific home or location, continuing to rent may be the better option. When you own a home, you can’t just pick up and move so quickly. It takes time – and a lot of money – to sell.
On the other hand, renting offers you the flexibility to move should a new job offer come up across state or you simply have a change of heart. Of course, you’ll have to wait until your lease expires to make the move, but once that date approaches, there’s a lot less red tape to have to go through to relocate.
For a lot of renters who are not the type to want to move around frequently, a big reason to renew a lease is to avoid having to move at all. Moving is a lot of work, regardless of whether you’re moving out of a rental or your own home. If you’re happy where you are and don’t feel like moving, that may be reason enough to stay put.
Reasons Not to Renew Your Lease
While there are plenty of reasons why you might want to renew your lease, there may be other reasons to make the leap to homeownership.
Rents Are on the Rise
In California, the median monthly rent across the state is currently $2,346, and that number has spiked 26% since 2014. For many, that number is simply too much to afford. Plenty of renters originally moved into their units at rental prices that they could afford, only to have the rent increased on them rather quickly. If your landlord is asking for a rental price that’s a lot more than you can comfortably cover as part of a new lease agreement, that may be reason enough to pack up and move.
You’re Ready to Plant Some Roots
Homeownership doesn’t necessarily mean you’re stuck with a home forever, but it’s certainly a lot more permanent than renting and requires a much bigger commitment. Renting definitely makes it a lot easier to pack up and move whenever the need arises, but if you are finally ready to plant some roots and settle down, you might want to start thinking about trading in a rental for a home.
Issues With Your Landlord
It would be nice if the landlord-tenant relationship was a positive one 100% of the time. Unfortunately, that’s not the case for many, which can have a significant impact on the enjoyment of living. While there are certainly plenty of landlords and tenants who get along very well and are respectful of each other, there are many others who experience the complete opposite.
If you’re one of the latter, you’re probably not interested in renewing your lease. Even if you’re still not ready for homeownership, you might still want to consider signing a lease for another property with a landlord who will give you far fewer issues to have to contend with.
Your Landlord May Require You to Vacate One Day
There is no guarantee that your landlord will let you live in the unit you’ve been occupying forever. Anything can happen in the future that may prompt your landlord to refuse to renew your lease.
Maybe they’ve decided to sell the property and require the place to be vacated before the new owners take possession, or perhaps they need to move into the unit themselves. Or maybe your landlord simply isn’t fond of you for whatever reason and would prefer to rent their property out to someone else. Once your lease expires, your landlord has the freedom to choose not to renew it, which will leave you scrambling to find yourself a new place.
Start Building Equity in a Home
Owning a home is somewhat like having a savings account built right into it. When you have a mortgage, you’re basically being forced to contribute to this savings account. Every month that you make a mortgage payment, the equity in your home builds.
Your monthly contributions coupled with appreciation can translate into a great deal of equity over time, which can actually help you build wealth. Should you ever choose to sell at some point in the future, you may stand to profit handsomely if the sale price of the home is much more than what you still owe on it.
The Bottom Line
There are certainly arguments to be made for either side of the equation. At the end of the day, you’ll need to assess your own situation both from a financial and lifestyle standpoint. Some of these reasons may be applicable to you, but some might not. It all depends on where you happen to be when your lease is up for renewal, which will influence your decision either way. Just make sure to take the time to weigh the pros and cons for both renting and owning before you make your final choice.