Renting a house is one of the most common ways of homeownership. Renting a house means that you assume its ownership for as long as you need, while making a series of interval payments to the owner as per the agreement.

These payments can be either monthly, quarterly, semi-annually, or annually, depending on what the tenant and landlord agree on. There are several advantages and disadvantages of renting a house you should know about before making such a commitment.

ADVANTAGES of RENTING A HOUSE

1. Suitable for low-income earners

One of the most significant benefits of renting a house is that you assume ownership even when your income isn't enough to buy a home. If taking out a mortgage loan from a bank to facilitate your homeownership dream, renting a house makes more sense.

You can choose the house whose rent is manageable for you based on your income. This will give you the same satisfaction you would have gotten if you decided to make the purchase.

You don't need to burden yourself with a long-term commitment such as servicing a house loan and all the interests it might incur. Renting a house gives you that freedom to make smaller payments than the ones you would make in a mortgage.

2. Flexibility

If your job requires constant relocation, renting is the best form of home-ownership for you. Vacating a house is simpler when you've rented more than when you've bought or taken a mortgage.

This is because it might take a long time to find a suitable buyer ready to match your asking price. For mortgage loans, the situation is even more complicated. If you relocate before the house sells, you still have to continue making mortgage payments as per the contract.

This means you'll be paying for two houses while residing in one. When it comes to renting a house, the moment your rent expires, you're free to move.

3. No repair costs involved

When you're a tenant, it's the owner's responsibility to cover all the repair and maintenance costs that might occur. Whether it's that leaking in the sink, bathroom, or pipe bursts, you don't need to burden yourself with the extra cost.

Renovation, whether it's a new paint job or new security devices, the owner takes care of it for your comfort.

4. Low upfront costs

Unlike other options such as mortgages that require extensive expenses to assume ownership of the house, renting needs little payments. The only extra cost you incur before renting a house is a security deposit that is often equivalent to the cost of a month's rent.

This makes it a very convenient deal for many people who maybe haven't saved up enough money.

5. Less strict credit requirements

You can rent a home even with bad credit. Many owners do not have strict measures about the credit scores or creditworthiness of a tenant. All that is required is to make timely monthly payments.

DISADVANTAGES of RENTING A HOUSE

i. You can't make any changes

With the issue of renting a house, since you're a tenant and not the owner, you're not allowed to make any significant changes with the house.

This includes things like a paint job or even fencing. If you're not impressed by how some of the house features are set up, you just have to get used to it.

ii. Rent can increase

When the lease duration as per the agreement you made with the owner is up, they can increase the rent. This means there is no guarantee that the amount you're paying every month now is the same as you'll pay in the next agreement.

You can always lose ownership of the rental if a better deal comes along for the owner, whether it's a tenant ready to pay the increased rent or a buyer looking to buy the house. This can inconvenience many people who opt for renting.

iii. No increased value

When you're renting a house, you're not building any value for yourself. This is because renting is not an investment.

Meaning if you decide to terminate the lease and leave the rental, you'll only leave with your belongings and nothing else. However, the owner's equity increases the more you rent their property.

Conclusion

Although renting a house does not give you complete ownership, it can be a significant stepping stone for your homeownership dream. You can save up all the money you require to purchase your house in the future while still having a place to call home.