Deciding whether to rent an apartment or buy a house is a common dilemma for young couples. An apartment may offer a little more long-term flexibility and hands-off responsibilities for upkeep. However, renting an apartment also has several drawbacks compared with owning a home and building up equity in an asset.
A major drawback of an apartment is that paying rent offers no long-term financial benefits. You could make $800 in payments a month in rent for 20 years and walk away with nothing tangible. When you purchase a home, the interest and property taxes are normally tax deductible. Plus, you build equity every time you make a mortgage payment.
Apartment leases can be restrictive. Luxurious, in-demand apartment complexes often require six or 12 month leases. If you want to move before the lease ends, you may be stuck for the remainder of the lease or getting sued. When you sign a lease, you also normally have to pay one month's rent or more as a security deposit. The landlord may hold onto this if you cause damage or leave the apartment in poor condition at the end of the lease.
Some landlords give an OK for you to paint walls and make minor modifications to fixtures and decor. But often you must change it back when you move. You normally have limited ability to move appliances, change flooring, hang art on the walls and add rooms or decks.
Typically, landlords bear responsibility for upkeep and repairs on apartments. However, you are at their mercy to get the job done. If plumbing goes bad in the early evening, for instance, a renter may have difficulty getting in touch with the landlord and getting an immediate repair. Heating and cooling failures and electrical outages can also become a pain if you can't communicate with the landlord or his response time is slow.
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