You generally need to either rent or own your housing. While each has its benefits, there are some disadvantages of renting a home. You often have limited ability to control or predict your housing costs as rent may rise, you can be at the mercy of a landlord to get maintenance done, you might find yourself losing your housing when your lease is up, and you aren't building equity the way you would paying a mortgage. On the other hand, you usually aren't responsible for doing maintenance yourself, and you can often leave more easily.
The Cost of Renting
If you rent an apartment or a standalone house, you'll have to make a monthly rent payment to your landlord for the privilege of living there. Unlike with a mortgage payment, where you are gradually paying off a loan for the home you own and live in, this rent payment doesn't buy you anything except the right to stay in the home for another month.
Additionally, depending on the terms of your lease and the laws where you live, your rent may go up over time. This means it's difficult to fully predict and plan for your housing expenses beyond the current term of your lease. While some jurisdictions do have rent control laws that say how much your rent can rise, many do not, leaving you at the mercy of your landlord and the market.
Relying on Your Landlord
If your landlord is responsible and easy to reach, it can be helpful as a tenant to not have to be in charge of maintenance, whether that means doing repairs, dealing with contractors or paying unexpected costs as things break down. But if your landlord isn't great at fixing things or taking care of them speedily, this can be a downside over owning your own home and being able to take care of things when they break using your skills or contractors of your choice.
It's often difficult to know before you move into a new place whether the landlord will stay on top of maintenance, and even if your landlord is good, buildings can change hands or other factors can impact your landlord's ability and desire to do prompt maintenance.
Housing Stability In a Rental
Another risk with a rental dwelling is that your landlord will usually have the ability to end your lease when it expires or simply give you a month's notice if you are renting month-to-month. This means that you may end up having to find a new place to live unexpectedly, incurring moving costs and having to deal with the stress of moving and the task of finding a new place to live.
Some places have laws making it harder for your landlord to kick you out arbitrarily, but there usually are some provisions that will make it possible to ask you to leave legally. In general, it's a good idea as a renter to know your local tenant protection laws and where to research any questions you may have.
On the other hand, it's often easier to walk away from a rental than from a property you own, whether you need to move for work or personal reasons or simply want to move into a new place.
Option to Purchase Clause
In some cases, you may be able to sign a residential lease agreement with an option to purchase your home from the landlord. This can be a good way to try out living in a new place with the ability to shed some of the disadvantages of renting in the future. Make sure you understand the terms of this clause and the rest of your lease, and consider talking to a lawyer if you have any questions.
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.