I have seen a lot of advisors, and "financial gurus", recommending that people, millennials and young people in particular, not buy a home and instead they should rent because of the "numerous benefits of renting". First, I'd like to preface that everybody's situation is different and I am not giving specific advice as I do not know your specific situation. However, generally, I think that advising people not to buy a home is terrible advice, particularly advising young people not to buy a home is terrible advice. Now sure, there are some situations where renting may make sense versus buying, such as frequent moving or not staying in the property for a long period of time, but these are typically one-off and unique situations.
Some of the "benefits" of renting that I have seen some of these advisors and "financial gurus" discussing is that you, as the renter, do not have to worry about doing any of the maintenance on the property. This can be true, or it may not be true. It depends on the terms of the lease. As a renter, you need to be aware that you are controlled by the terms of the lease. You need to read the lease carefully so you understand what maintenance you are responsible for as the tenant, and what repairs/maintenance the landlord is responsible for. On the note of being bound by the terms of the lease, you also have zero control as to if the owner wants to sell the property. If the owner want to sell the property unexpectedly, and the lease allows for it, then you will potentially have to find a new place to live/rent. That could be a very inconvenient circumstance in your life at the time if it happens. Moreover, another "benefit" of renting that I have seen these advisors and "financial gurus" touting is that you can move and leave the property more easily if you want to. This can be true, but again it depends on the lease. There may be penalties and fees associated with breaking the lease if you want to move out before the lease is up, potentially negatively impacting your credit, or you may be responsible for finding someone to take over your lease. Again, it depends on the lease. Lastly, I have heard people say that renting is cheaper than buying and well this just depends. There are many factors that go into this statement and the answer is it just depends.
Generally, owning is better than renting for a number of reasons. First, it is a way to own and asset that can potentially help grow you net worth. Real estate has historically gone up in value and, thus if you own, you can take advantage of the appreciation and start to grow you net worth. Also, owning can potentially start to build equity. With every mortgage payment (assuming you financed the property) a portion goes to principal and a portion goes to interest. the principal portion lowers the balance owed on the loan and thus gives you more ownership (equity) in the property. Paying rent literally does nothing for your net worth and you might as well light that money on fire because it is gone. You are not creating equity and will never get that money back. You are actually, potentially help pay down the landlords mortgage if they have a mortgage on the property you are renting. Lastly, if you sell the property you might be able to net some cash from the sell if there is any equity in the property, or if you need to move and want to keep the property you can turn it into an income property if you choose.
The bottom line is that when you own you have more control over the property, you can potentially build equity and can potentially grow your net worth. However, it is important to work with an advisor that you like to help guide you in your decision making, but also to help you develop a financial plan that aligns with your goals to help you pursue those goals.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.