Renting a home can offer tenants freedom and financial advantages that are often overlooked when discussing longterm finances. While homeownership may be a lifelong goal for many Americans, renting is typically a safer and more stable financial decision. Renting also offers high mobility and lower risk when compared to a long mortgage. Memphis is a particularly good city to rent in because of the competitive rental market. Memphis’s average rent is $855 and is $450 lower than the national average at $1405. Let’s take a look at a few of the major advantages of renting a home in Memphis:
Taxes & Fees
One of the biggest benefits of renting a home is not being responsible for paying any taxes on the home. In Shelby County, homeowners pay 4.11% of the property’s value annually. This is an expense that renters do not have to worry about. Wondering how much your property taxes are? In Tennessee, they vary by county click here for a calculator.
You also are not responsible for paying Homeowners Association fees which can be upwards of $800 a year. Additionally, homeowners insurance is exponentially more expensive than renter’s insurance. This is because the financial risk is put on the actual homeowner and not the tenant. Homeowner’s insurance ranges from $1,000 to $2,000 a year. However, homeowners insurance can even exceed these values based on the home’s size and location. Renter’s insurance ranges from $60 to $360 a year. This is because you are only ensuring your personal possessions and the possibility of minor damages.
Flexibility with Renting
Typically, a standard lease is set for one year, and at the end of your lease, you are given the option to renew your lease. By renting, you are given the opportunity to downsize or upsize your living situation to suit your needs. This can be particularly freeing if you are unsure of your future or plan on starting new projects. Also, if you find that you are not happy in your current rental property, you can easily move into a new location at the end of your lease. Additionally, you have the power to void your lease at any time if you become unhappy with your property, landlord, or anything at all if you choose to do so. Voiding your lease is not recommended and does cost you your original deposit along with a few other fees, but it is a useful option.
Underlying Costs & Repairs
When renting, you are not responsible for repairing damages to the home or property owned appliances. You won’t have to replace the roof, electric work, plumbing, heating and air conditioning, gas lines, and much more in rental homes. In any home, these repairs can add up quickly and often put homeowners in unexpected financial trouble. Therefore, not having to make expensive repairs is relieving for renters. As a renter, you are not responsible for repairing any storm or weather damages. All of these costs can add up quickly. Renting a home through a property management company can save you thousands in unexpected repairs.
As a renter, you have none of the financial responsibility for any of the home’s major repairs. Additionally, you also won’t have to worry about finding your own handy-man or repair company to come to your home. Your rental company or landlord will have a maintenance crew on-call that will assess and repair any issue. For example, if your water heater starts leaking, you can simply call your agency and they will send out a professional to fix it. You won’t be stuck waiting days searching for a reliable repairman who may not actually fix the problem. Typically, landlords and rental companies do not want their tenants to make repairs in their homes, and it’s often included in your rental agreement that repairs are the company’s responsibility.
Unsure to Rent or Buy?
When looking for a new home, it is important to look at the whole picture. If you are unsure if you should rent or buy, you should start by talking with an advisor from the bank you plan on using to finance your home. You will need to discuss interest rates, down payments, and qualifications with your bank, and if you are ever unsure about anything, don’t be afraid to ask. Furthermore, if you are still questioning whether to buy or rent a home, ask yourself these questions to provide clarity and understanding of your current needs:
- How long do I plan on living in this area?
- Will the size house I want to live in now work for me in 5 years?
- Will the size house I want to live in now work for me in 15 years?
- Can I afford a 20% down payment for a home, without affecting my financial wellbeing?
- If I do buy this house, what is its estimated resale value in 5 years?
- If I do buy this house, what is its estimated resale value in 10 years?
- What are my estimated annual costs for this house, HOA fees, County/State taxes, homeowners insurance, mortgage, and mortgage interest?