When deciding where to live, there are really two options. The first is owning a home and the second is renting. Owning a home is seen as an investment, but factoring in the real costs of homeownership is ultimately a financial liability. Renting is much more cost effective. Here are some of the factors that drive up the cost of homeownership and make renting much more cost-effective:
1. Property Taxes: In some states property taxes can cost you thousands every year. Michigan, Ohio, and Georgia all rank in the top 12 states with the highest property taxes, so renting is a much more cost-effective solution to owning. High taxes can erode the value of your home and in the long term end up costing you big.
2. Maintenance: Home maintenance can be really expensive. A new roof can run an average of $15,000, new central air conditioner can run between $4,000-$6,000, and a damaged foundation can cost $40,000. These costs can be a huge burden for homeowners. In apartments, these costs are covered by the property management group.
3. Insurance: Insurance is incredibly expensive no matter where you live. When you get a mortgage you are required to have so much insurance coverage to protect the bank’s investment until you pay off the house. This can cost you hundreds a month, which is significantly more than renter’s insurance which averages $15 a month for an apartment.
4. Utilities: Since houses are bigger than apartments, the utility costs are much higher. It takes more energy to heat and cool a home, provide water for the lawns, and you have to pay for things like garbage collection. Not to mention many apartment complexes offer certain utilities in the cost of the rent, so they offer even more savings.
5. Down Payment: With apartments, you pay first, last, and a deposit. Beyond the fact that this payment is significantly lower, the first and last month’s rent cover your living expenses and you will receive your deposit back if you keep your space in good condition. Down payments are tens of thousands of dollars, which is a lot to come up with at once. They are ultimately deducted from your loan interest and don’t actually add to your financial investment.
Considering all of these costs, renting is truly more cost-effective. At Lockwood Family Living, we offer a better solution than owning. All of our apartments and townhouses offer all the benefits of homeownership like a good community and private living spaces, plus a variety of amenities you won’t have otherwise. So before you buy, consider renting with Lockwood.