on Dec 18, 2019 11:00:12 AM

I'm Ready for a new place. Should I rent or buy?

When you’re ready to move from the apartment you’ve been renting, one of the first questions you’ll need to ask yourself is whether you should rent or buy your next place. Is this the time to become a homeowner, or does it make more sense to rent a new place that suits you better? While there are plenty of advantages to buying a home, in some circumstances, renting can be a better choice. The course that’s best for you will depend on your personal priorities and resources. One of the benefits of renting is that luxuries often are more affordable for renters than homeowners. Renting also gives you flexibility in terms of time and finances.

No Closing Costs, Down Payment, or PMI

While renting a new place typically requires a security deposit, this cost is minuscule in comparison to the down payment and closing costs involved in buying a home. Deposits on rental properties tend to range from a few hundred dollars to a full month's rent, while closing costs alone run between 2 and 5 percent of a home’s purchase price, averaging around $3,700. Down payments usually constitute even higher up-front costs: a typical FHA loan requires 3.5% down, and in order to avoid having to purchase private mortgage insurance (PMI, which runs between 0.5% and 1% of the purchase price annually), you need to put at least 20% down on a new home. That means that a modest home with a sale price of $150,000 would generally require a down payment of at least $5,250 (plus mortgage insurance costs of $750-$1,500 per year), or $30,000 to avoid the PMI requirement.

No Repair or Maintenance Costs

When something breaks, homeowners shoulder the burden of getting it fixed, while renters avoid this financial risk. When you rent, you simply call your property manager, and it’s their job to ensure that your home is safely habitable and that expensive components such as heating, cooling, and plumbing are working properly. This makes your monthly cash flow much more predictable and controllable. Of course, if something in your rented home breaks as a result of your negligence, then you may still be liable for those repair costs, but if you take reasonable care of the home, you can expect it to remain livable without cost to you beyond your monthly rent.

More Affordable Access to Highly Desirable Neighborhoods

While home values in the hottest neighborhoods may be prohibitive, you may be able to afford renting in your neighborhood of choice. For example, choosing to rent might enable a family to get their children into a more successful school district or a young professional to get a stylish place downtown and have easy access to many of the city’s best restaurants, clubs, and cultural events.


Most (but not all) rental units require an annual lease agreement. Although you could decide to sell a home you own at any time, it typically takes about five years after buying a home before enough equity is built up to make selling a wise financial move. If you’re not ready to remain in your home for at least a few years, then renting is likely the better choice.


Hubbell Realty Company provides homes for rent and for sale throughout the Des Moines metro area. We're proud to offer apartments, townhomes, and houses for residents in all stages of life - check out all we have to offer at!