Many people fear the jump into homeownership. They worry they don’t have enough for a down payment, won’t qualify for a competitive rate, or even worse: they won’t make enough to cover their monthly mortgage costs.
Sadly, these concerns are often enough to drive a qualified potential buyer away from the “for sale” signs and straight to a local landlord. And while at first, choosing to rent instead of buy may seem like a financially responsible decision, many people fail to consider all the hidden costs that come with a rental property.
Though it’s true, you won’t have a looming mortgage payment over your head, you will owe your landlord a substantial chunk of change every month, and more often than not, this equals much more than your average mortgage payment would have been. Couple this with the dozens of other added costs and fees we have listed out below, and you’ve got yourself a pretty sour deal in the long run.
1.Your landlord’s profit. You can bet your landlord isn’t charging you the bare minimum. They want to cover your property’s mortgage payment, property taxes, and mortgage insurance AND make a buck or two on top of that. So not only are you paying for your house, but you’re also paying for some of their income – and that’s definitely not something you have to worry about when purchasing your own home. (This is why monthly rents are often much more than a mortgage payment would be.)
2.Deposits and fees. Did you have to put down a deposit when you moved in? How about a fee for your pets? Or an application fee or security fee? While some of these may be refundable (years down the line when you move out), many times your landlord will keep them anyway. They may use them to clean the house after you leave, repair anything you may have broken or worn down, or just put it toward back rent you may owe.
3.Storage rentals. Are you considering renting a property that may be a little smaller than ideal? Then you’ll have to do what many renters are forced to do: rent a storage unit. You can use these to store excess furniture, clothing, décor or even cars until you have a home with additional space, and while they’re certainly convenient, they’re also very expensive. Storage units can range anywhere from $30 to upwards of $100 a month, depending on the size of your unit, its location, and whether it needs temperature control, security or other added features. These costs can add up quickly – especially if you’re renting them for the long-term! Wouldn’t it just be easier (and cheaper) to have all those items in your own home for good?
4.Renters’ insurance. One thing you don’t need when you own your own home is renters’ insurance, which protects your belongings in the event your rental house is robbed, flooded, burned down, or blown away. And though the minimal coverage doesn’t cost a ton, if you have some high-value items (like instruments, expensive furniture, jewelry, etc.) you’re going to want to cough up the cash for a better plan. It could be your saving grace should the unthinkable happen.
5.Taxes. When you own a home, you get a tax cut for it. When you rent, that chance goes out the window. It’s actually your landlord who will get the tax cut for your property and NOT you. (Bummer, right?) In the end, you’ll end up paying loads more in income taxes while you rent than you ever would as a homeowner – just another reason to ditch the "rent race" and buy when (and as soon as) you can.
Pictured above, 4144 St Charles Bay is a rental in Northwest San Antonio (near USAA and the Medical Center) is listed for $1,100 per mon th. Below 110 Hardwood Drive is for sale (also near the Medical Center). The estimated monthly payment? $691!
6. Home improvements. Sure your landlord will fix the AC when it breaks or replace that old water heater when it stops working, but they’re not going to paint your walls, give you new cabinetry, or install a new ceiling fan. Any home upgrades or improvements you want will be done on your own dime, and that’s not even the worst part. When you move out a year or two from now? You’ll have nothing to show for it the hard work or money you put into those improvements.
7.Pet rent. I mentioned pet fees and deposits before, but some landlords even go so far as to charge you monthly rent for your furry friends. It may be a little as $10 bucks a month, or it could be $20, $30 or even $50 depending on the number of animals you own and their breeds. Tack that on to your regular rent, your utilities, your storage unit costs, and you’ve got a pretty hefty bill racked up – and that’s just for one month. Imagine how much you will be paying over the course of the year!
8.Laundry. Unless your rental comes with its own washer-dryer (which many don’t), you’re going to rely on the local laundromat for all your washing and drying. Not only is this a huge hassle, taking up a big chunk of your time and your weekend, it also gets expensive – especially if you’re washing clothes for an entire family. A $.50 load ten times a week can add up over a year. Even if your rental home comes with a laundry room, it most likely will not come with the machine, in which case you will have to buy one.
9.Annual increases. Unless it’s written into your contract that your landlord can’t increase rents, you can bet they’re going to do just that at some point. Maybe your neighborhood has gotten more in-demand, or maybe your landlord just needs a little more cash to stay afloat. Either way, it’s very common to get a rent increase – even after you’ve been there months or even years. With a mortgage, this is never a worry. While your payments might fluctuate slightly due to escrow changes, you’ll always know what your loan amount is, how much you still owe, and what your mortgage is. Those are steady and reliable.
In some cases, rental properties can be a great option, but you should never jump the gun and assume it’s the only choice you have. You’d be surprised at how affordable a home mortgage can be (even if you don’t have cash for a huge down payment.) Mortgage rates today are at historic lows, and there’s never been a better time to buy, so make sure you talk to a financial professional as well as an experienced real estate agent before making any big decisions. Buying very well may be your best (and most affordable) bet!
Get the Help You Need
Do you want help finding houses for rent in San Antonio, TX? Are you tired of the rent race and want to buy instead? The agents here at Keller Williams San Antonio can help you either way. Contact us today so we can learn about you, your needs and your budget, and we’ll help you find the perfect San Antonio property to fit the bill. Call us now to get started.
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