Advantages and Disadvantages of Renting

Buying a home is a big step, complete with a hefty price tag, numerous hoops to jump through, and weeks of reviewing, submitting, and signing paperwork. This may all be worth it, as once the ink is dry, you have the benefit of knowing you’re well on your way toward owning property. If you’re a forward-thinker, you’ve also just made a solid investment well worth preserving. 

But purchasing a home also means signing on for decades of maintenance, upkeep, repairs, and renovations to protect and maximize your initial investment. And for some, the disadvantages of owning a home may not make it worth it after all. Renting a home presents an alternative to home ownership — but renting comes with its own set of perks and limitations, and may not be the best option in every case. 

Read on for a look at some of the biggest advantages of renting a home, as well as some of the downsides, and discover if renting or a residential leaseback agreement is the right choice for you. 

What Are the Advantages of Renting? 

For many Americans, renting a home may be a better option than buying. Here are just a few of the advantages of renting a home. 

#1 Less Responsibility

Home ownership can be a gratifying feeling, and many Americans may be comforted knowing that their monthly mortgage payment is being applied toward ownership. However, this comes at the cost of liability for any repairs and upkeep. Mowing the lawn, pressure washing the driveway, and tending a garden might sound rewarding to some — it’s the possibility of extensive, costly maintenance that can make renting the better option. As a renter, you get to enjoy the benefits of living in a home without living in fear that a multi-thousand-dollar repair may be lurking around every corner. 

#2 Lower Monthly Payments 

When you take out a mortgage for the purchase of a home, your interest fees are factored into your monthly payments. Generally, the better your financial history, credit score, and down payment, the lower your interest over the loan term will be. Therefore, borrowers with a checkered financial past may be penalized and forced to pay more in interest, which will be reflected in each monthly payment. These same borrowers may have no problem renting a home, on the other hand, resulting in a lower average monthly mortgage payment than if they had made the decision to buy. 

#3 No Closing Costs or Down Payments 

While renters may dread paying deposits, typically consisting of the first and final month’s rent payments and a separate security deposit for potential damage, these costs are nothing when compared to a home’s pre-purchase expenses. Down payments, closing costs, administrative fees, and other seemingly made-up fees can total tens of thousands of dollars before you’ve made a single mortgage payment. These expenses hardly scratch the surface when it comes to the hidden costs of buying a home. When you rent, there is no need to worry about the difference between appraised value vs. market value.

#4 Greater Flexibility and Freedom (from HOAs) 

Just because you decide not to buy a home right now doesn’t mean you’ll never make the switch from renter to homeowner, and renting can be a temporary solution while you prepare for homeownership. Lease terms vary from situation to situation, but the decision to rent means you won’t be stuck in one place for longer than you want. To expand on this advantage of renting a home, renters are also free from the obligations that come from a Homeowners Association (HOA). This can include membership dues and other fees, which can only add to your growing list of expenses as a homeowner. 

See related: Home Selling Checklist: 6 Factors to Consider

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What Are the Disadvantages of Renting? 

Renting isn’t for everyone, and — if the conditions are right and the home is within your budget — buying may end up being the better option. Below are some of the biggest disadvantages of renting. 

#1 What You See is What You Get

More than half of all new home buyers1 say they plan to renovate their home, and customization can be one of the most fulfilling aspects of home ownership. Making your mark on your new house can be a great way to quickly boost the property’s value and, therefore, your home equity, while also making your new house feel more like a home. With the signing of a rental lease, on the other hand, you agree to things exactly as they are. Dated interiors, unappealing paint colors, and existing amenities are likely there to stay. And if value-adding changes do end up being made, you might see a hike in rent when it comes time to renew. Are you fine with things as they are? Or is leaving your creative mark a must? Answering these questions will help you decide which pathway is right for you. 

#2 Renting (Likely) Won’t Help Your Credit 

Like making on-time credit card or car payments, consistently paying your mortgage on time will steadily improve your credit over the course of the loan. Not so with rent — your on-time monthly rent payments will do little more than keep your landlord happy and a roof over your head. With that said, you as a tenant can leverage these monthly rent payments to improve your favor in the eyes of credit bureaus.2 Self-reporting your good payment history will cost you a nominal fee, but it can ultimately help give your credit a boost that you wouldn’t otherwise see as a renter. 

#3 You Could End Up Paying More 

Putting pen to paper on a home purchase agreement is effectively a guarantee that your current rate will be unchanged for the duration of the loan; if it does change via a refinance, borrowers are typically the ones that stand to benefit. Leases, on the other hand, can fluctuate with the housing market, and unscrupulous landlords can all but force renters out through higher rates. Some states have legislation in place which prevents excessive increases in rent, but it’s still anything that goes in most of the country.  

#4 Rent Is Effectively Money Lost 

Likely the biggest disadvantage of renting a home is the fact that rent doesn’t earn you home equity. Rather, it earns your landlord equity or just goes straight into their pocket. For this reason, many renters will likely aspire to put their dollars to good use by purchasing a property. But factor in the potential cost of repairs and the countless responsibilities that come with home ownership and you — like 35% of the American population3 that currently rents — may find that renting is worth the added convenience. 

Evaluating Your Traditional Housing Choices: Renting vs. Owning

Many people find themselves caught between the desire for the freedom of renting and the long-term benefits of owning a home. Both choices have their own sets of advantages:

Renting: It provides flexibility, fewer immediate financial responsibilities, and relief from property maintenance. It's an excellent choice for those with a more fluid lifestyle or those anticipating frequent relocations.

Owning: It offers a sense of permanence, the chance to build equity, and the freedom to personalize and mold the property according to personal tastes. While homeownership comes with its set of challenges, like maintenance and fluctuating property values, it can be a rewarding investment.

If you're curious about the specifics and how these two compare financially, check out our comprehensive guide on the costs of owning vs. renting a home. However, the financial aspect often raises a question: Is renting always the better financial decision? The answer isn't black and white. It hinges on numerous factors, including your financial situation, long-term plans, housing market conditions, and personal preferences. However, what if there was a way to enjoy the best of both worlds?

Truehold’s Sale-Leaseback: a Popular Alternative to Renting

For those seeking a middle ground, the solution might lie in Truehold's Sale-Leaseback. Though renting and owning may be the two most common approaches to living, you’re not limited to these options — and people looking to combine the advantages of renting a home with the pride of ownership may find their happy medium with Truehold.

Through this modern approach, you can reap all of the benefits of owning a home and accruing equity. Then, when you’re ready to put the lawnmower in the shed, leave cleaning the gutters to a professional, and redeem your hard-earned equity, you can enjoy being a renter and all the freedom that comes with it. We’ll cover the tedious upkeep, you’ll realize your investment, and you can continue to rent the home you’ve built for as long as you want. Whether you want the freedom to see the world or just want to enjoy the fruit of years of mortgage payments, this approach may be for you. 

If you're wondering about the equity you've accumulated and how it translates in financial terms, explore our home equity loan calculator. Furthermore, for insights into the evolving landscape of homeownership and renting trends, delve into our comprehensive homeowner statistics report.

To learn more about Truehold’s Sale-Leaseback and see why more Americans are choosing this alternative to renting or owning a home, request our free Info Kit. 


1. The Home Renovation Boom Continues. National Association of Realtors.

2. Does Paying Rent Build Your Credit Score? Chase.

3. Renting Statistics: Trends & Demographics (2022). RubyHome.

Lucas Grohn
Written by
Lucas Grohn
Senior Manager of Sales at Truehold - A Thought-Leader in Real Estate
Lucas Grohn brings over a decade of real estate expertise to his role, where he guides a team dedicated to innovative sales strategies. Known for his thought leadership and diverse experience, from managing brokerage operations to training agents at top firms, Lucas covers a broad span of real estate content for Truehold.

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