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The True Cost of Renting vs. Buying a Home

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Choosing between renting vs. buying a home is overwhelming. There’s plenty to consider — and each situation is unique — but here are the facts.

For many people, owning your own home is considered a major success symbol and an essential part of the American Dream.

Yet, in recent years, socioeconomic changes have overhauled the way we live — and have impacted the way we view home ownership. Especially for millennials, home ownership isn’t as accessible as it has been for previous generations, with escalating inflation, static salaries and soaring student loan debts.

These days, the idea of owning your own home is more often seen as a luxury than an attainable goal. Too many people have convinced themselves that renting is the most affordable choice, without really considering all of the available options.

So, is buying a home too difficult for millennials? Is it really better to rent than to take on a mortgage? Let’s take a look at the true benefits (and drawbacks) of renting and buying, along with a few new, emerging solutions that make home ownership more accessible.

Buying a Home: A Millennial Problem

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In today’s housing market, millennials are the demographic most affected by the rent-vs-buy conundrum. More than other generations, they’re particularly likely to be impacted by certain financial factors that make owning a home more challenging.

In particular, staggering student loan debt [1] can cripple a monthly budget, making mortgage payments more unaffordable and make saving for a downpayment very difficult. Plus, loans can also prevent young consumers from building up a good credit rating.

Also, many millennials are often required to move from state to state to successfully navigate the current job market, making home ownership challenging for the time being.

And, studies show that 68 percent of millennials who already do own homes regret their purchase [2], primarily for financial reasons. These include underestimating hidden maintenance costs (such as plumbing bills) and not being adequately prepared financially for those relentless monthly payments.

Buying and Renting: The Facts

Choosing whether you should buy a home or continue to rent can be overwhelming. There’s plenty to consider — and each situation is unique — but here’s a quick overview of the primary pros and cons of buying and renting [3]:

Pros & Cons of Renting a Home


  • You aren’t locked into a mortgage for decades
  • You have the flexibility to move
  • Fewer maintenance costs and responsibilities
  • Fewer or cheaper utility costs
  • No real estate taxes


  • Since the home isn’t yours, you pay without accruing any equity
  • No control over the property — it could be sold at any time
  • Restrictions over landscaping, decorating, remodeling or improvements
  • Restrictions over lifestyle choices, such as pet ownership
  • You’re stuck in a lease for, most often, at least 12 months
  • You won’t have any property to leave your children — or sell for quick cash when you retire
  • Rents can increase regularly, even in a rent control building — unless you learn how to live rent-free
  • Rentals can carry expensive hidden costs such as renter’s insurance, extra security or pet deposits, and other fees imposed by your landlord.

Pros & Cons of Buying a Home


  • The home is yours, and you have control over lifestyle decisions, like having pets
  • You don’t have to follow anyone else’s rules
  • You have control over maintenance, remodeling, decorating and home improvements
  • You can lock in a fixed-rate monthly payment
  • If your home appreciates in value, you’ll build up equity with every year that passes
  • In many cases, a monthly mortgage payment may be cheaper than renting


  • You’re responsible for maintenance, remodeling and necessary improvements
  • You’re responsible for all utilities and fees
  • You’ll have to pay property tax
  • You’ll have to pay homeowner’s insurance, plus you might have to buy flood insurance and other relevant policies
  • You’ll have greater liabilities and more responsibilities
  • You’ll be locked into a certain location, unless you rent or move
  • There may be unexpected, hidden costs

More Options are Emerging

For a long time, owning a home meant either buying it outright, or, more often, finding a lender and taking out a mortgage. This is changing, and the options for buying a house are no longer quite so black and white. Now, more options are available for aspiring home owners that can help make the process easier and more accessible.

The Co-investing Model

One new financial model is co-investing. When you co-invest in a home, you make an initial investment in your house, just like a down payment, and another company co-invests with you, covering the remaining cost of the home. Instead of lending, co-investors share the equity in your home when you sell, treating it as an investment, and in exchange, you get reduced monthly payments. Haus is one of the newest companies offering a co-investment home ownership model. Rather than getting a mortgage from a bank, you can partner with Haus to purchase a home or restructure your current financing without taking on new debt.

When you buy with a co-investing model, you’re usually required to contribute a minimum ownership stake in your home. With Haus, you put down at least 10 percent of the home’s cost, and they put in the rest, then you make fixed payments for 10 years, purchasing more equity each month. One big benefit: under this co-investment model, your monthly payment averages 30 percent less than a traditional mortgage payment because you’re also sharing some of your equity when you sell. And with lower monthly payments, you can afford to pay down student loans and other monthly bills. Best of all, with a co-investor you’ll still have full ownership of the house, with your name alone on the title.

Another unique feature of some co-investing models, including Haus, is the flexibility to cash in and out of your equity without resetting your term or taking out an expensive home equity line of credit. With Haus, you can buy more equity whenever you want, or sell equity for cash if you need it — it’s up to you. Whether your home appreciates or depreciates, Haus remains your investment partner. If your home value goes up, everyone wins, and if it goes down, as your co-investor, Haus helps shoulder the burden. At the end of the ten-year period, you can partner with Haus again, sell, or purchase your home outright.

For many millennials, co-investing is a new option that offers control, equity and ownership, all combined with lower payments and more financial flexibility. If you’re curious about whether Haus is a good fit for you, you can learn more about how co-investing works on the Haus website.


One more option is rent-to-own [4], which allows you to pay the seller an option premium — typically five percent of the purchase price. In return, the seller will allow a portion of your monthly rental payment to go toward purchasing that home at a later time.

Rent-to-own is an attractive option for buyers who can’t quality for a home loan due to bad credit, and it can also help you lock in a purchase price. That being said, there are a few drawbacks, including losing the premium if you don’t end up buying the property, or having little control over the property itself. Also, if the housing market falls and prices are lower, chances are you won’t be able to negotiate a lower purchase price for the home, which means you’ll end up paying too much for it.

The Lowdown: Which is Better?

Especially when it comes to buying a home, everyone’s situation is unique. Since everyone has a different lifestyle, there is no singular answer. For some people, it may be easier or more financially viable to avoid committing to a property and continue paying rent. For many other people, home ownership is vastly preferable for many reasons. Home ownership provides lifelong equity, which can later be sold or passed down to future generations. Plus, it can often offer more stability, more control and more freedom in where you live.

More than ever before, aspiring homeowners have a range of options to consider when thinking about renting or buying a home. The most important thing of all is to take a close look at your individual financial and lifestyle situation and make a decision that’s right for you.



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John Meeks
John is a freelance writer specializing in finance and entrepreneurship. He also consults clients about financial management and small business solutions.

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