Can you save money by renting?

Posted by Admin | Real Estate Renting | Sunday 10 July 2011 2:48 pm

For a lot of renters the possibility of using a rental situation to save money is a strange idea. These renters often bemoan the fact that they have to lease a property rather than outright buy a property because they feel as though not securing the property is basically flushing money away each month. However, this is not entirely true. While there are certainly benefits to owning your own home and building equity homeowners can also benefit financially by renting their living abodes rather than purchasing a house.

While it is definitely true that money spent on rent each month does not get the renter any nearer to owning a home while each month, the  mortgage payment makes the homeowner that much closer to owning the property. However, this is not the whole story. Renters should also consider the amount of money they will be able to save each year for the purpose of purchasing a house by living in that rental property right now.

A Smaller Apartment Now Can Lead to a Bigger House Later

Some “would be” homeowners find renting a small apartment can allow them to start saving for the purpose of buying a house in the future. The ones who rent who are willing to sacrifice such things as comfort now and stay in the smallest apartment possible will likely be able to save the most money towards purchasing a home that suits them better.

In general the rental amount for an apartment is based on a value per square foot. This value may vary slightly from one property to the next but is likely to be very similar in properties in the same general area. This means apartments which are smaller in terms of square footage are likely to be less expensive overall. Therefore renters who would normally feel more comfortable and able to spread out might opt for a smaller apartment just so they can begin saving more money for their home purchase.

Create Your Budget Wisely to Save Money

Renters who want to save money for the purchase of a home while renting an apartment should understand their monthly rent is not the only medigating factor which may prevent them from saving money while they rent. For example monies spent on entertainment should carefully be considered when a renter is trying to save money. Most rental properties have a fully equipped kitchen making it ideal for the renter to prepare meals at home as opposed to going out to eat. Renters who cut down on eating dinner out may find they are able to save quite a bit of money each year.

Likewise renters who are spending an excess amount of money on superfluous items may have difficulty saving for a house while renting an apartment. Examining all current monthly expenditures can help the renter to determine where there is the potential for financial savings. Making changes such as debt consolidation may be one way to decrease monthly bills but this is certainly not the only solution. Renters can make other changes such as canceling subscriptions to premium movie channels, minimizing cell phone plans to include only the amount of minutes used each month and making changes to insurance plans to result in an overall savings. Changes to insurance plans may include having your car and renter’s insurance covered by the same carrier. Many carriers offer discounted services to renters who are willing to bundle their services. All of these slight changes can help to enable a renter to save money for a home purchase in the future.

Tags: , , ,