Renting Long-Term on Purpose

The story: Nora rents on purpose

Nora, a long-time renter, explains to a friend, Ana, how renters insurance, a careful lease and investing the difference make renting work.

1. Narrator: Nora has rented the same apartment for six years. Friends keep asking when Nora will buy.
2. Nora: I like renting. No repairs, no property tax, and I can move for a job.
3. Ana: But aren’t you throwing money away on rent?
4. Narrator: Owners pay for repairs, taxes and upkeep too. Nora invests the difference every month, so renting builds wealth as well.
5. Narrator: Nora also has renters insurance, because the landlord’s policy doesn’t cover Nora’s things.
6. Nora: And I read every lease renewal early, so a rent increase is never a surprise.

What you’ll learn

1. A real trade-off

   Renting trades building home equity for flexibility: no repairs, no property tax and easier moves. Owning trades flexibility for equity. Neither is a failure. The better choice depends on your plans, your city and your money.

2. Renters insurance

   Renters insurance usually costs little each month. It covers your belongings and your liability if someone is hurt in your home. The landlord’s policy covers the building, not your things or your liability.

3. Know your lease and your rights

   Read the lease: its length, renewal terms, rent-increase notice, who fixes what and the deposit rules. Get any changes in writing. Tenant rights, like deposit return deadlines and repair duties, depend on your state and city (see the card).

4. Invest the difference

   If renting costs less than owning would, save or invest the gap on purpose, or the advantage disappears. Keep an emergency fund for rent increases, and ask whether your landlord reports on-time rent to the credit bureaus.

   Example: investing $900 a month for 10 years at an example 5% return grows to about $140,000.

Key words

lease

the contract between a renter and a landlord

security deposit

money a landlord holds in case of damage, returned under local rules

renters insurance

a policy that covers a renter’s belongings and liability

tenant rights

the protections renters have under state and local law

Common questions

Can on-time rent help my credit?

Sometimes. Some landlords and rent-payment services report on-time rent to the credit bureaus. You can ask yours.

What if my landlord won’t make repairs?

Put the request in writing and keep a copy. Local tenant rules say what landlords must fix and how fast. The fact card links to help.

Remember this

Renting works when you insure your stuff, know your rights and invest the difference.

Try it: Run your rent-vs-buy numbers

1. Run the Rent vs Buy Calculator with your rent and a home you might buy.
2. Check that you have renters insurance.
3. Note your lease’s renewal date and rent-increase notice rules.

No account needed: the Rent vs Buy Calculator is free and public.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Tenant rights, deposits and rent-increase rules by state

  Source: HUD.gov(opens in a new tab)

• Free or low-cost legal help for renters

  Source: USA.gov(opens in a new tab)