Home Ownership

Where Does Your Rent Money Go?

Couple laughing and joking while they discuss if it is time to stop renting and purchase a home

Rents are rising across the nation, but that isn’t stopping more and more people from making the choice to rent rather than own. Sure, many feel burned by the housing crisis, but what are people who choose to rent giving up? Here’s a list of all the people who take a cut of the money you spend on rent.

Landlord

This one’s obvious. Your landlord owns the roof over your head. The simple math is: your check goes into your landlord’s pocket and your landlord puts that money toward equity and improvements on the property. He or she has the right to sell, lease or transfer that property as long as it’s in accordance with your lease. You don’t have to pay to maintain the building—hooray!—but you also take nothing with you when you move on to the next place.

Rental Agency

As the middlemen between you and your landlord, rental agencies and property management companies expect to get paid too. Your landlord usually passes the expense to you in the form of higher rent.

Super and Other Maintenance People

Many renters see not having to fix their own clogged pipes as an advantage to renting because the property is supposed to be maintained for them. While certainly a convenience, what they might not factor in is that someone is getting paid big bucks for all those small fixes. Meanwhile, a homeowner has the option (and financial incentive) to learn the rudiments of plumbing and fix many small household headaches for him- or herself.

Tenant Screening Companies

Every time you pay a rental application fee, that money goes toward a credit and/or background check on you. Even if you’re paying $25 per application (and fees can sometimes run upwards of $150 per application), that’s still money you could have spent on groceries.

Movers

Renters move three times more often than homeowners. Whether you’re hiring a moving company or buying pizza for some really loyal friends, those costs add up.

Storage Companies

Many renters find themselves in dire need of offsite storage because they don’t have access to an attic or basement for those boxes of stuff we all seem to accumulate. With storage rental fees at an average of $150 per month, owning a home with a garage can look pretty appealing.

Utility Companies

How old is that refrigerator anyway? If you owned your house, you’d replace old electricity-hogging appliances and windows that let in cold air. As a renter, you don’t have the freedom to make those kinds of changes, and your landlord (who isn’t footing the utility bill) doesn’t have a reason to want to pay for it. If you’re renting, you are probably paying higher utility bills because of it.

The Cable Company

Homeowners get to choose how much cable they subscribe to and the company that offers the best service. In an apartment, those decisions are sometimes made for you. And in the interest of appeasing all tenants, you can bet the management company is over-subscribing rather than undersubscribing. Of course, if you love Real Housewives of Bachelorette Cat Hoarders, you might enjoy having all the channels ever created.

The Bank

This probably doesn’t apply to you, because the likelihood is that you haven’t bounced a check in years (if ever). There’s a good reason for that. Bank fees on bounced checks are huge, and because rent is one of the bigger expenses you have, it’s the check most likely to bounce. Oh, and check your lease, a bounced check may also make you liable for any fees your landlord incurs as a result.

Laundromat Owners

Living in an apartment, you are far more likely to have to use a Laundromat or coin laundry. Sure, the water and electricity required to wash all your clothes cost money either way, but the Coin Laundry Association estimates that coin laundries can generate up to $200,000 in cash per year. That’s a lot of quarters.

The Government

In many cases the interest you pay on a mortgage is tax deductible. The rent you pay is not. Ask your CPA sometime if a mortgage interest deduction could lower your tax bracket.

Car Insurance Company

Some car insurance companies offer discounts to home owners because they’re viewed as more stable than renters. True or not, you might be missing out on a discount.

Your City

If you don’t have a reserved parking space for your car, chances are that you’ve gotten at least one parking ticket. In metropolises like Manhattan and San Francisco, the city gets rich off those parking tickets and tow truck operators aren’t doing too badly either.

 

It’s true that renting is the right choice for some people—like if you’re moving frequently from city to city or if you think you can catch the bottom of the market. But if you’re planning to be in one location for the next few years and you can see home prices starting to tick up again, take some time to do the math and see if renting or investing in a home is a better option to build your net worth and your future.

Did you know?

The home equity you’ve earned
can be used in a multitude of
ways. 


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Start your application online or give us a call.

Main
  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET