One of the hardest things that many Manhattanites struggle with when it comes to living arrangements is whether to rent an apartment or buy an apartment. For many years, renting was the popular choice for most of the middle class. For the upper class, the popular choice was to actually own their Manhattan luxury apartments.
Over the last decade or so this philosophy has gradually shifted. Those that truly believed that they should own one of the Manhattan luxury apartments is now considering renting those same apartments instead. One of the main reasons for this is price. What was once affordable is not far from affordable. Even with ultra low interest rates it is still not nearly as affordable as it once was.
Commitment Levels
There are other reasons why people are now choosing to rent versus buying. Another advantage of renting is the level of commitment. When a person owns a luxury apartment, they are typically owners of that luxury for a very long period of time. These types of apartments rarely move very quickly. If an owner has a life changing event, they might need to sell their luxury apartment. In today’s economy, it might not be that easy to do so.
The alternative is to rent the luxury apartment instead. Now rentals typically come with a contract that obligates a person to that property for at least a short period of time. Typically a person is obligated for a year at that apartment. This is much less risk. In this case if a person has a life changing event, they can just elect to not renew their lease and then just move out of the luxury apartment.
Repair Obligations
Another reason for renting has to do with responsibility for repairs. With a rental property if something breaks like the hot water heater, the owner of the property is responsible for the repairs. This may seem like such a trivial reason, but it is an important consideration when evaluating the total cost.
There are definitely plenty more reasons that are both good and bad for renting. Probably the biggest negative of renting is the zero equity. Renting means none of the money paid for rent goes into equity. A renter owns zero assets in this case.
