3 Reasons Renting Is Better Than Buying a Home, According to Ramit Sethi

If you're a renter and have ever been warned that you're throwing your money away, you're in good company. A lot of people will caution that when you rent a home, you're simply helping to pay off a landlord's mortgage when you could instead be paying off one of your own.

But renting a home has its benefits. In fact, financial guru Ramit Sethi is a big proponent of renting. In a recent tweet, he highlighted these benefits of paying a landlord for a place to live rather than owning a home yourself.

1. You might spend less on a rental

The amount of money you spend on rent every month might be more than what you pay in the form of a mortgage. But when you own a home, it's not just a mortgage payment you have to contend with monthly. You also have to cover the cost of property taxes, homeowners insurance, and other added costs like maintenance and repairs. So all told, you might spend more as a homeowner.

One could argue that even if you spend more to own a home than to rent one, down the line, you'll have the option to sell your home and make a profit. When you rent, that's not possible.

But let's imagine that renting a home for 30 years costs you $2,000 a month, or $720,000 all in. Owning a home during that time might cost you $3,000 a month, or $1,080,000 all in, when you factor in those additional costs. So even if you make a $250,000 profit on your home, you'd actually still come out ahead financially by virtue of having rented.

2. A rental gives you more flexibility

It's a lot easier to move when you rent a home rather than own one. You can always opt to not renew a lease, or even attempt to break an existing one for a modest fee (in some cases, you may not even be looking at a fee at all, such as if you're on a month-to-month lease and give your landlord 30 days' notice).

So, let's say you get a job offer across the country. If your lease is up in two months, you can probably pick up and move seamlessly. That's harder to do when you own a home.

Plus, you might simply like the idea of being able to live in different cities or neighborhoods during adulthood. That's much more feasible when you're a renter.

3. Renters don't have to deal with maintenance and repairs

Maintaining and fixing a home when things break isn't just costly -- it can take up a lot of your time. When you rent a home, all of that becomes your landlord's problem. The result? More free time for you, and less hassle.

Homeownership clearly has its share of benefits. But don't assume that renting is a poor choice. There are numerous advantages to being a tenant, so if that's the situation you prefer, there's no reason to get down on yourself for not buying a place of your own.