Financial Planning | Life | Personal Finance | Personal Stories | Article

This Couple Prefers To Rent A Property Instead Of Buy. Here’s Why…

by Ooi May Sim | 18 Apr 2024 | 4 mins read

The traditional path to financial stability has always been to work hard, save money then buy a house. Recently, however, there is a growing group of people who don’t believe in tying up a chunk of their money in a single property.

Evolving lifestyle needs, rising property prices and different values are among the factors that have contributed to this change. In lieu of homeownership, they would rather allocate their money towards personal goals such as experiences or invest in other assets.

One such person who prefers to rent a property to live in with his wife instead of buying it is Harold Danial. He talks to us and shares his reasons behind going against the grain.

Unburdened by long-term financial obligations  

While home ownership provides individuals with a sense of security, it often comes at a price. As most of us cannot afford to purchase a home upfront, it is common to take bank loans to finance a property. This could financially tie someone down for decades, which is not something Harold wanted to do.  

“(One of) my concerns about home ownership are the monthly repayments,” says Harold. He explains that buying a house would mean that he would be burdened by the long-term commitment of financing the bank loan. 

It also means that Harold and his wife would probably have to reside in that property for a significant portion of their lives… unless they rent it out themselves or sell it.   

“Renting allows me to find a place that is closer to my work which is more convenient,” he says. Without being tethered to a bank loan, Harold has more flexibility to explore job opportunities in other countries as “it is easier for me to pack up and leave”.

Gentler on the wallet 

If a renter is staying at a property and the roof suddenly starts to leak, they can sleep easy knowing that they are not responsible for fixing it as these costs are typically covered by the landlord.  

As a homeowner, the landlord is responsible for all the costs associated with owning and maintaining a property such as property taxes, insurance, maintenance and repairs. These costs can easily add up and are in addition to the monthly bank instalments they have to pay. 

Harold is free from these responsibilities and simply pays a fixed fee every month, so there are no surprises to his budget.  

Not having to deal with maintenance is definitely a plus, says Harold who feels that repairing and upkeeping a property can be expensive and tiresome.  

Plus, as it is often cheaper to rent than to buy, Harold and his wife also have the option to choose from a wide range of properties.  

More disposable income for investing 

“Renting has been very cost effective for me,” shares Harold. 

He reveals that it has given him more disposable income as he is not saddled by all the costs and expenses that are associated with home ownership. This has allowed him to pursue personal goals such as taking his family on vacations. It has also provided him with additional funds to invest and grow his money, which he does on other assets.   

While Harold acknowledges the benefit of homeownership, he believes that the returns are relatively low once you factor in inflation.  

“I can use my extra disposable income for other investments that can generate more income (than) a (property),” he says.


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Uncertain about the future 

At the end of the day, Harold believes that renting depends on the individual. “It can be a long-term housing solution if you choose the right properties to rent,” he says.  

But while Harold feels that this is the pathway for him and his wife, he still worries about their future. 

“My biggest fear is not having enough savings and income generating assets,” he says.  

So, his current goal is to build enough passive income with business generating assets so they will have enough money to sustain them when they retire.  

While renting a property was beneficial for Harold and his wife, you should carefully evaluate your long-term goals and financial strategy before making your own decision. Ultimately, the decision to rent or to buy depends on your own circumstances and preferences. 


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