Owning vs. Renting in Colorado: Pros & Cons



For many people, owning a home is part of the “American Dream.” The Upkeep Media marketing team will help you make that decision by examining the pros and cons of each option.

Advantages of Renting

1) Utilities May Be Offered 

Some landlords do cover the costs of some or all of the utilities. That said, the practice isn’t very popular, especially in smaller buildings like single-family homes and duplexes.

Conversely, homeowners have to pay for their utilities. Depending on usage and dwelling size, these costs can run into hundreds of dollars every month.

2) Credit Requirements are Generally Less Strict

Many landlords require tenants to undergo a sort of screening process. So long as your credit report doesn’t have a checkered credit report that includes judgments and bankruptcies, you’ll be more likely to get a rental home.

3) No Exposure to the Real Estate Market

Values of homes change in response to market forces. When renting, that’s an issue for your landlord, not you.

4) Moving is Easier

As a renter, relocating is less laborious and possibly less costly. That’s the reason why professionals usually consider renting until they reach some stability in their professional lives.

Disadvantages of Renting A Home

1) Limited Housing Security

Most states have laws that protect tenants from unsavory landlord practices. That said, no law entitles you to live in a rental property indefinitely.

This is an uncertainty that homeowners don’t have. 

2) Rents Can, And Often Do, Go Up

Your landlord can raise your monthly rent for the next lease cycle. They do so to match their operational costs such as property expenses, maintenance issues, and costs of living. A landlord can even raise rent just to force you out of the property. 

Homeowners with fixed mortgages, on the other side, enjoy fixed monthly loan payments, even when the home gains tremendous value. In Denver over any given decade, a homeowner has enjoyed over 5% annual appreciation, which is among the best in the country.

3) No Equity Building

Growing Your Net Worth with Homeownership

Growing Your Net Worth with Homeownership

Every rent payment you make is gone forever. Regardless of how long you live in your rental unit, you can’t build any equity in the home. Instead, you are paying off someone else’s mortgage; a painful reality every renter has to face.

Advantages of Owning a Home

1) Sense of Belonging & Community

Homeowners are more likely to put down roots in their community. This is because homeowners tend to stay in their homes for longer periods of time, and become more invested in the future of their property and neighborhood.

2) More Creative Freedom

Pretty smiling middle-aged woman painting interior wall of home with paint roller. Redecoration, renovation, apartment repair and refreshment

Homeowners have more creative freedom with their homes than renters. You can build your patio or deck, finish your basement, update your kitchen, or add new bathroom fixtures to your heart’s content. While this may seem trivial, there’s a shocking degree of freedom experience by people moving from renting to owning.

3) Potential for Rental Income

As a homeowner, there’s often potential to cash-flow your property, whether renting out a portion of your home or basement unit or renting a detached dwelling, often as a carriage house or above a garage. This can help you settle some expenses you may have like your mortgage and monthly utilities. Remember to always check with your local neighborhood, city, county and state regulations to ensure what you’re doing is legal!

4) Tax Benefits

A myriad of tax benefits are available for homeowners that are NOT available to renters. The most notable of these is the ability to write off a portion of your monthly mortgage payments through the federal tax deduction and the homestead exemption. That said, it’s important to check with your CPA and tax preparer prior to writing anything off to ensure your eligible and your write off is being taken appropriately.

5) Building Equity over Time

Owning a home enables you to build equity over time. In fact, the vast majority of millionaires own real estate, as it is a known path to financial freedom. As you pay your monthly mortgage, each payment goes into building your equity, which means when you go to sell, you have the potential to earn far more than you paid. Sellers who positioned themselves correctly in the market and experienced great appreciation during ownership can often expect to see returns in the 6 fixtures.

Cons of Owning a Home

1) High Upfront Costs

Buying a home is a huge financial undertaking. In fact, for most Americans, owning a home is the single biggest purchase and the single biggest investment in their lives. By contrast, renters are often only required to have the first month’s rent and security deposit to move in. All that said, many people don’t realize you need as little as 1-3% down to purchase a home, which is in stark contrast to the commonly heard 20%.

2) Most Homes Aren’t Sold Furnished

More and more new construction homes are being sold fully furnished, as the New York Times notes. Sure, it’s a lovely concept. That said, it’s a far cry from being commonplace. So, you will likely need to buy your own furniture which takes time, money and energy.

3) Responsibility for Maintenance and Repairs

It’s expensive to own a home. These expenses such as those for repairing and maintaining your home can take about 1% of your home’s value every year.

4) Potential for Financial Loss

In a weak market, home values can decrease. When you have a market collapse like the one seen in 2008, your property’s value could drop significantly. Keep in mind, over any 10 year period in Denver, home owners saw an average appreciation of over 5% annually, so as long as you can choose when to sell, you can expect to see a profit.

There you have it, 16 pros and cons of owning versus renting a home. With a little bit of luck, these should help you make an educated decision. Contact us for more support!