As investments go, it’s not always a great deal, renting for short use is more rational.
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When Renting Is Smarter Than Buying
That’s an interesting idea. I think it’s often the case that renting or subscribing for access to something is better than buying it outright. Buying stuff can be great, too. Ultimately, I don’t think the question is whether to rent or buy; it’s how to find the solution that gives you the best value for the thing you need to use. Sometimes, you’ll spend more money renting access to an item than you would just buying it outright. Other times, the reverse is true.
They lose value the moment you take them home from the shop, and continue to depreciate the longer you own them and the more you use them. This is true of everything from cars to designer shoes. There are a few things that can appreciate in value: collector’s items, houses, jewelry. For most of our stuff, though, we can hope to recover some of what we spent on it by selling it when we no longer need it, but we’re kissing the bulk of our money good-bye when we make the purchase.
Rent or buy?
How can you decide whether to rent or buy? The bottom line is minimizing the expense for having the Stuff you want.
Consider the cost. How much does the object cost to buy? How much is the rental fee? How long would you have to rent it before you’d have paid as much in rental fees as you would have to purchase it outright?
Consider how frequently you want to use an item. Is this something you’re going to use once, like a floor sander or a formal gown? Or something you want to have on hand at all times, like a hammer or your running shoes?
Consider how long you want to use the item. Do you want to have your residence for the next year or the next 20 years? Will you need that car for a weekend or a daily commute?
Consider its resale value. Does this object appreciate in value, hold a fairly steady value, or rapidly lose value?
Consider how much your use will impact the item. Some of our stuff we wear out. Some of it we leave little trace on. Are you buying a sofa that is going to be destroyed by your kids? Or a DVD that you’ll watch a few times and then re-sell good as new on eBay?
There’s no simple answer to the rent vs. buy question. For some people, it probably makes economic sense to rent furniture. They may want to change their furnishings frequently, and have a thing for high-end designer items that lose value quickly as they go out of style. Renting a couch for six months in those circumstances makes more sense than shelling out thousands of dollars for one. I, on the other hand, am happily using the couch that I received as a hand-me-down from my mom when I moved out. I expect to use until it breaks or my kids grow up, whichever comes first.
The key is to answer the questions above and figure out if it will cost you more to rent or buy the thing you want. It’s an equation you should probably be able to solve for anything you want to buy. The equation would look something like cost to buy — resale value vs total cost to rent. You’d also want to factor in maintenance costs on items you own.
Post items (For Rent) which are not in use for you now, by helping others getting it rental !
Get Rich Slowly,