Until recently, Ariana Grande spent years mansion hopping in Los Angeles, choosing to rent instead of settling down. She’s one of several celebrities who has long opted out of buying. Beyoncé and Jay-Z have rented a lavish 6.3-acre villa in Malibu for about $400,000 a month, along with places in Beverly Hills, the Hamptons, and Holmby Hills.
You might be thinking: paying upward of a quarter-million dollars every thirty days is a lot of money! Why not just buy and pay a one-time fee (or get a mortgage)? Well, renting is a smart move. It gives you more flexibility and freedom. Whether you’re the wealthiest celebrity in the world or the rest of us, there are reasons to rent at every income level. Here are a few lessons we can learn from celebs who rent:
Come as You Are
The cost of a house is often just the beginning. Then there’s renovations, taxes, landscaping upkeep, and all the maintenance that goes into owning a home. This can range from replacing electrical wiring to hiring an exterminator if you get a termite problem. Plus; houses aren’t exactly how we want them to look when we buy them. We like to paint, purchase wallpaper, and rip out carpets.
Renting, however, requires none of this. Sure, you can paint your living room eggplant purple if you want, but you’re probably not very inclined to if the place isn’t yours. And maintenance issues? That’s what landlords are for—you don’t need to pay an electrician. The nice thing about renting is that you aren’t pouring money into the place beyond the monthly payment.
In Flux
Some people tend to think of purchasing a home as an investment, but it’s not necessarily a good idea to think that way. The market can fluctuate, a pandemic can hit, you can get a divorce. There are several reasons why you could lose money on a property. And celebs aren’t exempt. Some of them have lost some serious money after buying homes. Katy Perry lost about a million dollars on her house after breaking up with her husband, Russell Brand. Reese Witherspoon, Michael Jordan, and Christina Aguilera have all lost a good chunk of change on their homes.
We need to get it out of our heads that housing is a good investment. Robert Shiller, a Nobel Prize winner in economics, has been saying for years that investing in housing isn’t such a great idea. Houses require maintenance and depreciate—plus, there could be other problems. Just look at the 2008 housing crisis.
Some people tend to think of purchasing a home as an investment, but it’s not necessarily a good idea to think that way.
Eye on the Prize
Taylor Swift famously rented a luxury townhouse on Cornelia Street in New York (as anthologized in her song “Cornelia Street”) while renovating other properties in the city. While the reason for her rental was more temporary and practical than most renters’ situations, her ability to rent allowed her to spend her money where she wanted. The beauty of renting is that it allows you to focus on what you want to buy, if anything, not what you need to buy. There’s an opportunity cost here, meaning you’re giving up something to pursue an alternative path.
By renting, you can focus on investing in a market that will pay the most dividends later on and not end up in a situation where you think you have to buy property right away. Perhaps you’ve gotten engaged or are pregnant and want to settle down in a house. That’s great. But renting for a while before you buy will allow you to shop around to make sure you’re purchasing the right place. You may also find that renting suits you and your new lifestyle just fine.
Ready, Set, Jet
Celebrities are often on the move: touring, filming movies, attending premieres. It can be hard to live a jet-setting life and own a home. There’s the worry that someone may break in if you leave for an extended period. Or if the basement suddenly springs a leak, no one will know for weeks, and that could cause serious damage. Renting allows you to focus on your career without worrying about what’s happening at home. You can go on a business trip or attend a conference without wondering whether you set the alarm or installed the timed lights correctly.
Mentally speaking, renting gives you more freedom to get ahead in your job. Being a homeowner is sometimes not just a financial suck, but a time suck. If you rent and don’t have to worry about how your place is holding up while you’re gone, you’ll be able to put your mental capacity towards networking at that happy hour.
Gym, Tan, Laundry
A lot of new apartments these days come with a number of amenities: gyms, parking garages, concierges. Taylor Swift’s rental had an indoor pool. Many of them now have rooftops and shared outdoor space. If you choose to rent, look into a place that gives you more bang for your buck. Having these amenities can save you time and money and give you a better deal than buying. If you decide to put a home gym into your house, you’ll have to pay for that. And pool maintenance can cost $1,800 a year. If you rent an apartment with nice amenities, you can get these perks without having to deal with the upkeep or overhead costs.
A lot of celebrities rent: Joe Jonas, Justin Bieber, Kendall Jenner. These people aren’t exactly strapped for cash. They could buy a house if they wanted. But renting affords them the freedom to come and go as they please, to move if they ever get sick of their house, and to rely on a landlord to take care of maintenance and any property issues that arise. Buying a house might seem like the more “adult” thing to do, but it’s not necessarily the right financial choice.
