Reasons for renting
Reasons for renting, There are many possible reasons for renting instead of buying, for example:
- In many jurisdictions (including India, Spain, Australia, the United Kingdom, and the United States) rent paid in a trade or business is tax-deductible, whereas rent on a dwelling is not tax-deductible in most jurisdictions.
- Financial inadequacy, such as renting a house when one is unable to purchase, i.e “renting by necessity”.
- Reducing financial risk due to depreciation and transaction costs, especially for real estate which might be needed only for a short amount of time.
- When something is needed only temporarily, as in the case of a special tool, a truck or a skip.
- When something is needed that may or may not be already owned but is not in proximity for use, such as renting an automobile or bicycle when away on a trip.
- Needing a cheaper alternative to buying, such as renting a movie: a person is unwilling to pay the full price for a movie, so they rent it for a lesser price but give up the chance to view it again later.
- The tenant may want to leave the burden of upkeep of the property (mowing the lawn, shoveling snow, etc.) to the owner or his agents.
- There is no need to worry about lifespan and maintenance.
- Renting keeps off-balance-sheet the debt that would burden the balance sheet of a company in case the property would have been bought.
- Renting is good for the environment if products are used more efficiently by maximizing utility rather than being disposed of, overproduced, and underutilized.[2]
- Risks aside, renting has the potential to generate a regular stream of revenue for the owner. The more the churn (the number of times the item is rented out) the higher the income. Eventually, the rental income crosses the product procurement value, and every churn post becomes a profit for the owner
- Renting often also becomes an alternate revenue pool for idle inventory vs. overly depending on a stagnant / slowing retailing business environment
