There is Nothing Wrong With Renting

There is nothing wrong with renting. But if that is true why do so many Canadian’s feel like they need to own a home?

It might be greedy sales people, worrying parents or simply the sense that everyone else is doing it but I have good news.

You can have an amazing life and build a solid future whether you rent or own.

As always, my promise is to make the decision easier and clearer so you can make an informed decision for yourself. At the end I have a tool one of my old mentors created that will give you a crystal clear financial answer on should you rent or own.

Comparing Renting to Homeownership

Both options have pros and cons. There is no denying the satisfaction of owning something but the freedom of renting cannot be left unsaid. Let’s take a look at both options so you can better determine where you fit in.

Renting A Home

Renting has a certain freedom to it… hotwater tank breaks…not your problem… needs a new roof… not your problem… furnace stops working… well you get the idea.

Now this doesn’t mean it wont suck while you wait for it to get fixed but at least you are not the one paying for it (directly).

In the short term renting is typically cheaper than owning. Each market will have it’s own balance but here is an example of a home for rent in Edmonton.

To rent this property it would cost $2800 + utilities.

To own this property is would cost … cost of ownership + utils + Down payment (DP) you get the idea.

Owning A Home

Owning is a much bigger commitment but over the long term tends to have a lower cost.

Over time the value of your property tends to go up… assuming you maintain it.

A big mistake is forgetting the value of the house itself is likely to decline without constant improvements.

If you purchased this home with the minimum down payment ($30,000) at 4% your mortgage payments would be $2850/m.

Your actual cost of ownership would be mortgage + property taxes + home insurance + maintenance + utilities. This works out to roughly $3650 per month (before utilities) or roughly  $850/m more than renting.

So Should you Rent or Own?

In the short term renting is the cheaper option but long term owning generally wins out.

Over time the cost of renting typically increases at a rate far faster than the cost of ownership.

In addition to this most homes in Canada increase in value over time.

Last but not least, in the first 5 years the home owner would pay off $69,604 of their mortgage. That works out to $1,160 per month.

Simply put each month the home owner is building equity in their home by paying off the mortgage.

My goal is to make the decision of should you own or rent as simple as possible. Here is a tool that compares renting vs owning from a net-worth perspective.

To keep the evaluation fair it assumes the renting invests the amount of money required to purchase a home (down payment) and the difference in costs between renting and owning.

If you need any help with this let me know! I can connect you with amazing professionals who will take the time to make sure you have everything you need to make the best decision for you.