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Renting Versus Buying: Pros And Cons

Written by Posted On Monday, 30 September 2019 12:03
Renting Versus Buying: Pros And Cons

When it comes to the topic of renting versus buying, I’m always conscious of appearing biased — after all, I have a vested interest in the topic. While many would assume that most brokers are keen on working with clients who are looking to buy, in truth, I have many clients who are dead set on renting condos.

Home ownership has become a goal for many millennials, but this generation faces more obstacles than their parents did; it’s odd to think there was a time when people would graduate from university, land a job, and buy a large four bedroom house on a sizeable plot of land. In fact, many of the people who bought those four bedroom homes still own them or are now selling them for a significantly higher price and a new generation of buyers are having a difficult time securing financing for those same properties.

In the face of these hurdles, it’s understandable why many prospective buyers would look to the weigh the pros and cons of buying and renting. To assist in this, we’ve laid them out.

The Pros of Buying

One of the best aspects of owning a home is stability. Depending on your rental situation, this might not be an issue, but it’s important to note that after a 1 year lease is up on a rental, a landlord can terminate a lease agreement to move in, have a family member move, or to perform renovations.

As well, when you own your home you can choose to make revocations, which rooms to paint, how to landscape your property, etc. Many landlords have rules about smoking or strict pet policies — as the homeowner it’s entirely your decision. You might even elect to become a landlord yourself and have somebody else pay your mortgage.

Another definitive bonus to owning a home is benefitting from increases in property values. Should the day come that you decide to sell your home, your property could have increased in value and that increased value could be used as a down payment on another home.

The Cons of Buying

In order to buy a home, you must first apply for a mortgage; in Canada, that means having a 5% down payment and passing a mortgage stress test. Many prospective buyers have had to put their dreams of home ownership on hold after failing to qualify.

Home ownership requires that you take care of your property; maintenance and repairs are your responsibility. Shovelling sidewalks and driveways in the winter can be a hassle, especially as one ages. However, if you own a condo, then your condo fees go towards repairs and maintenance, but those fees are still an additional expense.

Just as a homeowner benefits from increasing property values, they feel the impact of a downturn in the market as well. Toronto has been relatively secure from an investment standpoint, but the same can’t be said for other markets. Most can remember the housing crisis in the United States which lead to countless foreclosures and a significant decrease in property values.

Pros of Renting

One thing that cannot be denied is that renters have far less responsibilities than homeowners; pay your rent, follow the rules, and take care of the unit. Renting allows for a flexible lifestyle — you’re not tied down by a mortgage, making it easy to move to a new home for work or a change of pace, even moving cities if necessary. And when you sign your lease, you pay first and last months rent, not closing costs.

With basic renters’ insurance, your liability is minimal as any structural damage or repairs are your landlord’s problem; provided that you’re not putting holes in the walls. If there’s a housing recession, you’re protected, and you might even benefit from lower rents in the future. Unless stated otherwise in the lease, snow clearing or mowing the lawn is not your responsibility.

Renting enables you to put your savings towards something other than a down payment; vacations, investments, career advancement, or retirement. Despite all the of the pros, many renters choose to buy at some point or another, the following are likely some of the reasons why.

Cons of Renting

One the biggest complaints about renting is being at the mercy of a landlord — most landlords take pride in their work, but the ones that don’t can be difficult to deal with. You might wish to paint a room or change out the flooring but that’s not your call when you’re renting somebody’s property.

Rent pays somebody else’s mortgage, and every month you assist your landlord by paying off a small portion of his/her investment. Moving frequently is another downside of renting, because no matter how settled you are in your home, it’s not YOUR home. Falling in love with a rental unit and being forced to give it up can be very disappointing, and though this is rare, it does happen.

Closing Thoughts

Like anything in life, there are pros and cons to consider. In the end, it’s a matter of perspective; what’s most important to you? There’s no rule that says if you buy you have to be a homeowner forever, or that if you rent, you’ll never own. Rather than let a realtor or an expert tell you what’s right, weigh the pros and cons and decide for yourself.

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Robert Van Rhijn

Robert Van Rhijn is a Toronto based Realtor and Broker-of-Record at Slate Realty Inc. He founded Strata.ca in 2018 — a Toronto condo website featuring data and analytics you don’t need to be a statistician to understand. You can connect with Robert at robert@strata.ca.

https://truelofts.ca/

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