Should I Rent or Buy

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A major question that keeps resurfacing today is “Should I Rent or Buy?” The answer, however, is not as simple because it truly depends. Most people find this as a no-brainer and go with buying because real estate is a good investment that has potential for high return. Although we have record-low interest rates, high prices and carrying costs are meriting second thoughts for home-ownership. The only way to narrow down the answer is to ask yourself several key questions:

Should you buy?

The truth is that we are now coming off of the greatest housing boom in the history of the world. Many profits have been made from buying property. First you must ask why you would buy a property:

To use as a primary residence – most Canadians buy a property to use as a family home for their own personal use.

To gain capital growth – the last decade has been the prime time of increasing property value. This depends on the market.

To gain income – Canadians are purchasing property to rent out to other parties. Mortgage interests have been low and qualification requirements have loosened, allowing anyone to qualify to buy a home.

If you are looking to buy a property, you need to take note of how the market is changing. Good advice is to buy only if you are looking to own the property over long-term as a main residence. This is because you may be forced to sell at a loss as a result of a change in the economy. Capital growth in in the market has a high level of uncertainty, therefore direct investment in income property only works for a full-time investor who knows his/her market inside and out with a strategy in place.

Is you job stable?

Will you stay in your field? Would you be able to manage with a decreased income?

Are you emotionally ready to own a property?

It may be an odd question but owning a home is a big lifestyle change. Most people jump into buying a property because they see prices rising, but are they ready to take on the emotional challenge? A home is considered one of the biggest financial commitments in most peoples’ lives. When you rent, you have a one-time fee of rent to pay, once a month, and then it is out of mind for the next 30 days. A a homeowner you have multiple bills such as insurance, maintenance fees, utilities, property tax, and so on that you need to stay on top of. It is very different and very much a shock to the system. When you own a property, you need to cut the grass and tend to the garden, whereas renting will allow you to save and go on that trip every so often. If you aren’t going to enjoy spending all your time in that house, why buy it?

Should you rent?

There are more and more reasons that make renting appealing in today’s market. The population is generally more informed and mobile so renting is increasing in popularity.

Here are the main reasons why someone would consider renting a property:

Economical living – in most rental markets it has been shown that the cost of living can be significantly lower by renting a property versus buying.

Facilitates movement – many Canadians are shifting their career focus westward. It is easier to take on employment opportunities where renting a property is involved as opposed to real estate. It takes time to move and sell a home and by then the job opportunity could be long gone.

Chance to invest – Money can always be made in real estate in the Canadian market no matter what the economy is like. There is no excuse to not invest. The profit you save from the reduced cost of living can be invested in other investments that yield great returns.

The debate over “Should I Buy or Rent” is an ongoing one. It all really depends. If you are purchasing for long-term residency, you will benefit from the low mortgage interest rates. If you are foreseeing any changes or moves in your near future, renting is a better and more advantageous option. Do your research and make the right step that works for you and your budget.