Should you rent, or should you buy?
Monday Nov 19th, 2018
Ah, the age-old question for the Toronto real estate market remains. “Should I buy, or should I rent?”.
I get asked this by clients all the time and for anyone who loves analyzing the market knows that this is a never-ending debate.
There is no right answer to this question and it’s not because of the market circumstance bur rather your own personal ones.
Toronto real estate has been booming for a minute and speculation on the ups and downs of it all have been going on for the past three decades.
My personal belief? I wouldn’t be in real estate if I didn’t believe in the power of accumulating properties as a lucrative path to success.
The purchasing of real estate and the path to accumulating wealth and profitable assets has been tied together for the past couple of centuries… And there’s good reason for that.
Missing out on an opportunity to get in the game or not, only leaves more on the table for others. When it comes to real estate, I’m a big proponent of playing the game instead of sitting on the sidelines.
If you want to get into the real estate market, here’s how to identify if you should rent or you should buy.
What can you afford and how much savings do you have?
The first step starts with your financing. Identifying how much home you can afford and what your savings will allow for starts painting the picture to renting versus buying.
If you choose to rent, your monthly costs are generally fixed for the term of the lease. You’ll also have to budget for utilities on top of your monthly rent.
When buying, most mortgage lenders require a down payment between 5 and 20 percent of the home’s purchase price. Some loans may have an easier barrier for entry, but most down payments less that 20 per cent will require you to pay for monthly mortgage insurance which is an additional expense.
A free housing affordability calculator can help you determine how much house you can afford. Maintenance of the property, repairs, insurance, land transfer fees and more all need to be considered.
What are your long-term goals?
If you plan to be in a place for a number of years, want to build equity in the marketplace, your eligible for a mortgage or you’re willing to put some “sweat equity” into a fixer upper, you should think about buying a property to achieve those goals.
On the flip side, if you’re not sure what your long-term goals are, you’re seeing potential pivots in the trajectory of your career and you’re not sure you’ve identified where you want to be living, renting is a great alternative till you get a clearer picture.
Ultimately, you’ll have to consider your needs and capabilities of your current financial position and what your objectives are for the long-term.
Should you rent, or should you buy? Like anything in life, both options are available to you. It’s more important to make the choices and changes now to achieve the outcome you’re hoping for.