Real Estate: Renting versus Owning -- Which is better?

According to Canada Mortgage and Housing Corporation (CMHC), 37 percent of Canadian renters could afford to buy a home. Now granted that was prior to the July 9th, 2012 mortgage updates but the sentiment remains the same, over a quarter of renters could buy a home if they wanted…so why wouldn’t they?

Let’s take a look at some of the advantages and disadvantages of owning a home compared to renting.

Why would you want to Own a Home?

First answer, Equity = Financial Security.

CMHC reported that entering this century the average net worth of renters was $14,000 as opposed to Home Owners at $226,000. Which is understandable seeing as most families LARGEST ASSET is their home. The more equity a family has in their home, the more leverage and borrowing potential they have to smooth out unexpected bills, market fluctuations, and capitalize on investment opportunities.

Your Style and Your Lifestyle take priority

In your own home you can decorate and renovate the way that suit’s your needs. Today it’s an Office/Den, next year it can be the nursery, by the time they are teenagers the unfinished basement can be renovated to their underground lair…I mean bedroom. All it means is FREEDOM to make your own choices about how you want to live and surround yourself.


Having a place of your very own.

Why would you want to Keep Renting?

Lower monthly costs.

Your finances can become strained when added expenses, above and beyond your mortgage payment. Your mortgage payments may be similar to what you paid in rent, but as a home owner you’d still have property taxes, mortgage insurance, home insurance, all your you utility bills on top of that.

Added responsibility, it’s all yours

As a Home Owner you are now responsible for putting in the time and money in for the upkeep of your home. You either become the handyman/woman of your own home or become friends with one because in your home there is no landlord to call. You also become responsible for the seasonal upkeep, leaves, snow, landscaping, watering & cutting the lawn as well as the long term maintenance of furnace, windows, siding, roofing.

So yah or nay?

It’s all about your comfort level…

Your finances, your choices. Although you might be loosing out on building equity and net worth by renting, you can save on time invested when minor repairs and upkeep are the landlords issue rather than yours.

“Building Wealth”

Real estate is one of the easiest ways to build your net worth when it’s a side effect of where you live. If you choose to lease your shelter you need to look for other, diverse vehicles for wealth building.

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There's no real right or wrong answer here. You have to have both to have balance and there is plenty of merit in either. But for investors, purchasing real estate should be an obvious choice. There will always be renters for need or desire to continue renting, so there will also always be the potential for continued positive cash flow monthly if you invest wisely.
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