Today’s blog will discuss the differences between renting and owning property. The rent payment and mortgage repayment costs can be similar depending on where you live and when you took out the mortgage. In the Greater Toronto Area, rents have been steadily increasing with property prices. When comparing the two, we must also consider individual circumstances, locations, and cultural and economic factors.
Renting a property suits individuals who may have a job which means they move around a lot. They do not want the responsibility of dealing with the property’s maintenance, repair, and management. Also, older people may find that renting a property allows them to downsize, with more flexibility in the location and style of the rental. They also do not have to worry about utilities or maintenance work such as gardens and landscaping as somebody else is taking care of those things for them. In the US, economic and social factors influence people’s preferences. In Ohio, many people prefer to rent as the state had a bad experience during the last banking crisis in 2008 when many lost their homes in the property crash. The emotional pressure and mental stress associated with losing their homes have made them risk-averse and wary of owning property again.
Buying a property also offers its benefits depending on each individual’s circumstances. If you have just graduated with student loans and are single, renting will be better. However, if you have just secured a job, have a partner and help from the Bank of Mum and Dad, then owning a property will appeal more. An average starter property here in the GTA will cost in the region of $500,000 so as a first-time buyer, a down payment of $25,000 will be required. This is a significant consideration for many people when deciding to rent or buy a property, the down payment size. Renting is a much lower outlay, a month in advance and a month’s rental, so the price point entry is a barrier for most people wanting to buy a property. Investors buying properties to rent will have to pay more in the down payment, usually around 20%, but that makes it more challenging to get into the market, especially here in Toronto, where you will need a $100,000 down payment to enter the market.
Some people may think it’s too late and I have missed the boat. I would highly recommend that if you want to purchase a property, now is the time to do it. That may apply if you bought 20 years ago, but in today’s reality, you need to move as soon as possible, especially with inflation rising worldwide. If you can’t buy in your local area due to high prices, consider travelling a little outside that zone to find the property. In twenty years, that area could be worth more than today. You are the expert in your locality use that knowledge, do your homework and invest wisely. You may also be tied down to a high prices area for a time period due to family or job commitments, but those circumstances can and will change over time. You will not be there forever, and there are many different options you can explore while you wait. I am always available to offer advice and guidance on these options so please feel free to say hello. Until next time, thanks for reading.
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