Rent or buy? This excellent video explains.

[stinkynuts]

https://www.youtube.com/watch?v=KAMeI4uHAFE


The short answer is that it depends.

But renting is a good option if you can save the difference diligently and invest it wisely.

 

[Occasionally]

IMO, always buy if you can afford it.

Yeah, there could some weird economic periods of oddball inflation rates and mortgage rates or once in a lifetime sub-prime crisis that affects certain areas (I don't think Canada really got hit at all), but in normal times, always buy.

- You build equity
- Home prices go up over time
- You are your own boss. It's your place and you don't have a landlord hassling you

Renting is good if:

- You are broke and can barely pay the bills. Rent whatever you can for cheap... even if it's one room or one floor of a home
- You are purposely renting to build up some $$$ so you can put down a big down payment that saves you that CHMC fee (whatever it's called)
- It's a temporary spot because you are moving out of town soon
- You don't give a shit about how you live, so you want a landlord to do your dirty work. And after you've had enough living like a slob, you move to another rental unit and live like a slob again with zero responsibilities of owning property/appliances

The reason why so many people over the past 10-15 years seem loaded is because anyone who owns a property in the past 2 decades has seen their property go up in value anywhere from 10-20% (if bought recently) to probably triple what it was worth when bought in 1998. Then you have people who bought a place in lets say 1985 for $200,000 and now it might be worth $1 million.

Lucky asses from those years have probably banked at least $500,000 if it's a good home in a good location.

Renters? Zero. They just help the landlord pay off the mortgage, which helps them even more because every landlord's monthly rent has a portion of it as equity.

 

[GaryLi]

It depends on your lifestyle, what kind of property you are looking at and how smart you are. I disagree that you should "always buy". In some cases you should own your principal residence, that's for sure but for extra property the answer is no, you should not always be buying. Also try not to go for property like townhomes, semis and condominiums/apartments where you don't really "fully own" the land unless you own the neighboring properties. What do I mean by "fully own"? Well when you buy a detached and you want to demolish it and raise a new home, its do-able. But once you have a semi, townhome or a condo, you can't do that as easily without buying out the neighbor(s) which usually is impractical so really you don't own the land or the home you just get to live in it and maintain it/renovate interiors.

Investment-wise buying property unit by unit is only lucrative in a market filled with speculators and money launderers. The market is like this at the moment and it shows no sign of changing but rest assured it won't be like this forever. Eventually the right number of tax payers will get angry and anti-laundering/speculation law will be passed or some social housing solution funded by property tax will be implemented. When? Who knows.

In my opinion property should not be viewed as an investment as this usually leads to social issues like young adults not being able to afford homes to raise the next generation. Property can also be a liability since they require maintenance and can be very illiquid. So other than my primary residence and business headquarters I do not own anything else. Everything left over at the end of the month goes into index funds or anything else that is stable and liquid. There is one type of RE investing I respect and its developing property and owning multi-unit rental property but that is a multi-millionaires game.

There are people that will just never understand anything other than investing in real estate and therefore they should stick to RE investing. But for those who do understand stocks and their derivatives like index funds just know that they are better than RE in many many ways.

 

[explorerzip]

In my opinion property should not be viewed as an investment as this usually leads to social issues like young adults not being able to afford homes to raise the next generation. Property can also be a liability since they require maintenance and can be very illiquid. So other than my primary residence and business headquarters I do not own anything else. Everything left over at the end of the month goes into index funds or anything else that is stable and liquid.

Like him or not, Robert Kiyosaki also does not view your house as an investment or asset. Even when you pay off the mortgage, you still have expenses to pay like property taxes, hydro, water, etc. Also, you never have cash flow coming in as a result of living in the house unless you're renting out rooms.

The market value of your home is also irrelevant if you have no intention of selling. You should have some of your net worth in the market and not attached to your home. That's why you have all these reverse mortgage companies popping up. Retirees have all of their net worth tied up into their home with no other savings.

I know someone that sold his detached home 2 years ago because he was anticipating the market to tank. Well, it's gone up even more and he is stuck in a much smaller condo and can't afford to get back into a detached home. If you're lucky enough to own a detached home in this day and age, hang on to it!