The way that I look at it is as follows (other people will have their different/skeptical views):
If monthly rent payments are say $1,200 per month for a small 1 bedroom condo in downtown Toronto, after 2 years those payments would equal: $28,800.
If you did rent as per the above example, and if the market price of the condo that you rented went up by say 5% per year (assuming a $225,000 condo), that would equal $22,500 (property now worth approx. $248,063 after 2 years).
Therefore, as a renter 2 years later, not only did you not profit from buying a condo at $225,000 and seeing a 5% per yer increase, but now you're in the negative by $51,300!!! ($28,800 + $22,500). If you chose to buy after 2 years, the same condo in theory will cost you approx. $248,063.
Ownership means that the mortgage payments would have decreased the loan and you would have 5% more equity per year (again assuming the above scenario).
Get the minimum downpayment together and take the plunge. I do not know of anyone who has regretted making the decision to buy a place.
Good luck and don't let anyone discourage you or scare you that the market will crash. That day will come, but if you're in it for the long run, you'll be fine. In real estate, prices double approx. every 15 years.
If monthly rent payments are say $1,200 per month for a small 1 bedroom condo in downtown Toronto, after 2 years those payments would equal: $28,800.
If you did rent as per the above example, and if the market price of the condo that you rented went up by say 5% per year (assuming a $225,000 condo), that would equal $22,500 (property now worth approx. $248,063 after 2 years).
Therefore, as a renter 2 years later, not only did you not profit from buying a condo at $225,000 and seeing a 5% per yer increase, but now you're in the negative by $51,300!!! ($28,800 + $22,500). If you chose to buy after 2 years, the same condo in theory will cost you approx. $248,063.
Ownership means that the mortgage payments would have decreased the loan and you would have 5% more equity per year (again assuming the above scenario).
Get the minimum downpayment together and take the plunge. I do not know of anyone who has regretted making the decision to buy a place.
Good luck and don't let anyone discourage you or scare you that the market will crash. That day will come, but if you're in it for the long run, you'll be fine. In real estate, prices double approx. every 15 years.
Ryan wrote:I'll bring back this thread since my question is semirelated.
Do you guys think it makes sense to buy a condo, live in it for a couple of years, and then rent it once I move out (or sell depending on the market) as opposed to renting for a couple of years and then buying something?
I'm looking at something downtown Toronto and it seems that with interest rates as they are that the mortgage payments would actually be less than rent.
I'm currently 23 and don't have any equity if that impacts your advice.