Condo: Buy vs Rent (numbers crunched)

[RubberCheese]

How difficult is it for the landlord to make a rationale tenant (not taking about bums here) move out? I've heard about laws that actually protect the tenant from being forced out.

In what ways can the landlord not renew the contract? I can think of some reasons but are there more?

My children will be occupying the property once the lease is up.
The property is now on the block.

This is probably one of the risks of renting since frequent location may be required since it would be out of one's control if the landlord asked not to renew the contract. I'm also in favor of renting if makes more sense financially.

After one year (unless the initial contract is longer?), the renter is on month-to-month. Legitimate reasons to ask a renter to leave in Ontario include family moving in, major renovations, or selling property. You can ask them to leave with no reason, but I believe that you need one of these reasons to force a paying tenant out in Ontario.

Dear Renters,

Please keep paying down the mortgage on my rental properties while I build up my net worth to purchase more properties and enjoy further capital appreciation.

Thanks
- Owner of tangible assets

You can also mix & match. For example, own and rent out a property in a low-value city, and rent in a higher-value city. Renting out in lower-priced cities provides much higher ROI (capital cost is much lower, while rent is only somewhat lower). You also limit absolute exposure to capital gains/losses, which is good in a time where prices are generally expected to stagnate or decline.

[Beeg]

Legitimate reasons to ask a renter to leave in Ontario include family moving in, major renovations, or selling property.

Almost.

Even the three reasons you give can be complicated if the tenant doesn't want to move.

-If you have family moving in, you can't have the house under a corporation. And your immediate family member must live there a minimum of one year. There are many cases where a tenant has moved because of the family move-in clause, they watch the property, see it advertised 1, or 3 or 10 months down the road. They then file at the LTB for compensation because the landlord didn't act in good faith. The landlord usually ends up having to pay for the tenant's moving costs, difference in rent, and other expenses.

-If you are doing renovations, you have to allow the tenant the right to come back after the renos are done.

-If the tenant has a lease and you sell, the tenant has the right to stay, even when there is a new owner(!) This is why some crafty tenants want 2-5 years leases because it will be very difficult to get them to move as long as they keep paying.

[RubberCheese]

Almost.

...

-If you are doing renovations, you have to allow the tenant the right to come back after the renos are done.

Thanks for the clarifications, I didn't realize the owner needed to give tenants rights to come back at the end of renos.

If you had a tenant on month-to-month, and you got them out for renos, would you be able to increase rent to reflect the renos if they wanted to return?

[Redmen62]

Because renting isn't cheaper than buying. It never is. The appreciation will offset any increased costs in getting a mortgage.

Except when, you know, there's no appreciation.

Also, the "increased costs in getting a mortgage" really aren't the deciding factors in these calculations. Usually the mortgage payment will be less than the monthly rent on the same property, but that difference is usually small potatoes to the real costs of buying/owning.

Any calculation of the costs of owning a home that down't factor in CMHC insurance and the costs of selling the property ignore some of the biggest factors in the equation. For a $300,000 condo with $15,000 down you're lighting $7837.50 on fire the moment you close the deal, money that purchases insurance for your bank's benefit. You will never see that money again.

When you go to sell a couple of years later, you can expect real estate commission of more than $10,000, depending on the market. At both the time of purchase and the eventual sale you may have some combination of taxes, legal fees and transfer costs, depending on where you live. These costs are enormous, and the comparisons that people throw around to make renting look like a fool's game almost always ignore their effects.

Saying that renting is never cheaper than buying is breathtakingly shortsighted.

[savingforever]

My situation is quite similar but in Vancouver. Will have 20% for 370k condo near south east false creek (1 year old building) and I don't have the time constraint that the OP has...does it make sense to buy? Or should I consider renting. Thanks

[sirex]

There is really nothing to say to the people whom think that renters are "throwing" their money away.

Dont waste your time talking, or "discussing" with these people.

[Beeg]

There is really nothing to say to the people whom think that renters are "throwing" their money away.

Dont waste your time talking, or "discussing" with these people.

Good post.

Renting can be a very sound strategic option. There are lots of reasons to rent rather than buy. These reasons range from not wanting to pay property taxes to not wanting to worry about the fridge or washer dying to not wanting to put down expensive roots in one particular area.

I rented for years in various places.

[sirex]

Good post.

Renting can be a very sound strategic option. There are lots of reasons to rent rather than buy. These reasons range from not wanting to pay property taxes to not wanting to worry about the fridge or washer dying to not wanting to put down expensive roots in one particular area.

I rented for years in various places.

Thanks,

I never really understood the logic behind these posts to be honest. One could argue, "don't buy, you're throwing your money away on interest."

On a $300,000 mortgage, over the span of 10 years, you will pay over $100,000 in interest. Does anyone think about the oppurtunity cost of that before making those obtuse comments. And I am a landlord FYI before someone says I have renters bias, etc.

And then there is the fact that no one ever considers the maintenance costs of owning a home. Unless you're a very handy person, there are many things that can break, or can go wrong. Like Beeg said, what do you do when your fridge breaks down? Or the plumbing breaks? Or the roof leaks?

The person that rents always comes out ahead financially. There is no math that can prove this wrong. Unless you bought a home for $80,000, 30 years ago, the times have changed

The only arguments for owning a home are:
- it's yours
- you dont have to move/worry about moving
- many people have this as a goal
- maybe gives you the feeling of security?

[speedyforme]

Thanks,

I never really understood the logic behind these posts to be honest. One could argue, "don't buy, you're throwing your money away on interest."

On a $300,000 mortgage, over the span of 10 years, you will pay over $100,000 in interest. Does anyone think about the oppurtunity cost of that before making those obtuse comments. And I am a landlord FYI before someone says I have renters bias, etc.

And then there is the fact that no one ever considers the maintenance costs of owning a home. Unless you're a very handy person, there are many things that can break, or can go wrong. Like Beeg said, what do you do when your fridge breaks down? Or the plumbing breaks? Or the roof leaks?

The person that rents always comes out ahead financially. There is no math that can prove this wrong. Unless you bought a home for $80,000, 30 years ago, the times have changed

The only arguments for owning a home are:
- it's yours
- you dont have to move/worry about moving
- many people have this as a goal
- maybe gives you the feeling of security?

I agree. I also look at costs such as furnace, windows etc that also usually done. Most people also put in a new kitchen or change carpets as well during their life in a home when they own. And if they don't make those changes, they usually sell and buy something that has newer things but at a cost, moving/buying/selling fees and taxes.

[ahmahndoode]

go ahead and rent, your landlord will be greatful you're paying his mortgage for him

[bcbgboy13]

go ahead and rent, your landlord will be greatful you're paying his mortgage for him

http://forums.redflagdeals.com/ask-m...state-1100718/

[alanbrenton]

go ahead and rent, your landlord will be greatful you're paying his mortgage for him

What is a common yield for condo/townhome rentals in the GTA? Where I used to live (Yonge/Finch), monthly rental for 1+1 is going for around $1,400. My landlord then said the property value when I was about to leave was close to $300k. [300,000/(1,400x12)] = 5.6% yield.

Barring a catastrophic price decline (unemployment numbers at least double and interest rates hovering at double digits), does this mean a person with a 25-year amortization will come ahead after 25 years (including property taxes and all incremental expenses) since he will not have to pay anymore rent after that? I'm already being conservative since 100/5.6 = 17.86 years.

[rob444]

The person that rents always comes out ahead financially. There is no math that can prove this wrong. Unless you bought a home for $80,000, 30 years ago, the times have changed

Lol always?

In 2006 i used an $18K downpayment to buy a condo for $180,000.

5 years later in 2011 i sold that condo for $285,000.

Even considering CMHC, monthly interest paid on the mortgage over 5 years, and the realtor costs when i sold... i find it hard to see any "math" that tells me i would have been better off investing that original $18K and renting for 5 years.

[alanbrenton]

Lol always?

In 2006 i used an $18K downpayment to buy a condo for $180,000.

5 years later in 2011 i sold that condo for $285,000.

Even considering CMHC, monthly interest paid on the mortgage over 5 years, and the realtor costs when i sold... i find it hard to see any "math" that tells me i would have been better off investing that original $18K and renting for 5 years.

People will talk about making 500% or more on the stock market with the cash flow differential. But the way you profited seems so much less riskier.

[speedyforme]

Lol always?

In 2006 i used an $18K downpayment to buy a condo for $180,000.

5 years later in 2011 i sold that condo for $285,000.

Even considering CMHC, monthly interest paid on the mortgage over 5 years, and the realtor costs when i sold... i find it hard to see any "math" that tells me i would have been better off investing that original $18K and renting for 5 years.

I agree, not always the case. But did you do the math to include: insurance, maintenance fees, property taxes and land transfer taxes when you bought/sold?