Real Estate

Renting vs owning dilemma

  • Last Updated:
  • Feb 22nd, 2020 2:19 pm
Member
Mar 23, 2019
204 posts
190 upvotes

Renting vs owning dilemma

I've been sitting on it for sometime now and after all my math was not helping me I thought I'll check with you guys.

Ideally, I would like to live in my own house either 1 bed or bachelor's in Downtown or as close to downtown as possible given the budget of 600k. Here's the situation I can invest this 20% down payment and get 7.5% ROI Or I get myself my first property here and pay close to $2500 per month hoping for value appreciation overtime which hopefully would beat the 7.5% I could've made by investing elsewhere.

To be cash flow+ Im also thinking of having a roommate and get about 1000 in rent.

I don't know if I'm thinking this straight I have no experience buying properties And I'm new to this country so please help me with your suggestions.
9 replies
Deal Expert
Feb 29, 2008
21738 posts
21353 upvotes
Tarrana & The Ri…
Condo prices are going up at that rate or better and on top of that you need a place to sleep. Lock in your payments. I would always pick owning over renting if you have no plans of leaving the city.

As far as roommate, you would need a 2 bedroom which is above your budget.

Lastly, can you afford a 1 bed and will your income increase beyond just inflation in the coming years?
Deal Addict
Feb 19, 2019
2347 posts
4020 upvotes
Stouffville ON
The benefit of renting is flexibility, If you are paying rent and will be settling in Toronto I would say get into the market sooner and avoid paying rent.
The roommate option is available if den is big enough to pretend to be a bedroom.
Full Time and Full Service Realtor
Member
Mar 23, 2019
204 posts
190 upvotes
JayLove06 wrote: Condo prices are going up at that rate or better and on top of that you need a place to sleep. Lock in your payments. I would always pick owning over renting if you have no plans of leaving the city.

As far as roommate, you would need a 2 bedroom which is above your budget.

Lastly, can you afford a 1 bed and will your income increase beyond just inflation in the coming years?

That's what I've been thinking that paying rent is a sunk cost might as well make some money by buying a place and if this market trend continues I'd Def come out on top in terms of ROI in comparison to opportunity cost.

I think there are still a few options at 600k for 1 bed maybe not in the core. Hoping I come across some great deal lol
Member
Mar 23, 2019
204 posts
190 upvotes
senasena wrote: The benefit of renting is flexibility, If you are paying rent and will be settling in Toronto I would say get into the market sooner and avoid paying rent.
The roommate option is available if den is big enough to pretend to be a bedroom.

Sharing a den with roommate would be tough. 1 bed would be more ideal like I mentioned in my previous post on this thread I'm hoping to get somethin in the 600k+ range downtown.
Newbie
Feb 18, 2020
2 posts
Toronto
If you are not planning to move from the city in 5-10 years. Definitely i think its better to purchase, no matter what will be happening with RE prices, you will accumulate decent equity in your property. Downtown Toronto will be more sellable than suburbs, so even in down market it will be possible to sell.
Deal Fanatic
Oct 7, 2007
9404 posts
5374 upvotes
Is it a fair assumption to assume condos will appreciate over time especially when they are building new ones all the time? It would seem to me that condos actually depreciate over time and will require some renovation to refresh and make it feel new again. In Vancouver, there is a wide spectrum of condos available at all different ages. Usually people on a tighter budget look at "used" or older condos because these tend to be cheaper. Just curious how we know that condos really will appreciate over time, especially when the supply is massively increasing every day.
Deal Addict
User avatar
Jan 2, 2012
4596 posts
3099 upvotes
Toronto
Freshto wrote: I've been sitting on it for sometime now and after all my math was not helping me I thought I'll check with you guys.

Ideally, I would like to live in my own house either 1 bed or bachelor's in Downtown or as close to downtown as possible given the budget of 600k. Here's the situation I can invest this 20% down payment and get 7.5% ROI Or I get myself my first property here and pay close to $2500 per month hoping for value appreciation overtime which hopefully would beat the 7.5% I could've made by investing elsewhere.

To be cash flow+ Im also thinking of having a roommate and get about 1000 in rent.

I don't know if I'm thinking this straight I have no experience buying properties And I'm new to this country so please help me with your suggestions.
Personally if it was a choice between renting my own place, or buying but being forced to live with a roommate, I'd choose renting and wait until I could carry costs of owning on my own. But perhaps that's just me, I don't think I could live in such a small space with someone that wasn't my spouse/partner.

Remember when choosing to buy there is more to the decision vs projected ROI or what appreciation you expect on the home. You are buying a home, not just an investment. Owning brings the stability of living in a desired location and being assured you won't ever be evicted or subject to unpredictable rental rates if you are forced to move. The decision of rent vs buy has a lot to do with your type of employment and lifestyle and if you value stability or complete flexibility.
Sr. Member
Jul 7, 2019
867 posts
705 upvotes
+1 for Buying if you plan to live in Toronto, Renting if you dont plan on staying medium/long term.
Jr. Member
Sep 21, 2018
114 posts
210 upvotes
The other posters summed it up - buy if you are planning to stay medium/long term, rent if short term.

If you have leftover cash after mortgage payments, the scale is even more tilted towards buying since you can diversify yourself by investing the leftovers. You then have 2 asset classes (minimum) instead of one, in comparison to renting and investing.

However, if you are willing to commute a bit by train/subway, I would recommend buying a freehold townhouse instead of a condo if it is compatible with your desired living arrangements. There is less risk since you own actual land and you aren't tied down by a strata. With the low interest rates today, it is usually better to take a higher mortgage in comparison to paying strata fees, since there is more sunk costs with the maint fees. Even if you have higher payments with the townhouse, at ~2.5% interest rates a big chunk (over half) is going to the principle. Even better if you can snag an end unit, however that may be way out of your price range.

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