Renting vs Buying a Home and which one is better?
Tuesday Jul 06th, 2021Share
[00:00:00] Davor: [00:00:00] all right. What's up everybody. The board here from Ottawa, I have at least. I have melody and I have Mr. Mike, Chris with us Ari panel serving you today new new way. We don't think today, we're gonna, we're gonna shorten things up and we're gonna make it a little bit more interesting.
[00:00:22] There's not really much of a scripted way. Are we going to do it too? It's a three for all sort of we're going to discuss against some good subjects. Today, what are we going to talk about is rent versus buy. We're going to discuss some benefits of renting versus benefits of of buying and vice versa.
[00:00:41] And the obviously the cons of both. So I think melody has volunteered earlier to start this off. So melody over to you.
[00:00:51] Melody: [00:00:51] Yeah, absolutely. And like we've always mentioned in our videos, my name is melody. I'm with a forest, a real estate here in Toronto. [00:01:00] And to go back to your question and that debate of rent versus buy.
[00:01:04] So what I'll mention are very popular things that people think about, which. When you buy a property, you are able to build equity over time. A lot of experts suggest to at least keep a property for five years at longer possible. But then also keep in mind any sort of changes in the economy or what's in the area.
[00:01:26] For instance, if there's a large company that leaves the area that can decrease the value. So you just want to be mindful of certain factors. And then in terms of renting a positive for renting. Most likely going to pay a specific amount per month so that fixed amount can help and assure a lot of people financially.
[00:01:47] So that's a couple of points that I have. I'll pass it onto the next member of the panel.
[00:01:55] Davor: [00:01:55] Did you want to take it at least? But yeah, go ahead. [00:02:00] Go ahead. I'd love
[00:02:00] Elyse: [00:02:00] to talk a little bit about both renting and buying. So I did both, maybe we'll talk like eight years ago or nine years ago I was renting and, you know, it was a great way to save money.
[00:02:11] Cause it was a little bit cheaper. I went and I rented with some friends and like I said, it was a great way to set myself up. I remember when I bought my first house, I was about seven years ago. And I remember trying to budget for everything and saying, okay, my mortgage amounts are going to be this and my utilities are going to be this.
[00:02:29] And then we moved in and we got our first property tax bill, and I was amazed at what property tax. Cost. So, you know, it was enough to go on a vacation that we had to bring a check down to city hall. So I think, you know, it's, it's nice when you rent and you know, if you have a plan to buy, eventually, I think it's always important to talk to a specialist so you can kind of have your finances in order.
[00:02:54] You're not spending too much on rent. But then when you are going to buy, it's super important [00:03:00] to know about all of the expenses that come along with owning a home, because a lot of people will say, well, why rent when you know, that's my mortgage payment for a month? You know, I pay $1,600, my mortgage payment, $1,600 in rent.
[00:03:13] But what you're not thinking about is that $1,600 is for your mortgage payment. Then you have your utilities, then you have those property taxes and everything else.
[00:03:23] Davor: [00:03:23] Yeah, awesome stuff. So what I gathered from that is mainly the finance is the financial part. So you gotta, you gotta, oh, we got a little joint.
[00:03:35] We have a little friend. Is he a renter? Is he
[00:03:40] Elyse: [00:03:40] he's a renter. Yeah. He's renting our tour right now.
[00:03:45] Davor: [00:03:45] So I was saying, there's the main thing that people tend to focus on is, is whether or not they want to pay their own rent or they want to sorry, their own mortgage and they want to pay the landlord's mortgage if they're right there. But there's a benefit [00:04:00] of you know, you're, you're more flexible when you're are.
[00:04:03] Like your, your expenses are less, you don't have to worry about any maintenance. Usually landlord takes care of that. You don't have there's no property taxes. There's no, there's no additional costs that you have to worry about as a land owner. Clearly you're not building equity, but a lot of people in today's economy.
[00:04:21] You know, they can't
[00:04:26] I can't necessarily afford you know, mortgage because there's so much added cost to it. Did they have to rent? So th there's surely a benefit to that. And we, as agents are obliged to, to help our clients, whether they're looking for rental or they're looking to buy. Regardless. So, you know, that's what I draw out of it.
[00:04:48] It's usually fine.
[00:04:54] Mike: [00:04:54] Guys. I'll throw a different twist to this. I mean, we all know that such a [00:05:00] strong seller's market for awhile. Within this seller's market. There's lots of folks right now that are considering selling and buying. And with that, their hesitation of course, is they know they're going to win big on the sell, but they're really concerned about getting in the buying.
[00:05:16] And I've actually spoken to some clients recently that are considering today's market that they're going to sell. But then they're going to become a renter for approximately 12 to 24 months, depending on how the market goes. And depending on what happens with the mortgage rates and so forth, and that could allow them to be a big winner in today's market and then potentially be a big winner when they buy days, 18 months or so from now.
[00:05:45] So something interesting to consider. I I've talked to a lot of agents and. So they're considering selling that are considering that right now. It's a challenge out there as
[00:05:55] Davor: [00:05:55] we all know
[00:05:58] Melody: [00:05:58] very interesting strategy, [00:06:00] actually, because I'm in Toronto, I've heard of cases where people are buying properties and even over asking with the intention that if they sell in two months, they'll be able to sell it at a higher price.
[00:06:12] It's risky, but I like what you're saying, Mike, because it seems like a safer bet to hold off until two years, because what happened in this case is that they tried to sell it and then buyers are getting smarter and they know, and they're not willing to pay over asking. So they weren't there. They had to sell at a lower price.
[00:06:31] So it's
[00:06:32] Mike: [00:06:32] Yeah, it's not often in real estate that you can actually get a win, win, and that's, you know, that's a potential dab. You were gonna.
[00:06:40] Davor: [00:06:40] Yeah. Yeah. That's what melody pointed out. I mean, there is a, there is a shift in the market obviously with all the agents advising properly, their, their buyer, clients, the buyer and clients are getting more educated and they're not falling for the whole above asking trap.
[00:06:55] And I've seen that here in Ottawa, the market is sort of a stabilized, let's [00:07:00] say there's still a, quite a demand, but there's a, there's the, well, the The buyers are not going in. You know, there's certain properties that do warrant a higher price. It depends on how you, you know, you, you guys know that it depends on how you price.
[00:07:15] It depends on how you mark. You know, it depends on timing. I mean, there's, there's all these moving parts, but yeah. Yeah. I agree. The buyers are not falling for it anymore. So, so going and doing that, but you said to buy something and turn around a couple of months later to sell it for, you know, even for a slight profit, because it's a such a hot market, it might work for some people at the early stage.
[00:07:36] It seemed like any market, you know, you get in early and you get out sort of what everybody's, you know, And then, and then you know, the people that are getting a little bit late, they tend to fall through the cracks and end up you know, stuck with a mortgage and a, and then there's a whole other problem there.
[00:07:51] But yeah, if you, if you wait or even rent it out renting out the property, I mean, you know, like I said, the market is really hot, but [00:08:00] you know, it's also an affordability issue. And people just can't afford it. People do tend to rent. There's a lot of rental happening and that's where we are. That's the nature of the game.
[00:08:10] Mike: [00:08:10] Yeah, at least you, you made a great point on property taxes and you know, for any first time homeowners out there potentially getting into the market, you know, you've got to look and, and, you know, as agents, we spend time with our clients on this, all of the costs, right? Like you talked about property taxes.
[00:08:28] But when you look at the maintenance costs, when you look at the insurance costs, when you look at, you know, just the overall upkeep of homes and things that happen, we've all, as homeowners had surprises. And I think it's just good for, especially those first time home owners. Yeah. Be educated with that.
[00:08:47] You know, the least
[00:08:51] Davor: [00:08:51] of that. I have a good example of that. There's a, there was a homeowner. I used to live in a townhouses in Leslie park in Ottawa, [00:09:00] and there was a homeowner that had this old Oak tree in their backyard and there was a huge storm and it broke the Oak tree and it fell onto the parking lot and crushed about three cars.
[00:09:11] So who was responsible for the damages to everything, the owner, because the tree was off of their property and then adapt. So that's another thing, you know, as a, as a homeowner, you're reliable for anything and everything that happens on your property or anything off of your property that damages other properties.
[00:09:31] Well, there's a lot to it. Yes. You're building equity, but there's a lots of costs associated. So you have to sort of weigh the pros and cons and work out what's best for you. So you have to be ready for everything. Yeah. Yeah, absolutely. I think unless somebody has more to add, I think we sort of touched on the main points of our discussion.
[00:09:50] I'd like to wrap up. By saying that this was educational. It was a lot of fun to do it this way without, you know, following sort of the rules and, you know, moving in there in a [00:10:00] linear motion through the screen. So this is a lot more fun, sorry about the, you know, my ninja moons. And, and I think I want to wrap it up by thanking all, all, all of you guys Ari panel, we're here to help.
[00:10:13] And and that's it. That's a wrap.
[00:10:16] Elyse: [00:10:16] Amazing.