Renting vs. Owning
 

Whats everythings thoughts on the pros/cons?

Generally with rent being less than it costs to pay for the same property's mortgage (assuming 0 down), you could essentially take that extra money and invest it in RRSP/TFSAs...

I've heard some argue that buying a house is the best investment you can make, but I've heard some argue that if you take the extra money you would save by renting you could invest it and be in a better position in the long run.

I think it all depends on factors such as interest rates, direction of the stock and real estate markets, etc..

You should read through some of the real estate threads in this forum

If interest payments > rent, then you should rent
If you're a savvy investor then you should rent and put your money elsewhere.

I would buy if i:
- have a good down payment ready
- am looking at a long horizon
- don't plan on buying and selling or moving a lot

one advantage with real estate is that the gain on your principle residence is tax exempt.

bottom line..

only buy a home if you can make a profit on it or its 25% or under market value. otherwise youll get raped by interest payments. it takes an average of 30 years for a normal working person to pay off a home. just rent and save some money on the side for 30 years and buy a home with straight cash when you have enough.

i knew a family that was renting and had most of their money tied up in investments saving up for a down payment... 2008 happened and they lost at least 30-40% of their savings..

I can understand the logic behind saving for 30 years and then buying with straight cash, but a lot of people's circumstances change in those years, such as having kids, etc...

i have been dwelling on the OP's question as well. damn housing is expensive.

i have been saving a bunch of money in mutual funs and i wont be moving it anytime soon because of the redemption fee. i was thinking that when the time is right, i will be taking the money out and throwing it into a down payment for a house.

it seems that it is not as simple as it sounds. obviously i want to maximize the utility of my dollars so flipping houses to make coin sounds really good but i really have no idea how it works.

anyone car to chime in on how to make money by flipping houses?

heres some advice.

get some money together from friends and family.
buy a couple of cheap lots in the burbs.
build a subdivision.


credit is everything.

Buy an old property that needs some work, spend some time improving it, and sell it for more.

Another to make some coin is to buy a bigger lot, and split it up. There was a really old house i saw sell for 2.4mil with a 66ft wide lot, sold based on the value of the land. you could build 2 houses on it for 400-500k a piece, and sell for close to 2mil, which is what the going rate of a newer house in that same are sells for with a 33ft wide lot. Right there is approximately half a mil profit, less carrying costs...

Then 2009 happened and they got back 80% of what they lost.

If they lost 30-40% is it because they were not very diversified. I lost 50% on some equity investments, yet those are already back to the same levels as before the crash, and were actually higher briefly.

There's risk in everything, at least investments let you diversify to spread out the risk. Real estate does not.

Exactly, and when you own and have to sell/buy another home cause you have to move, downgrade due to loss of a job or stay-at-home mom, or upgrade due to large family, .. you're taking a 10% loss on the house you sell, and another 2-3% buying the next house.

There was a study done that showed someone who flipped houses 3 times in the last 10 years made very little after all the fees.

I don't know if they got back 80% of their investments, but i do most recovered around that level, but not all...

I think that alot of people think that is really easy to flip houses and make tons of money, but I know people wh have actually lost money trying to flip properties.. one person I know who sold a property for 50k more than what they paid within a couple years, but in the end only made around 10k due to carrying costs, realty fees, etc...

If you know this then please stop the drama queen shenanigans. Posting "my friends lost 30-40% in 2008" is useless whining if they've recovered most since.

You're not helping your point, and only showing we shouldn't take your posts at face value cause there are facts left out.

I think most people don't account for all their costs even when selling their own place. For instance after all fees I'm only going to walk away with $67K total profit after 6 years of ownership, even though I'll get $105K difference between selling the house and the remaining mortgage. CMHC fees, commission, lawyer x 2, taxes, renovations, original downpayment, ... all adds up.

Owning a home is something most people have to do since they have to live somewhere.

For most people, it's the association with owning. It's like you feel better than the person next to you that says they're renting.

The average person is not able to save their money in a reliable way so home ownership is the only way that some people can grow their net worth. This is why in BC, there are a lot of people home rich but cash poor.

Much of the money being spent these days is money that was taken from the equity of their home from the recent decade's price run up.

I know many people worry about their investments dropping but lets not forget that there were plenty of homes in the US that also dropped 50% and they are a long way from coming back to their previous prices.

Never buy any investment, stocks, mutual funds, real estate after there has been a huge price run up for years. During these times, the market loses logic and you'll likely be in for a small ride up with a huge ride down.

So is renting better than owning?

It's not a yes or no answer because there are things to consider.

Owning your own home gives you that forced savings plan, something some people need. There is also the mental state of having a place that you can call home for good. This becomes more important if you have a family.

Owning your own home has a lot of nice elements to it including bragging rights which makes people feel good.

Renting has it's great points as well.

At the end of it all, pricing is what determines if you're making a smart move. In the case of current pricing, most home ownership does not make sense and it's better to rent.

This is because we're likely to see a decline in prices, which means if you rent now and buy later, you'll be buying at a cheaper price. It is also because the price of rent is far cheaper than the price of ownership which also plays a large roll.

Many people continue to purchase at overstated values with the expectation the home prices will continue to go up. We've been at the tipping point of prices for a while. The only thing keeping prices up have been low interest rates along with external funding.

That party is coming to an end now as well so upwards movement is possible but you're betting with the odds not in your favor.