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Post #: 2                                                                                               Welcome Potential Home Owners and Lease Holders 

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Post #: 2                                                                                               Welcome Potential Home Owners and Lease Holders 

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To have the comfort,  joy and pride of your own space called home, is always at a price with unpredictable economic trends and population flocking to cities. The BIG Question is, ' Is renting  better than buying in today's market?'  Below, we will take a look on some tips to be considered in the interim of planning for a humble abode or luxurious space to call your own home.

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Welcome to the Big Debate 'Renting v Buying'

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Welcome to the Big Debate 'Renting v Buying'

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Post #: 3                                                                                               Video #1: Grappling with the High Cost of Housing Interview

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Post #: 3                                                                                               Video #1: Grappling with the High Cost of Housing Interview

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https://tvo.org/video/programs/the-agenda-with-steve-paikin/rent-dont-buy

This video interview was  with Alex Avery, author of 'The Wealthy Renter,' by Steve Paikin to discuss some of the opportunities and benefits of renting instead of buying. In this video, renting is highlighted as a better option than buying. I am not in agreement with Alex Avery. i am in agreement with the conventional wisdom which says, "If you can afford to buy a home, you should, because renting is the act of paying someone else's mortgage and leaving the renter with nothing to show for years of payments." while promoting renting over buying a home, Alex Avery owns a home. He is not renting, and therefore, not living what he preaches. He refers to people who advocate for home ownership as part of a cult. this statement can be easily flipped and the other side rightly fits his statement.

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Post #: 4                                                                                                   Website #1: You should rent a home, not buy one, if :                       a) You would be bad at taking care of a house;                                         b) You didn't have a cushion if things go wrong, among other things.

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Post #: 4                                                                                                   Website #1: You should rent a home, not buy one, if :                       a) You would be bad at taking care of a house;                                         b) You didn't have a cushion if things go wrong, among other things.

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https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-you-should-rent-a-home-not-buy-one-if/

An article by Rob Carrick, The Globe and Mail. Bob Carrick, Personal Finance Columnist, discusses reasons to rent a home, instead of buying one. He based the foundation of his argument on information he garnered from Jared Dillian, American Financial Writer. In his view, Jared postulates that, "A house has a very cost of carry, and unless you buy a new house, you are going to spend up to 1 % of its value on maintenance every year."
With all honesty, we can admit that almost every usable thing we buy, whether new or used, will wear and tear and also depreciates, and will need repairs and some sort of constant maintenance to stand. However a house is among the few things that the price has the potential to go up. Therefore, there is no need for this sort of negative signal regarding buying and owning a home.

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A government bond yields about 2 per cent these days, while blue chip Canadian stocks have an average yield of about 2.6 per cent. The yield on your house when treated like an investment? American financial writer Jared Dillian pegs it at minus 1 per cent.

"A house has a very high cost of carry," he wrote in a recent commentary. "Unless you buy a new house, you are probably going to spend up to 1 per cent of the value of the house on maintenance every year. Stuff breaks. Pipes burst, roofs leak, and occasionally the whole thing burns down."

But houses go up in value, right? Mr. Dillian lives in the United States, which means he lived through a housing crash there more than about 10 years ago. While he's confident the price of his house will rise over a 40-year horizon, he believes people should think of their home as a place to live, not an investment. Naturally, he's also open-minded about renting. In fact, he thinks you should rent if:

You would be bad at taking care of a house;

You don't have a cushion if things go wrong;

Your rental payments are lower than a mortgage payment on an after-tax basis (including property taxes and insurance) for a dwelling of comparable size;

You think houses are overpriced.

Mr. Dillian acknowledges one financial benefit of home ownership - paying down a mortgage is a forced savings plan because you build equity in your home over the years. But he also notes the tendency of some owners to borrow against this equity through home equity lines of credit, or HELOCs.

Mr. Dillian might be a little more pro-ownership if he lived in Canada, where you can sell a principal residence tax-free. In the U.S., there may be capital gains taxes to pay on part of your gain. Overall, though, his take on home ownership is sensible and business-like. I wish more Canadians thought that way.

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Rob's personal finance reading list...

Why you should take a staycation

Nope, not to save money, although that is a benefit. The real benefit of vacationing in your own city is that it " leaves you refreshed and provides perspective."

The best housing markets for buyers and sellers

Newfoundland rules for buyers, while sellers have the upper hand in a range of cities stretching from Victoria to Halifax. Vancouver, Calgary and Toronto are considered balanced markets.

Does anyone travel without first checking TripAdvisor?

According to this behind the scenes look at TripAdvisor, about one in every 16 people on earth use some aspect of this travel website's services every month. This is a really interesting dive into the challenges TripAdvisor faces in ensuring its review are real and accurate.

A strong argument against early retirement

Retiring at 66 instead of 62 increases a person's standard of living by one-third, according to a study. Even working an extra month at the end of your career can help your retirement savings.

Today's financial tool

This list of consumer resources from the Ombudsman for Banking Services and Investments includes a guide to online financial and investing content relevant to seniors.

Ask Rob

Q: " I have a granddaughter heading off to university in 2019. Do you know of a list of places she can apply to for scholarships and bursaries?"

A: "Here's a really good list of places where students can seek financial assistance, and here's a list of scholarships."

What I've been writing about

Hey, realtors and family members, stop pushing seniors to sell their homes;

What Air Canada's purchase of Aeroplan means for all those points you have;

Younger investors, here's how to get fee breaks and other little-known perks at online brokers and robo-advisers (for Globe Unlimited subscribers)

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For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group. Send us an e-mail to let us know what you think of my newsletter. Want to subscribe? Click here to sign up.

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You should rent a home, not buy one, if...

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A government bond yields about 2 per cent these days, while blue chip Canadian stocks have an average yield of about 2.6 per cent. The yield on your house when treated like an investment? American financial writer Jared Dillian pegs it at minus 1 per cent.

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Post #: 6                                                                                                Video #2 : Mortgage Professional Canada  2019;  Pre-Budget Consultation

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Post #: 6                                                                                                Video #2 : Mortgage Professional Canada  2019;  Pre-Budget Consultation

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https://mortgageproscan.ca/advocacy/federal-matters/news/2018/09/26/2019-pre-budget-consultation

Financial Literacy Leader of the year Award.                                                          Christopher Nichilo, A worthy recipient of this prestigious award, was introduced by Martin Reid, the president of 'Home Trust,' the company which sponsored the award. Christopher Nichilo was referred to as: A world class public speaker, and an expert in the areas of:

Financial Literacy

Private Mortgage Investing and

Interpersonal Communication

A hearty, positive statement which was made in connecting Christopher to his career is the positive impact he made in 2007, when he launched the Magnetic Mortgages and Investing Inc. He used the a proprietary strategy called; 'The Method' to achieve his goal. It is a strategy which teaches Canadians how to build equity in their homes up to five times faster than the normal, using the same money. This is the type of empowerment and education people need to advance positively in life. Christopher stated that his motive is to empower people how to easily get out of mortgage, similarly to how easily they get into it.

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Christopher Nichilo - 2016 Financial Literacy Leader of the Year

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Post #: 7                                                                                           Website #: 2 -  Own vs Renting by The Mortgage Professional Canada

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Post #: 7                                                                                           Website #: 2 -  Own vs Renting by The Mortgage Professional Canada

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https://mortgageproscan.ca/docs/default-source/government-relations/owning-vs-renting-2018.pdf

This website carries articles as recent as September 2018, conveying report, highlights of underlining views of home ownership, and the return on the capital to investors over long term investment.  A very interesting area of this article is a table labeled:
Table 1: Comparing the Cost of Owning Vs Renting in Canada, as of 2018 - Q 2  It is a very interesting, pre-calculated table with every aspect of the calculation needed for comparison and decision making, plugged in. Some of the outlined and calculated areas displayed are as follows:

Owner Cost

Tenant Cost

Owning Vs Renting

Capital Invested and

Return on Investment

This website carries vital information which can educate persons with the intention to rent or buy a home. I would recommend it as a good one.

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Post #: 8                                                                                              Image #2: Quick Sale, Satisfactory Profit  

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Post #: 8                                                                                              Image #2: Quick Sale, Satisfactory Profit  

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https://getanoffertoday.com/common-questions/

Owning a property, gives families a much more stable expectations of expenses and better future planning even if it cost more in the beginning. Sometimes families sell their homes either to upgrade or downsize the current one. This image seems to be showing the possibility for quick sale with satisfactory profit. By the time the child holds up the home for sale sign, the father holds the sold sign way up high. Which shows that by the time it is advertised for SALE, it is SOLD. See! he family is happy and is celebrating.

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Post #: 9                                                                                               Video #3: Buying vs Renting -  The pros and cons

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Post #: 9                                                                                               Video #3: Buying vs Renting -  The pros and cons

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https://bc.ctvnews.ca/video?clipId=621240

Jason Peters from Coastal Capital Savings, looks at the Benefits of Renting.
In his interview with Kerry, Jason Peters shows a bright side for renting and whom such benefits most. The interview was carried out on the basis of a recent survey that shows that by the year 2025, only individuals working in the senior business construction and engineering positions will be able to afford a home in Vancouver. Jason postulates that renting is not a bad idea, especially for people who have mobility in their career and move around a lot, people who are single, and also for those who have just started their career and are yet financially stable.
Jason also put forward the point that there is always a strong preference for home ownership, but, with the escalation of the minimum down-payment, the affordability is becoming even harder. The greatest eye-opener which he puts forward pertaining to the pros and cons is: If you buy, whenever you come to the end of paying mortgage, you can enjoy the equity. On the other hand, if you decide to Rent-For-Life, until death, you will always have rent to pay.

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Buying vs. renting: Jason Peters from Coast Capital Savings looks at the benefits of renting

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Post #: 10                                                                                         Website #: 3 -  Rent vs. Buy Calculator

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Post #: 10                                                                                         Website #: 3 -  Rent vs. Buy Calculator

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http://wheredoesallmymoneygo.com/rent-versus-buy-calculator/

This website has a heading of a wonderment question:
Where Does All My Money Go?
The best way to know the answer to this question, is to keep a log of all income and expenditure. The article of this website commenced with a true statement regarding the calculation of the math of the subject, which is said to be relatively easy, but the discipline/behavioral considerations are everything excepting easy.
I found the website to be educational/informative. It analyses and puts forward many factors which impact the decision of renting versus buying a home. It carries a 9 minutes video which is imperative to watch in order to understand the comparison between renting and buying a home. In addition, it carries a spreadsheet which one can download and plug in his/her own numbers and calculate what needs to be. I would recommend this website as a good source of information to anyone who needs to be educated on the basics or more about calculating the difference in renting versus buying

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There are many factors which impact the decision to rent versus buy a home. The math is relatively easy, but the behavioural considerations are anything but.

There are two parts to this post:

1. A video which runs about nine minutes but is imperative to understanding the comparison. I strongly suggest watching it first.

2. A spreadsheet you can download so you can plug in your own numbers.

I'm posting a beta version of this rent vs buy calculator publicly, in the hopes that people can provide feedback for improvement, and for the masochists out there, let me know if any of the formulas or results are wrong. There are a lot of formulas and references in the spreadsheet, and in my experience, one person putting together something like this rarely gets it perfect the first time.

So help me try to break it, in the hopes that we can make it better and/or more accurate.

Some notes:

This assumes you are a first time home buyer in the City of Toronto

Therefore it assumes two levels of Land Transfer Tax (Provincial and Municipal)

It also assumes you are eligible for a rebate

You can model moving two times during the 25 years and all the transaction costs are automatically calculated (CMHC, Land Transfer Taxes, Realtor Fees, Legal Fees, etc.)

The Monte Carlo simulations assume a normal distribution for both real estate and stock market returns. If you have suggestions on the variables to use for a non-gaussian distribution, let me know.

There are cell comments for all the input fields

I'll add cell comments for the outputs later (if we think they are necessary)

Please do not send your downloaded copy of the spreadsheet to others, instead refer them to this page where I will keep an updated copy of the spreadsheet

Assume it is wrong until I have a few independent sources go over it in more detail (Another reason to not distribute it)

With house prices in Canada having had a spectacular run for a long time, and rents in some locations not increasing nearly as quick, at some point people will wonder if renting can make more financial sense in certain circumstances.

Most people have heard the usual rhetoric: "Renting is just throwing your money away" or "Why would I want to pay my landlord's mortgage when I can pay my own?". I am currently a renter and I'm confident that I'm not just throwing money away when you make a more apples to apples comparison, but I also believe that most people would be better off as owners.

To understand this somewhat paradoxical statement, I'll refer you to a saying I have been known to trumpet from time to time: Managing your personal finances is 90% psychology, and 8% math. (The missing 2% is a testament to how unimportant that math is.)

In other words, if you took two otherwise similar homes where the only difference was one was for sale and one was for rent, then depending on your assumptions about growth rates and the ratio of the sale price to the monthly rent, you could see what would increase net worth faster: 1) Owning, or 2) Renting and taking all the upfront, and monthly cashflow differences and investing it. In one case your net worth would be driven by increasing the equity in your home. In the other, your net worth would be increased by how fast your investment portfolio grows over time.

While understanding that the projections are only as good as the assumptions (sketchy at best), far more important that the math are the psychological factors. For example:

1. If renting and investing the difference is currently favourable, will you actually save the cashflow differences? In my experience, this is rarely the case except for the most disciplined of individuals.

2. It's *harder, but not impossible* to make mistakes as a home owner when it comes to getting the return available in the market. In other words, if there was a housing correction, most people wouldn't panic and sell their homes. They would be more likely to ride out the downturn. The same is not true for people and their stock/bond/mutual fund portfolios. History has shown that investors do not often get the returns available in the market due to constantly making changes to their portfolios. (Edit: As per John Robertson, author of the new and recommended book The Value of Simple: A Practical Guide To Taking The Complexity Out Of Investing, "there's an added risk on the home ownership side in that you can be forced to sell if you have to move to a different city for work or family reasons, but as a renter you can take your investment portfolio with you.")

3. On the other hand, some homeowners can sabotage themselves by accessing the equity in their homes too liberally. Some people renovate too much, fueled by rising home prices creating equity that can be tapped, oblivious to the fact that housing markets can correct, and sometimes viciously. Others may continually upgrade their homes by renovating or moving into more expensive houses time after time.

4. There are less tangible benefits of owning: such as the pride of home ownership, having roots or a stable base for raising a family.

5. Younger Canadians without families might also realize a benefit of renting instead: mobility. If you were offered a fantastic job in another province or country, are you more or less likely to take it if you've just bought a home? Is this important to you?

There are many other factors to consider, but for now, let me just say this: I don't care if you own or rent. I have no horse in this race.

If you just want my opinion on what the average person should do, it's this: Save up a healthy downpayment, make sure you find a place you don't reasonably expect to move from for AT LEAST 10 years, buy a house that's about 2/3 of the size of the mortgage you're pre-approved for so you can be an owner and have money left over to invest in the stock/bond markets as well. Don't over-think it.

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There are many factors which impact the decision to rent versus buy a home. The math is relatively easy, but the behavioural considerations are anything but. There are two parts to this post: 1. A video which runs about nine minutes but is imperative to understanding the comparison.

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Post #: 5                                                                                                           Image #1: The Pen & Contract Document :                                                                       Apartment Leases vs. Rental Agreements

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Post #: 5                                                                                                           Image #1: The Pen & Contract Document :                                                                       Apartment Leases vs. Rental Agreements

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http://www.rentseeker.ca/blog/index.php/know-your-options-apartment-leases-vs-rental-agreements/1093
The image of the 'pen' signifies the instrument of commitment which is used to seal the binding agreement between the parties involved in the renting or leasing affair. Thus, affixing one's signature to the document in question, seals the contractual agreement, making it legal.

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Post #: 11                                                                                             Image #3  A Happy Family Posing Together Outside Their Home.

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Post #: 11                                                                                             Image #3  A Happy Family Posing Together Outside Their Home.

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http://canadarealestateadvisor.ca/rentoown.htm

This picture depicts a happy family standing outside a home which they aspire to fully own some day. They are happy that while renting-to-own, they can love, share, enjoy life, and grow optimistically in the place that they will eventually own some day as their own home.

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Reflective Discussion Questions and Answers