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Hello everyone, my name is Kaylan Phillips and I have created this pallet to inform people on the all the information needed on making a clear decision to Buy or Rent a house. This pallet will separate the two and compare the differences, rates, even go as far to input your own personal situation to assist on making it easier to make a decision to buy or rent a household. I hope you enjoy reading further, and I hope through all the information you stumble upon, there will be something you find useful to take with you.

Picture sourced from: https://www.google.com/url?sa=i&url=https%3A%2F%2Fslate.com%2Fbusiness%2F2018%2F07%2Fdoes-buying-a-home-count-as-saving-for-retirement.html&psig=AOvVaw0Z6B18jwrJNQm3JK0BBee4&ust=1638233514494000&source=images&cd=vfe&ved=0CAsQjRxqFwoTCLj2j8etvPQCFQAAAAAdAAAAABAL

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Post #1 - Could a rent-to-own turn more Ontarian's into homeowners? 

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Post #1 - Could a rent-to-own turn more Ontarian's into homeowners? 

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This article is great because it takes a whole different approach to the Rent vs Buy debate. Instead of just choosing one or the other option, why not have both? Sounds strange, I know. This article suggests the Rent-to-Own option. Essentially when you rent a home, from the money that you put towards your rent on a monthly bases, a portion gets set aside and eventually gets put towards your down payment for a home in the long run.

You would think this method wouldn't be feasible, because of all the landlords out there that have a rental property as a second investment. Actually, the investors choose to get involved a lot of the time. It saves them time and effort trying to find responsible tenants, and they end up making a greater return on their investment.

I really enjoyed this article because of the different approach on the renting and buying debate. Instead of siding with one or the other, the alternate perspective really opens peoples eyes to a wider variety of opportunities they didn't know were possible.

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The rental agreement that Davis Leke signed three years ago didn't look much like the ones most Ontario tenants arrange with their landlords.

Of the $2,050 he and his partner, Nicollette Evans, were to pay each month for a one-bedroom waterfront condo in Ajax, $380 would be set aside for something else: a down payment that they could use to purchase the unit at an agreed-upon price after three years of tenancy. "I'm a big advocate of it," says Leke of the deal, which he and Evans made in March 2018.

This spring, the couple took possession of the 780-square-foot unit after having purchased it from their landlord for $347,000 and qualified for a mortgage of their own. What Leke and Evans did is a version of a rent-to-own plan. While such arrangements have historically been uncommon, the Liberals make mention of them in their housing plan (they do not appear in the NDP or Conservative platforms). "I do think the government should be involved," says Leke of supporting rent-to-own initiatives. "It should be about people who want to own - I think we should put money in their pockets to be able to afford [housing] and just support [them]."

So how does rent-to-own work, and could it actually turn more Canadians into homeowners?

Rent-to-own basics

"Under a typical rent-to-own model, an individual commits to renting a property for a period of time with the option of buying it at a locked-in price before the end of the lease, to allow them to save for a downpayment," the Liberal party's website states . If elected, the party says, its government would dedicate $1 billion toward rent-to-own initiatives.

In Canada, rent-to-own housing dates back to at least the '70s, according to Rent to Own Essential Guide for Homebuyers: The Key to a Fresh Start and Richer Future. "Back then, the agreements may have been more casual and the terms a bit looser," says Rachel Oliver, who co-authored the book with her husband, Neil. (Together, they run Clover Properties, which for the past 12 years has been connecting local investors with Ontarians - including Leke - who are interested in renting to own a property.)

Yet some 50 years later, rent-to-own remains a niche option. "It's a pretty small segment overall," says Peter Norman, chief economist at Altus Group, a real-estate consultancy. "I think that if you're going to find any data or any information out of it, it's going to be anecdotal."

What rent-to-own programs already exist?

Getting the government involved in a national rent-to-own program would be unprecedented in this country. But options already exist on the private market across North America, including in Ontario. Rachel says that her business, Clover, has worked with more than 500 families on rent-to-own setups across southern Ontario, primarily focusing on more affordable markets outside Toronto proper: "We get a lot of people misunderstanding what rent-to-own is - and isn't - and our definition of it: it's really a solution for good-income earners that have saved a little bit of a down payment but are having some credit challenges and are getting turned down by the banks."

The homeowner-hopefuls that Clover works with fork over what amounts to a 5 per cent down payment to the current owner, who pays a fee to the company for brokering the deal. Then, over the course of a three-year term, part of each month's rent is added to the deposit with the goal of doubling it in order to more easily secure future financing.

The homeowner is contractually bound to sell the property, but if the renters still can't purchase at the end of the terms laid out in the contract - which is signed in addition to a conventional lease - they forfeit all but 10 per cent of their deposit, unless the timeline is extended, which has happened. "We have a 90 per cent success rate," Oliver says. "One in 10 doesn't succeed with the process, because, generally, they have a disruption in their marital status, a divorce, separation, or a job loss - those are the things we can't often help."

In British Columbia, Bosa Properties use a different model. Through the Bosa Equity program, 25 per cent of a tenant's total rent paid during their leasing period can be put toward a new unit in a Blue Sky or Bosa development, up to two years after moving out. "We are seeing a new type of renter - one who is very selective in their wants and needs. They view renting as their long-term mode of living and not simply a stopgap to home ownership," says CEO Colin Bosa in an email statement. "Within that group there are those who are pursuing the rent-to-own scenario - Bosa Equity. This is a newer concept and it is being embraced slowly."

Why would developers and investors get involved with rent-to-own?

The Liberals' billion-dollar commitment would come in the form of loans and grants for private companies, not-for-profits, and co-ops to develop new rent-to-own projects. But how do you get the developers to buy into such a scheme? "That's a good question," says Norman. "For your typical bread-and-butter condo developers, you basically want to get in and out; you want to sell all those units, and you want to get yourself out of that property as quickly as you can."

Whether the homebuilding industry would embrace the Liberal proposal would come down to the specific numbers, says Diana Petramala, a senior economist at Ryerson University's Centre for Urban Research and Land Development (a Liberal party spokesperson confirms the program is still in the planning stage). But Petramala sees incentive for such real-estate ventures in cooler housing markets. "For the developer, it helps them work down their inventory so they can find the demand for any potential inventory that they have that they can't sell," she says. Both Petramala and Norman note rent-to-own gained some popularity stateside following the 2007-08 financial crisis, when developers were scrambling to offload units in projects that were too far along to cancel.

A spokesperson for the Liberals tells TVO.org in an email that there won't be a one-size-fits-all structure for the program and that the earmarked money should be enough to encourage participation from a variety of groups: "We are confident that, by partnering with municipalities and providing substantial federal funding, we will be able to incentivize the building of new rent-to-own units across the country."

There are a few reasons investors choose to get involved with rent-to-own through Clover, Oliver explains. The landlords they work with are typically buying a secondary property, looking for a stable return on investment, hoping to avoid the hassles of finding reliable tenants, and interested in making an investment that will support home ownership, a cause they believe in. "They want to invest with a purpose," she says, adding that Clover has turned away big investors who were too profit-driven and seeks to provide housing at below-market rates while still ensuring sellers take home a profit.

The drawbacks of rent-to-own

Early rent-to-own deals might have been done by handshake or verbal agreement, or didn't account for a prospective buyer's financial situation, Oliver says, and this has somewhat stigmatized these types of agreements historically. "That's what gets everyone in trouble - not thinking far enough down the line before anyone signs on the dotted line," she adds, noting that this leaves the door open to a tenant not being able to afford to purchase the property later.

Although details about the proposed federal program are thus far scant, Norman is skeptical about its ability to be an effective affordability measure due to what he suggests is its limited scope. "First of all, it's not a lot of dollars," says Norman. "The magnitude of this [rent-to-own program] is pretty small, even in comparison to their current commitments to subsidized housing. It seems like it's more politics." More effective, he says, would be giving renters in need direct monthly subsidies.

Petramala also suggests the current economic climate could make rent-to-own riskier. "I think there are a lot of concerns over inflation and potential for interest rates to go up," she says. "The longer the lease term, the more likely that they're actually going to be facing higher interest rates when it comes time to buy, when they want to mortgage it." Uncertainty is one of the reasons rent-to-own hasn't taken off to date, Norman suggests. "One of the reasons why it hasn't been that prevalent and not that common is that it's just not that clear that it's in the renter's interest to get into these contracts." He notes that the portion of rent set aside for the down payment amounts to a premium. "It's a little bit like leasing your car - if you run the numbers on that, it's often a lot less affordable than actually buying one; all it does is provide you an opportunity not to have to put all the money up front."

While Leke is a supporter of rent-to-own, he acknowledges it isn't for everyone. "You have to know what you're getting into," he says. "You need to be disciplined." Oliver says that, while "a lot of people feel that you can rent-to-own if you can't afford real estate," that's not the case - people still need to be in a financial position to absorb the ownership costs when they exit their lease: "Somebody still has to carry the property."
Ontario Hubs are made possible by the Barry and Laurie Green Family Charitable Trust & Goldie Feldman.

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Could a rent-to-own plan turn more Ontarians into homeowners? | TVO.org

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The rental agreement that Davis Leke signed three years ago didn't look much like the ones most Ontario tenants arrange with their landlords. Of the $2,050 he and his partner, Nicollette Evans, were to pay each month for a one-bedroom waterfront condo in Ajax, $380 would be set aside for something else: a down payment that they could use to purchase the unit at an agreed-upon price after three years of tenancy.

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Video #1 - Is Renting a waste of money? | Rent vs Buy 

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Video #1 - Is Renting a waste of money? | Rent vs Buy 

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This video perfectly describes the break down of the financial side of things between the costs of buying and renting a house. He takes two separate individuals with different wants and living situations. He explains the differences between the two and how much money they're spending and paying off monthly, and yearly. In turn finding the total at the end. Thats being said, that doesn't mean renting is a bad option. If you're planning on staying in a house for less than 5 years, renting would be a more feasible option. Buying a house would be more of a long term investment, as he states in the video.

I chose this video because I liked the way he broke down the financial side of buying a home as well as renting. Not only did he break down the costs, he also included a fake scenario of two individuals and their financial situations of buying and renting, which I found extremely helpful.

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IS RENTING A WASTE OF MONEY? | Rent Vs Buy

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Image #1 - Buy vs Rent - How do the costs compare? 

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Image #1 - Buy vs Rent - How do the costs compare? 

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This photos explains exactly what to expect when it comes to comparing the costs of buying or renting a home. Although the living situations may be similar, the way its broken down by common costs, things can vary more than you think.

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Post # 2 - Rent vs Buy: When is a mortgage better than rent in Canada?

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Post # 2 - Rent vs Buy: When is a mortgage better than rent in Canada?

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This post was very helpful in going over the basics and pros and cons between Renting vs Buying a home. It states that really no matter what you purchase, you're almost always going to end up with something called "dead money". Which refers to the money that you spend and invest towards your property, that has no return value with it, such as monthly rent, or property taxes. It goes on to state the simple pros and cons  between renting and buying a household. it then continues to talk about "The 5% Rule", which I have posted as a video more in depth. In short, the cost of owning a home is 5% of the property value. If rent is lower than that for a similar home, suggested keep renting. If higher, best choice would be to buy.

I enjoyed this article because of how much information it with-held, while still maintaining a very simple and easy understanding of the subject. Some articles I find to be overwhelming when reading so much information. This article recites it very straight forward without leaving important parts out.

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Rent vs buy - it's one of those eternal questions that will be asked and answered by millions of Canadians in every generation. However, it's not a simple question, even if your parents think it is!

You may have heard the conventional wisdom that rent is "dead money", that you're throwing cash down the toilet unless you buy a place. It's not really a fair comparison though. The truth is that even a house that you own, with or without a mortgage, has a certain level of so-called "dead money" associated with it. So from a financial perspective, the rent or buy debate is a lot more complex than "buy a home as soon as you can afford it" (and that's without considering the drop in housing affordability in recent decades).

Here's a little more guidance on the rent vs buy debate in Canada. The short version is that it will depend on your many factors including your lifestyle, finances, and the property market where you live (or where you want to live).

Renting vs buying a home: Pros and Cons

The rent vs buy issue is much more than a financial one. There can be big differences between the lifestyles of renters and homeowners, which you need to consider alongside your finances. Here are some of the advantages of both renting and buying a home that considers both lifestyle and financial issues.

Advantages of renting

Flexibility: Renting doesn't tie you down in any way. If you plan to move soon, or regularly throughout your life, renting lets you move out of a place as soon as your initial lease is over, typically 12 months. With a mortgage, this isn't really possible, as there are financial penalties when you break a mortgage and taxes to pay whenever you sell a property.

Less hassle and maintenance: Owning a home isn't just a drain on your wallet. The daily maintenance and upkeep of a home will demand many hours of your time, as well as a few extra dollars on top. Renting transfers this responsibility to your property manager, freeing up your time for more productive work.

Cheaper: Renting is generally cheaper than a mortgage, at least in the short term. If your household income isn't high enough to afford a mortgage, then renting is typically a more affordable option. Alternatively, if homeownership simply isn't for you, renting can give you more disposable income to spend or invest.

Access to alternative investments: Being a renter doesn't mean you have to forgo investing in your future. The additional cash you can save by renting can be invested in the stock market, a GIC, your own education, or toward starting a business. Some of these could pay off even more than owning a home could, if you work hard and are a bit lucky!

Advantages of buying

Stability: Owning your home means you call all the shots. If you want to paint, replace the floor, renovate, or add an ensuite, you don't need to ask a landlord or property manager*, you just do it! Owning your home also means you won't get suddenly evicted because your landlord's second cousin's 19-year old daughter needs a place to live when they're at university for 6 months each year**.

You retain capital gains: If your home increases in value, being the homeowner means you will pocket the additional home equity, and realize the capital gains if you choose to sell (minus capital gains tax). If were to be renting, the only one to benefit would be your landlord - if you're really unlucky, a price rise could see your landlord sell the home, or increase your rent! Of course, the flip side of this is that if prices fall, it's the homeowner that's on the hook, not the renter.

Building up equity: With a mortgage, every monthly payment is helping you build equity in your home. While some of your mortgage payment goes toward paying the interest on your loan, the rest is paying off your mortgage principal. At the start of your mortgage, interest will make up more of your payment, but it will decrease over the years.

(Sometimes) cheaper: Buying a home will generally see you pay a higher monthly payment than you would pay in rent on the same home, at least in the beginning. However, that isn't always the case, especially when you subtract the amount of your monthly payment that is going toward paying down your principal. You'll need to run the numbers on your prospective home to be sure - our mortgage payment calculator can help with that.

Simple investment: Part of the allure of homeownership is the fact that it makes investing in your future simple. Pay off your home and you'll have a guaranteed asset that can see you through your life - no need to worry about stocks, bonds, or other financial products (unless you want to). It's generally a safe bet, as property prices tend to be fairly stable (until they're not, but that's another story). If you want a simple long-term investment strategy, homeownership literally has one built-in.
*You may need to ask your local council if you're renovating. **This is oddly specific, but it's just a hypothetical, I promise.
Rent vs Buy: The 5% rule

When people talk about renting vs buying a home, they often misunderstand and underestimate the costs of owning a home. The 5% rule is a decent rule of thumb for the rent vs buy issue, but it will also help to clarify the real costs of renting and buying. It is a little complicated, but we'll walk you through it step-by-step.

First of all, here's the 5% rule itself:

The annual unrecoverable cost of owning a home is approximately 5% of the property value (whether you have a mortgage or not). If your rent is lower than that for a comparable home, you should keep renting. If rent is higher than that, you're probably better off buying a comparable home.

Let's unpack this a little.

Total unrecoverable cost

What is the total unrecoverable cost? The total unrecoverable cost is the amount of money you pay for a property that doesn't result in residual value. In the case of paying off a mortgage, the residual value is the home equity that you build up over time, which is a financial asset that you can leverage in the future.

When you're renting, the total unrecoverable cost is simply the amount of rent you pay. You don't own the home, and your rent doesn't go towards purchasing an asset or investment.

When you've bought a home, the total unrecoverable cost is more complicated. It's made up of three different costs that cannot be recovered:

Property Taxes

Maintenance on your home (not including renovations, which can increase the value of your home)

The cost of credit (see below)

The first two of these are simple enough to understand, but the cost of credit is a bit more complex. The cost of credit is either the cost of borrowing money with a mortgage (ie interest on your mortgage) or the opportunity cost of investing your money in a home, rather than more lucrative investments. The former applies to money that you still owe, while the second applies to your home equity. In either case, they are generally around the same amount, depending on factors including your mortgage rate and how much your home increases in price.

The 5% rule

Here's where the 5% comes from. Property taxes are around 1% of your home's value each year, maintenance costs are also around 1%, and the cost of credit generally comes up to 3%. That means that the total unrecoverable cost from a house you own should be around 5% of the total value each year.

So, if you can rent for less than 5% of the value of a comparable home (calculated annually) you should probably keep renting, while investing the difference in an RRSP, TFSA, or the stock market. If you can buy a home where 5% of the property value is less than the rent, buying is probably a good option.

Now, this is a simplification of a rule that is already somewhat simplified, and there's a lot more to it if you want to understand it fully. Check out Ben Felix's video about the 5% rule below - he's a financial planner with PWL Capital in Ottawa, so his explanation is tailor-made for Canadians.

Should you rent or buy?

As with most things, there are no easy answers to whether you should rent or buy - it depends on your lifestyle choices, the market where you live, and your personal finances. However, there are a few general suggestions that might get you thinking one way or another.

When you expect to move regularly over the next few years (or most of your life) you might consider renting.

If you want stability in your home, including the option to renovate, you will probably want to think about buying a home.

When your yearly rent is less than 5% of the cost of a comparable home, you might consider renting and investing the difference.

If you're paying rent that is more than 5% of the price of a comparable home, you might consider buying a home.

The bottom line

The key thing to remember is that there is not necessarily a better or superior alternative to renting or buying. Even a fully paid-off home represents an opportunity cost and has overheads that you will need to pay in perpetuity. Renting can give you the flexibility to make other investments and be more responsive to opportunities that come up in your career, or in other areas of your life.

If you're confused about what the best choice is for you, it's probably a good idea to speak to a financial advisor or mortgage broker about your options.
ALSO READ

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Rent vs Buy: When is a mortgage better than rent in Canada? | Ratehub.ca

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Rent vs buy - it's one of those eternal questions that will be asked and answered by millions of Canadians in every generation. However, it's not a simple question, even if your parents think it is! You may have heard the conventional wisdom that rent is "dead money", that you're throwing cash down the toilet unless you buy a place.

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Video #2 - Rent vs Buy a home in Canada (2021) | Whats the better option?

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Video #2 - Rent vs Buy a home in Canada (2021) | Whats the better option?

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This video touches on the comparisons between buying and renting a home. Not only on the financial aspect of things, but the lifestyle side as well. Not only do you need to factor in which option will cost more, but which option also fits your lifestyle as well.

I chose this video as apart of my presentation because of the sole purpose that it touches on the two sides of the equation between buying and renting; financial vs lifestyle. This video takes a different perspective on renting vs buying because not only does he explain in great detail the differences of the financial side between renting or buying a home, he goes the extra step by explaining how lifestyle can also effect the factors of buying or renting a house.

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RENT VS. BUY A HOME IN CANADA (2021) || What's the better option?

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Post #3 - How a little mortgage math helps swing the own/rent debate in favour of buying a house 

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Post #3 - How a little mortgage math helps swing the own/rent debate in favour of buying a house 

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This post about mortgage math was a great addition to my presentation for the sole purpose that it doesn't just compare Buying to Renting, it talks about a thing called "Mortgage Math" and how implementing it into your home search would be extremely beneficial. The article takes data to compare average costs between renting and buying with "Mortgage Math".  The short answer, renting was cheaper by $705. That being said, the equation doesn't account for the mortgage payments being returned to the owners pocket. In turn, buying is (sometimes) cheaper than renting when you think about it, and you can thank the Homeowners Advantage for that.

I chose this article to include because of the "Mortgage Math" equation. Something as simple as comparing costs and rates with a little mortgage math, is something very beneficial to know, and I can see myself applying it to my very own property in the future. We've read about a lot of different equations on how to properly calculate the differences between the costs of Renting and Buying, but this is the one that stands out the most, and will be remembering for future reference.

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How a little mortgage math helps swing the own/rent debate in favour of buying a house

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Both sides come equipped with facts, numbers and compelling opinions, but homeownership comes out ahead Murtaza Haider and Stephen Moranis, Special to Financial Post The transition from renting to buying is an important one for many young families, but it can be a confusing time, too, since both sides of the rent-versus-own debate come equipped with facts, numbers and compelling opinions.

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Video #3 - Renting vs Buying a Home: The 5% Rule

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Video #3 - Renting vs Buying a Home: The 5% Rule

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In this video he describes something called " The 5% Rule"
He further explains that by using this percentage number you can apply it to the way you purchase or rent a house.
He also explains the added costs that are attached to home owning. These are costs that people seem to forget about or oversee, such as property taxes, maintenance costs, utilities, etc.

I chose this video for my presentation because like other videos, he takes the break down between renting and buying and applies it to "The 5% Rule" as he states in the video. He uses this %5 rule to help him estimate which money he's going to spend and where. He compares it between the scenario of owning a home, and renting a home. I enjoyed this video because its different in a way where he explains that people usually compare the costs of owning a home, they look at the material values. He takes his own equation and applies it to realistic situations in order to find the best suitable option.

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 Image #2 Renting vs Buying - The Differences 

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 Image #2 Renting vs Buying - The Differences 

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This image shows the simple differences between renting and buying a house hold. These are the main differences people would think to look at when deciding  whether to punched or rent a household.

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Image #3 - The salary you need to buy a home in cities across Canada 

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Image #3 - The salary you need to buy a home in cities across Canada 

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This photo exhibits and explains the differences of the price of homes in different regions across Canada, as well as the salaries needed to purchase the home. Someone who is able to purchase a home in one region with their salary might not be able to purchase a home in another region because of how vast the housing market is through out the different provinces and cities.

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Video #4 Should you Rent or Buy? | Pros and Cons of Buying vs Renting 

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Video #4 Should you Rent or Buy? | Pros and Cons of Buying vs Renting 

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This video covers off all the pros and cons to buying a house as well as renting a house. He makes it extremely simplified by breaking down different situations and explaining why that option would be more suffice.  The decision of renting or buying can be a tough one, but this video makes the entire idea less intimidating.

I chose this video because he made the information he was reciting very easy to understand. If someone were start looking for a home, I would show them this video as a good starting point. The one thing that stands out to me in this video apart from the others is he takes each side of the argument and divides the conversation up evenly. He takes a more personal approach to the video which in turn makes people less intimidated to start looking for a property.

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Patrick Fields, Edmonton Real Estate Guy

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Should you Rent or Buy? | Pros and Cons of Buying VS Renting

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1. Was did you learn about this topic that surprised you the most?
After researching this topic extensively and getting a feel of the differences between renting and buying a home, there were quite a few things that surprised me. In the end, there really is no right answer. It all depends on your financial situation and your personal living situation. If you're not planning on staying in a place for more than 5 years, go the renting route to save you money in the long run. If you're planning on staying somewhere for longer than 5 years, and are willing to invest money and time into a property, purchasing a home would make more sense.

2. Provide a real life example of how this topic is relevant or interesting to you.
I decided to choose this topic because I've always been personally interested in buying a home myself, as a longterm investment. Being unsure of what the best option would be for my situation, I chose this topic to enhance the knowledge of what I already knew, and to learn about things I had never head of before. After extensively researching this topic I came out with a lot more knowledge and understanding that I had originally started with. I can now apply my knowledge to real living situations in the future to assist me in making the best decision possible for my circumstance.
3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
One piece of information would pass on to a family member or friend would be to inform them about the "Rent-to-Own" options when it comes to investing in a property. A lot of people are unsure about what they're wanting in a home, living through unsteady living situations, or even just not having enough available capital for a down payment. Looking around for Rent-to-Own options will be beneficial in the long run, for the people who aren't sure of what to do as of yet, but have a plan for the future.

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This image directly compares the monthly expenses of the costs between buying or renting a home over the span of 5 years. The image highlights the value on either side where the costs are almost the same between a different time period between buying and renting.

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Post #4 - Rent vs Buy2021 | Renting vs Buying a House | Rent vs Buy Calculator 

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Post #4 - Rent vs Buy2021 | Renting vs Buying a House | Rent vs Buy Calculator 

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They say save the best for last, and here we are. This article is packed full of amazingly rich information to do with all ends of the spectrum when it comes to renting and buying. Unlike the other articles that mainly focus on one topic, this one combines all of them plus more into an extremely helpful guide. It goes as far as explaining and even comparing the market currently to the crash of 2007. Explains that even though more people may be settling down to buy, renting is just as important for the market. Comparing the new rent vs buy factors, with renting ultimately being cheaper, but with no return investment in the long run. It also goes as far to explain the renting and buying market currently in 2021. As well as providing links to Buy vs Rent calculators, that way you can input your own information and the system will do it for you. All in all, an extremely well thought out informative article. I will be returning to this link in the future to help me in the decision of purchasing a home.

This article was a clear choice as to why I decided to add it to my presentation. After reading through, I couldn't pass up sharing all the information I found useful within this article. Having touched on so many helpful posts and information within this presentation, having this website as the wrap up post for everything seems very suffice. Pulling all the information I've touched on, plus more into one big article. This post is different in a way where it almost takes you from begging to end, decision wise. It's almost as if it walks you through the entire process already, touching on so many points along the way, ultimately which leads to a calculator to calculate your own information. In the end hopefully being able to find which option would be more suffice for your given situation.

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2021 is unfolding and many of us are returning to the pressing question of buying vs renting a home. It's a tantalizing opportunity to buy a house, but are we reaching out to grab a branch on a cliff?

Hundreds of thousands of Americans, Canadians, Brits and Aussies are all pondering this same question: Should I buy a home this year?

We've all had the value instilled in us that owning a property is a smart wealth creation strategy. And given you can incorporate a rentable unit in your house, buying a house does a common sense conclusion.

In fact, Attom Data recently released a report that says a median-priced 3 bedroom home is a better choice than renting in two-thirds of the US.

The Lure of False Statistics

But is buying in the next 2 years really a wise decision? Is this housing market one you want to jump into? And are purchasers really weighing the right criteria and respecting the wrong data? Is fear of missing out (FOMO) what's really driving most homeownership for Millennial first time buyers?

In many states/cities homes are really out of reach for most buyers. And although low mortgage rates are the rule now, it's a certainty that inflation will drag them upward. When home prices peak, what are the odds they will keep climbing?

And here's a key matter for those who want to travel or need to move for a job:

"If you expect to be mobile and move within a window of roughly five years or less, you're probably better off renting only because the costs associated with homeownership are significant," said George Ratiu, senior economist with realtor.com.

And property taxes, insurance, Realtor fees and commissions, along with maintenance costs are more significant than most buyers realize.

We're in an unusual place right now economically speaking. Home prices are rising faster than rents, and more than a few believe we're in a housing market bubble.

Rent vs Buy in 2007

Back in 2007, house prices were rocketing and flocks of people including first-time buyers were launching into homeownership. It turned out that buying was the worst decision and one that cost many of them dearly. An unfortunate number had their home foreclosed and went bankrupt. Was it fear of missing out that drove this decision?

You can certainly use a buy vs rent calculator to calculate the numbers short term and long term. Yet it's the macroeconomic uncertainty that might be the issue.

It's a volatile time where employment, business success, and survival are uncertain. However, lots of first-time home buyers continue to weigh the buy vs rent numbers, in the hope of perhaps buying a house.

Should We Continue Renting?

The answer for that question is increasingly Yes.

Economists are concerned about inflation. The US money supply has grown so much that experts are saying liquidity is sloshing around in the markets like a bath tub. And housing is in short supply, and there's little to suggest that housing supply in the major cities will improve. Without houses to buy, people will return to apartments to rent.

We're not out of the Covid pandemic yet and despite the optimism, there are real risks to the economy, investment and employment. Recent employment trends are causing anxieties. Small business owners must be very smart this spring to avoid bankruptcy.

Our economy will improve but it may be walking a tightrope. It's in these vulnerable times that something could happen. And many mortgage holders are on their last legs and may not be able to pay back overdue mortgage payments. When the mortgage/eviction moratoriums end, many will get caught with insufficient funds to pay their payments.

It's vulnerability like this that makes renting a wiser choice.

Major Factors to consider?

does the economy and housing market resemble the 2006 bubble?

will I lose my job?

will I need to move and relocate?

how long do I want to stay where I'll live?

how high will house prices rise in the next few years?

how high will house rental prices rise?

will mortgage rates rise?

how much are the hidden homeownership extra costs?

what will the future tax write-offs look like?

will your landlord be selling and requiring you to leave your rental in 2021?

Demand is so intense, home prices are rising fast and it's pushing rent prices up as well. Prices likely won't get cheaper. Real estate prices rarely retreat.

New Buy Vs Rent Factors

There are additional buy vs rent home factors that have changed in the last year.

Homebuyers like yourself may face additional taxes, rising prices due to lower supply, job losses, shrinking US GDP, increasing development regulations reducing supply, rising cost of living and inflation-related challenges along with higher mortgage qualification rules.

Renting Still More Affordable for Most

For those with high financial resources, buying is better than renting. Yet for those building toward a purchase renting does seem more sensible.

While house prices are rocketing, in general, rents aren't. This should allow renters to save more money in 2021/2022 to allow them to afford a better home in 2023. Construction starts will grow post-pandemic and prices should moderate.

Wealthy People Choosing to Rent

Yet here's the thing. The number of high-income earners who are renting is growing strongly. How strange it is that people with lots of money are deciding to rent vs buy.

RentCafe reported that in Seattle, WA, renter-occupied households earning over $150K per year multiplied 7.4 times and the number of Charlotte NC high-income households living in rentals has grown by 400%.

It's uncertain as to why so many wealthier people are renting. It could be mobility, travel, or that home prices are ridiculously overvalued.

Another trend of people moving out of the city, and even into other states are pushing up house prices in places as Utah, Oregon, Arizona, North Carolina, and Texas. Even California house prices were rising as supply shrank. And in the UK, buyers are weighing these buy vs let factors too.

The challenge for house buyers is avoiding being overleveraged (living house poor) and deciding to move far away to acquire their dream home. Remember 2007.

Could Buying to Rent Tip the Scales for You?

Many renters desire to own their own home, build equity, and enjoy more security. Those are big incentives. Some very smart buyers look at this from an investment standpoint. They're intending to buy to rent out a portion of the house. That's how many successful landlords start out. Of course, that home may have to be larger than they'd originally planned, which raises purchase costs, ongoing maintenance costs, and a higher down payment.

Enthused with the success of their first rental, they realize investment rental properties are a legitimate way to make a lot of money. But that's another matter.

Buying a house and renting out an apartment solves their dream and helps them fund it.

Earning rental income makes your buying position much more favorable. You'll want to review the best types of property to buy, which cities are best ( California cities too), and use a thorough system (multiple sources) to find a house to buy.

The Rental Market in 2021

The year 2021 will bring more changes to the rental markets. And rent prices will likely climb, especially for townhouses and single-family homes. The dream of having one's own home, building equity, and enjoying stability is alluring.

Yet a number of factors can make buying a house a risky option. Job insecurity, lack of ideal home listings, high down payment, high home prices, and stringent mortgage qualifications will make buying a difficult choice, even for those wanting to rent out the basement.

Future job loss and unemployment periods raise the specter of losing your investment entirely. It happened in 2008/2009.

As the Corona Virus threat eases and employment rises in 2021, it will support both apartment rentals and home buying. Rental prices will rise because new construction is falling far short of the 4.6 million units needed each year.

What's Up for Home Buyers in 2021?

long term fixed mortgage rates are falling further

home prices are stable

listings are falling to record lows

home prices are still outrageously high

rent prices aren't going down

economy is in tatters and may not recover this year

wage demands could fall considerably

employment rates are at historic levels

more new construction units becoming available but not enough to satisfy demand

construction slowing of late

more people have saved the down payment putting price pressures up

When the Economy Comes Back

Take this example below, for a small 2 bedroom home in San Francisco, San Jose, Toronto, Seattle, Vancouver, or San Diego:

Rental Investment Calculation

Price: $600,000
Mortgage: $500,000
Down payment: $100,000
Mortgage Rate Rising: 3.5%
Mortgage Payment: $3,028
Tax Write offs: Varies according state or province

Keep in mind, most buyers do not pay 10% to 20% downpayment.

Equity For Owners after 25 Years: $900,000, plus tax benefits + rental income + collateral for further property investing.

Equity for Renters: $432,000 spent for zero equity after 25 years.

Over the long term, buying easily wins if the buyer is solidly employed, withstands recessions, and rents out a portion of their home to create consistent monthly revenue, while enjoying further tax breaks. Buying to rent is a clear winner.

Buying rental property for growing income create even greater value. In fact, this is how most millionaires make their fortune. Choose the best cities for buying a rental property and you're on track.

Lifestyle Renters are a Big Target Market

For the non-financial aspects, renting may offer better results. Those who need to be mobile for work, or who can't really afford an expensive home, will be better off renting.

Many of the new rental buildings offer extensive services and lifestyle benefits. Retiring Baby boomers are renting in the Chicago rental market, Miami market, Phoenix market and Las Vegas market to savor lifestyle benefits.

Working Millennials, after making their rent vs buy calculations are seeing the benefits of co-living and apartments in key neighborhoods in these cities. For California, the prospects for buying are unfortunately slim.

Whether for retirement lifestyle benefits or career benefits, many multifamily developments are catering to these groups. Read more about the new developments in Chicago and Denver.

If you're one of the many who are migrating to a new city, and have limited down payment funds, Austin, Oakland, Denver, Honolulu, Tampa, Miami, Dallas, or Charlotte, might offer better rental markets.

The US is Still a Renter Nation

The rental property market is strong because investors are buying properties to rent out. Some call them speculators, but they can and do buy properties and those properties aren't for sale. This is why there's been such a boom in the property management business.

They get the income earnings benefit, capital gains later, along with tax benefits. That's dried up housing availability and raised home prices.

It's not an inviting scenario for hopeful home buyers with simple wishes. That's lead to America becoming a renter nation.

Does Buying Really Deliver Value?

There are many with an unshakable belief that a home is also a retirement savings asset, while others suggest that you can't eat a house when you're 65. Many seniors today can't sell because there's nowhere to go. In Toronto, Vancouver, or in most cities in California, buying may never make good financial sense.

Compare the Key Benefits of Buying vs Renting

The Benefits of Renting a Home or Apartment

creates long term wealth accumulation

tax advantages

rental investment income possibility

greater feeling of security and stability

interest rates are low currently

it may be cheaper to buy than pay high monthly rental rates

if you divorce your spouse, it could create severe losses

there is a housing crisis and big demand for any home or apartment should push prices higher

real estate as an asset has performed better than any other asset type in the last 30 years (if you consider tax write-offs, price appreciation, and rental income, it outperforms by far)

However, we're still asking if buying a house right now in 2021 is wise or does renting a condo or apartment make more sense?

Other Considerations before deciding on buying or renting:

no downpayment stress

no worry about mortgage commitments

no high cost of house and property maintenance

no worry of buying a money pit

no worry of mechanical breakdown

freedom to travel and move

many buildings and condo complexes have fitness centers and swimming pools

no worry of real estate market collapse

unemployment doesn't mean you could lose your investment

Buy vs Rent Cost Calculator

To get a better view of your buying vs rent decision, try out the rent vs buy calculator from the NY Times. This widget still requires your input on forecasting a few things, yet it might help clarify the pluses and minuses for you.

whether this is the right time to buy for you personally and emotionally - do you really want to be tied down to a house and property with all the stress and responsibilities?

will you be marrying and raising a family? - can you raise children well in a high rise condo or a downscale neighborhood where you can afford to buy?

how much house can you can afford, or can you really afford it all? - purchase and rent prices are so high in cities such as San Francisco, New York, Miami, Dallas, Austin, San Antonio, Denver, Seattle, San Jose and Los Angeles for instance, it may take all your income to pay for the cheapest unit.

how high will mortgage rates will climb - can you pay your payments if they rise by 70%?

how much other debt do you have? - do you have student loans and credit card debt to add to your mortgage payments?

alternative investments - what else could you invest in right now with your down payment (bitcoin, startups, gold, stocks)?

should you buy to rent out yourself? - rents are rising fast with very low vacancy rates ensuring a positive cash flow if you should rent out a portion of your house. This is a smart opportunity.

Additional Buy vs Rent Calculators:

Rent vs Buy Cautionary Points:

Good luck with your buy vs rent decision. Most renters will choose to continue to rent an apartment this year. Buying has its benefits when interest rates are so low. And if you've thought it through and are confident about your choice, feel good about what you're doing. Being positive is a must for anyone.

Please read our new State of Property Management report, and learn more about what property managers are doing to improve their businesses.

1. Don't buy because you think it's an investment, unless you plan to rent it out.

2. Don't buy because that's what your friends are doing.

3. Don't pay the going asking price because the seller thinks it's worth that much. Consider why they're so eager to sell right now.

4. If you buy right now, you're paying a speculation price. If you do buy, only buy at an affordable price for a home, condo or apartment.

5. The only exception to this would be to buy an investment rental property. When your property earns big income from hungry renters with few rental options, it's a good investment for the next 5 years. If you have to sell it, you'll likely see a positive ROI.

Learn more about the current state of the rental market.

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Rent vs Buy 2021 | Renting Vs Buying a House Rent vs Buy Calculator | ManageCasa

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Buy vs Rent? As 2021 approaches fast, lots of first time home buyers are still calculating the buy vs rent numbers. You can see the buy vs rent calculator cited below. Mortgage rates are low, and people want more room to live and to be able to work at home.