Buy vs Rent: Which is better for you?

To buy or to rent?

This is one of the most hotly debated questions in any city, but especially here in Vancouver.  Buying is often a trade-off between your money and your lifestyle. So what are the pros and the cons of renting versus buying?

Why Rent?

1.  Live where you want – When you find a neighbourhood you love, you can probably afford to live there as a renter.  And if you’re new in town, renting is an awesome way to check out the neighbourhood.
2.  Stay flexible – If your job demands that you travel a lot, it makes sense not to be tied down by a mortgage.  Renting is also far more cost-effective than living in a hotel.
3.  Maintenance? Not my problem – When you’re a tenant and something breaks, your landlord will have to fix it.  No costs to you.
4.  Avoid the extra costs of buying – Buying a home involves a host of extra expenses that add thousands of dollars onto the purchase. That is beside the costs if you have a leaky roof, or the furnace breaks, or …..
5.  Know what you’ll pay – You have the stability of knowing exactly what your monthly outlay will be.  In BC, 2014 rent increases are limited to 2.2% by law.
6.  Invest the difference – Many home owners are stretched and have no room for savings. Smart renters invest the money they save by renting and make sure their RRSP and TFSA savings are at the maximum so they take full advantage of tax refunds.

Why own?

1.  Enjoy the fact it’s all yours – About 70% of Canadians want to buy a home.  Pride of ownership, the ability to decorate how you like and the stability of knowing no landlord can force you to move.
2.  Put your money to work – Renting means every dollar of your monthly payment is gone for good.  When you own, a portion of each month’s mortgage payment goes to reducing your principal amount.
3.  Benefit from competition for you dollar – Developers are offering increasingly innovative incentives for buyers who are considering a brand-new home.  No Strata fees for a year, legal expenses, upgrade packages and many others items have made appearances as no-cost buyer incentives.
4.  Make tax-free profits – Although and RRSP should be part of every retirement plan, you will always need a roof over your head. When you do sell your home, that profit is tax free on your primary residence.

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