Real estate has always been considered a great investment as property value increases over time. However, real estate investments are not just limited to buying. Renting can also be beneficial.
You may be asking yourself whether you should buy or rent a property. Long answer, short: it depends on your wants and needs. In order to help your decision-making process, here are some factors you should consider when deciding between buying and renting.
What are the benefits of buying?
Homeownership is enticing (doing things on your own terms is definitely a plus). Here are some common benefits to buying a home:
- You build equity. Every mortgage is a step to paying off your home and taking you one step closer to owning your own home, which is something renting doesn’t provide you with.
- It offers stability. With a fixed-rate mortgage your payment is more stable as it cannot be increased (when renting, your landlord can increase rent within a legal limit.
- You have privacy. You can do things on your own terms without worrying about building rules.
- It’s generally a safe investment. Homes usually go up in value. Therefore, purchasing something within your budget can reap its financial benefits down the line.
What are the downsides of buying?
- It’s a commitment. If you’re buying a home, it’s likely because you see yourself staying there for a few years. If you see yourself relocating to another neighbourhood or city, buying may not be the best option as selling a home can sometimes be a lengthy process.
- Ongoing maintenance costs. Homeowners have to pay all maintenance and repair expenses, whether it’s replacing the roof once every ten years or fixing a broken pipe, the responsibility is yours.
- Less disposable income. Homeowners take on considerable responsibility and debt, which may prevent them from investing elsewhere and diversifying their portfolio.
- ROI can be slow. Homes do go up in value; however, it takes time. Don’t expect an immediate return on investment.
What are the benefits of renting?
- This isn’t always put into the limelight but renting has perks that are worth considering. Here are some benefits to renting:
- It’s cheaper. In general, rent payments tend to be lower than mortgage payments, and may cover other costs, such as utilities, appliances, parking, and services.
- Little to no maintenance. Landlords cover for a portion, if not the entire price, of any necessary repairs or maintenance.
- Financial freedom. As you’re not tied down to a mortgage, you’ll have the opportunity to diversify your investment portfolio.
What are the downsides of renting?
- You’re not building equity. While renters avoid taking out a mortgage and covering any other additional costs that come with owning a property, you may lose out on building equity. Instead, your monthly rent cheque goes towards paying someone else’s mortgage.
- Instability. In accordance with local laws, the landlord can hike the rent.
It’s all about you
There’s no direct answer. Hopefully these factors allowed you to better evaluate which option is best for you given your circumstances.
At the intersection of Villeray & Little Italy, Le Nuovo offers you the opportunity to live in a high-end building and enjoy practical services and conveniences, without the constraints of co-ownership. A 6-storey building, Le Nuovo includes units of several styles between 700 sq. ft. and 1,500 sq. ft., as well as a pharmacy on the first floor. This 2016 real estate project combines luxury, design, comfort and convenience—the result of meticulous and modern design.