The Advantages of Buying vs. Renting.
Friday Oct 14th, 2022
One question that many people grapple with is whether you should try to purchase a condo unit versus renting it. This article will help you to consider the five advantages of buying versus renting a condo, so that you can make the best decision for your life circumstances.
Advantages of Buying
#1: Building equity
Condominiums are often thought of as starter properties because their price points are typically more affordable than detached homes. A lower purchase price means a lower down payment and a smaller mortgage, as well as lower property tax rates. One caveat is the additional expense of condo maintenance fees, which can vary across condominiums from as low as a few hundred dollars to over a thousand dollars per month. All in all, however, compared to other types of property, a condo is great for first-time buyers to enter the real estate market as homeowners. With every mortgage payment you make, it is helping you build equity in your home. Therefore, if you’re able to stretch to manage the expenses, it may well be worth the investment earlier on, rather than renting and delaying your entry into the real estate market.
Owning your home means you are not at risk of being evicted or the landlord not renewing the lease because of their own personal situation changing. You therefore have greater control and stability over how long you will be living in the property, as well as the freedom to increase or decrease housemates as you wish.
#3: Potential for generating passive income
Depending on your living situation, purchasing a condo instead of renting provides you with the potential to rent a room within your condo to cover part of your expenses. It also provides you with the potential to rent your entire condo and generate passive income in the future if your plan is to move.
#4: Greater flexibility for renovating and improving your home
More often than not, when you are renting your home, you have very limited freedom and flexibility to renovate and improve your space as you would like. You need to get the permission of your landlord, who typically restricts what can be changed. Owning a condo gives you much more flexibility to make improvements that you want for your home. While you will still have to work with your condo’s property management company to make sure you comply with any condo by-
laws, the flexibility afforded to you is much greater. Another benefit is the fact that you can get a return on your investment of renovating come time to sell.
#5: First Time Home Buyer Credit
The First-Time Home Buyer’s Tax Credit is a $5,000 non-refundable tax credit. If you’re buying a home for the first time, claiming the first-time homebuyer credit can land you a total tax rebate of $750. While $750 isn’t a life-changing amount of money, it can make buying your first home a little bit easier. The First-Time Home Buyer’s Tax Credit was first introduced in 2009, and is available to all qualifying Canadian taxpayers.
The benefits of purchasing versus renting will largely depend on your lifestyle, your finances, and where you live. Property Hound can help you when you’re ready to take the next steps, so if you have any questions, don’t hesitate to drop us an email.