Is it really so bad to get a condo instead of a townhouse if you have a set budget?

[k_ann]

@anthony16 This assumes you never lose your job. Paying rent is permanent and always goes up.

Buying a house or condo ends eventually and all your left with is maintenance and property tax. Much easier to stomach than say a sudden job loss and you cant find an equivalent paying job.

You are also forgetting about long term care. Once your old and require help, you can sell the house or rent it to help offset huge retirement care costs

 

[anthony16]

@k_ann I don’t think you understand the point. Losing your job is equally threatening to homeowners as it is to renters. Moreover, if your ownership costs are more than your rent, you most definitely are going struggle A LOT more keeping up with your monthly mortgage payments.

Most mortgages last long enough that you’re pretty much done with your career by the time you own the house, so it’s inconsequential that at some point you won’t have to pay interest.

Matter of fact, by investing what you save by renting, your money will be exponentially more valuable in your younger years than it would be when you’re older. Through compounding, you will always, unequivocally, come out ahead by renting. Do the math, it’s not rocket science.

And as your retirement portfolio will be substantially larger than your home equity (in this case), you won’t need a house to sell when you’re old. And besides, what is the point of spending your whole life paying for an overpriced house when you’re gonna sell it when it matters most? It’s completely backwards.

 

[k_ann]

@anthony16 I have family members that have been renovicted. How much money do you think the average Canadian has to invest? One went from 1900 a month in rent to 3200 just because the landlord could. Had to move back in with my parents who own a home in full.

 

[huntbchsocal]

@anthony16 Look at the average difference in net worth between homeowners and renters.

 

[anthony16]

@huntbchsocal That’s a straw man. You don’t need a study to prove basic math. A larger portion of your income invested in faster appreciating assets always results in a higher net worth in the end.

The reason why most renters have lower NW than homeowners is because people are terrible at saving and investing. When you HAVE to pay your mortgage every month or risk losing your home, it’s easy to be disciplined.

 

[lessme]

@huntbchsocal That's because the comparison is flawed: comparing between those who can afford a home to those who can't (and forced to rent). A proper comparison would be to those who CAN afford a home but choose to rent and invest the difference.

 

[juco]

@torah1st2019 not really, renters can invest money saved from not owning into an all-equity fund which appreciates at 7% per year after inflation. more than what the real estate market makes some years

 

[torah1st2019]

@juco In your best year you might take 7, but things like market performance in 2022 and 2008 happen too.
Plus you have stabilized prices, something you can update and never worry about renovictions or other fun things landlords do to stress you out.

 

[laura_10]

@torah1st2019 7% is the average not best year lol. Best years you will make way more than that.

 

[juco]

@torah1st2019 no, 7% is a conservative (!) post-inflation estimate of the average annualized rate of return over an equivalent mortgage amortization period (20-30 years). in your best year you might see closer to 30%, not 7.

 

[fby]

@lovelycamillia So sell and rent.

 

[lovelycamillia]

@fby We bought for non-financial reasons, like stability for our 2 school aged kids, and it’s not a burden as we can afford it. But the idea that renting is throwing money away, and that owning does not include non-recoverable costs as well, is still false.

 

[fby]

@lovelycamillia So the fact that you have a house at the end of mortgage vs no house ever if you rent just doesn't matter?

And don't tell me renters can save so much more and invest, because that's clearly not the majority of Canadians or we wouldn't be in the predicament with debt.

You bought within your means and you can afford the cost. What is the comment for? Garnering sympathy? Discouraging people from buying? Just general moaning?

 

[lovelycamillia]

@fby The specifics of my situation don’t matter. The premise that renting is “throwing away money” and that homeownership doesn’t involve exactly that, is faulty and leads people to buying when they can’t really afford it. But it makes no difference to me whether people do so or not.

 

[theodoric1970]

@lovelycamillia Unless someone pays cash for a house (which I realize is not usually a thing).

 

[mainechild]

@fby Exactly. Even if we never put extra payments on our mortgage, it'll be paid off by the time we're 54. That is very reassuring to me knowing our expenses will be lowered that much. And if we wanted to sell and downsize, that's a lot of cash to work with

 

[emperorsolo]

@romanticcode You know what else disappears into a hole?

Mortgage interest, strata, insurance, property tax, etc.

 

[shedar]

@emperorsolo Strata pays for work being done, insurance is to cover your ass, property tax is to the city services you use. Mortgage interest well. Shit your borrowed money.

*Renters have all those costs built into their rent payment so the landlord can stay cash flow positive. *

 

[xmountainx]

@romanticcode Rent doesn’t disappear into a hole you’re paying for a place to live. The interest you’re paying on a mortgage disappears into a hole. You’re planning to stay there 5-6 years where you’ll pay the most interest (approx $140k) and only $70k equity on a $500k mortgage. Not to mention all the other costs that come with home ownership and not renting (property tax, transfer tax, strata, closing, maintenance, etc)

Buying a home is expensive and makes way more sense when you amortize that over 10+ years. If you were to stay there for 5-6 years, you’d need your home to appreciate by $210k just to break even on interest alone and don’t forget you gotta pay a 6% realtor fee when you sell ($42k if you sell 6 years later at $700k). So add that to your break even price on top of all those other home ownership costs and you’re in the hole on this purchase. Now what many is being sent into a hole?

It’s a good idea to run the numbers and lay out all your costs for both renting and owning over 6 years (hint: it’s cheaper to rent, and it’s often more profitable if ur investing the extra that you would be paying to own).

Living in Nanaimo isn’t bad if you don’t go to the city that often anyways. Take the things that you do often in the city and see if you can find replacements in Nanaimo, then ask yourself how often you need to go to things that are only in the city. I have several friends who moved to the island and commute to van because it’s THAT much cheaper. But only you know what’s important to you. For me, I would need to be making $70k MORE to maintain my current lifestyle by moving to van from the island. But that’s just my lifestyle

 

[juliia]

@xmountainx

Rent doesn’t disappear into a hole you’re paying for a place to live.

"Stop eating all that food! It's just disappearing into a hole!"