# Rent or buy? with a twist



## Catweazle2013 (Apr 16, 2013)

Rent or buy? I'm sure this has been discussed to death.

I'm brand new to Canada, have a good job and I'm living in a basement. Just released $300k in equity from a house sale overseas. Using this as a down payment would mean the cost of owning would be way less than renting an equivalent property. But what happens when the real estate market takes a turn for the worse? I'd lose (a big chunk of) the equity...

What would *you* do ?


----------



## rikk (May 28, 2012)

Well, I would not live in a basement ... most likely I would put 20% down (minimize my equity) on a property designed such that I could bring in a few boarders the goal being to get my expenses as close to zero as possible. The rest of that $300k, I'd spend wisely on women and beer.


----------



## andrewf (Mar 1, 2010)

Your risk is the same whether you have a large down payment or small.


----------



## kcowan (Jul 1, 2010)

It comes down to what you think the cost of waiting will be. There is little question that the costs of ownership are higher than the costs of renting if capital appreciation is zero or negative. But it is important to compare ownership to renting a nice place and not a cheap place. Also there is job and personal stability to consider.


----------



## Four Pillars (Apr 5, 2009)

kcowan said:


> But it is important to compare ownership to renting a nice place and not a cheap place.


Exactly. You don't need to rent a basement.


----------



## Sprucegum (Dec 12, 2012)

Are you handy with tools?

Find a house that's under-valued and fix it up.


----------



## Hawkdog (Oct 26, 2012)

Buy this house on Haida Gwaii -retire- then buy a fishing rod!! 
http://realestate.haidagwaiitrader.com/open-to-offers-solidly-built-waterfront-view-home/

Its tough to say what the real estate market is going to do, be patient. If you find a place you like, low ball 25% !


----------



## Cal (Jun 17, 2009)

Catweazle - what is your family situation, married, single, kids, in an urban area or rural. IMO these would make a difference to me if I were to decide to buy or rent.


----------



## none (Jan 15, 2013)

andrewf said:


> Your risk is the same whether you have a large down payment or small.


I disagree with this but it's quibbling over the potential for a few thousand dollars and not really worth discussing in the grand scheme of things.

Do a full cost analysis of rent vs buy. I wouldn't buy a house in Canada with a 2% interest rate. No thanks _ i'd rather lose all my cash in small oil and gas companies with ridiculous dividends thank you very much.


----------



## Greenback (Mar 16, 2013)

If you lived in Winnipeg you could buy a 2br bungalow for less than $150K.
And live rent free with $150K left over to invest, maybe in another similar property that you can rent out for income.


----------



## lonewolf (Jun 12, 2012)

Your brand new to Canada, I would not consider buying property untill your certain you will want to live there for @ least 5yrs. (to much money lost in HST & commision) 

Does Alberta have any sales tax or HST on homes ? 

If you had to borrow the money it would be about 10 yrs of being certain of living in the house because of money lost in interest paid to the bank (use a credit union instead of bank )along with the HST & commision.


----------



## Catweazle2013 (Apr 16, 2013)

Cal said:


> Catweazle - what is your family situation, married, single, kids, in an urban area or rural. IMO these would make a difference to me if I were to decide to buy or rent.


Mississauga, which is expensive !! $300k buys almost nothing here. Married with no kids, but a baby on the way !


----------



## meddlesomemarmots (Feb 16, 2011)

I'm with lonewolf.

Get a handle for where you are living, and the surrounding areas first. Maybe move a couple of times over the next couple of years, and see how you like different local cities/neighbourhoods. I don't think you'll have a ton of renters remorse regarding property prices in a couple of years (generally speaking - we're not sure where you are).


----------



## chloev (Nov 26, 2012)

If you are thinking about purchasing a home in Canada, I would suggest you choose the location wisely. For example, cities like Vancouver and Toronto are not ideal places to buy now. If I were you, I would invest that money in booming cities like Calgary or Edmonton and a year from now, you will be able to sell it and gain some capital. If you have $300k in equity, you can afford to buy and hold a property, which means the risk is lower for you as a real estate investor. What I have been doing recently was I bought an income property in a town outside of Edmonton but still within the Edmonton region and rental in receive covers everything: management fees, mortgage and taxes...etc. I don't even need to worry about tenants and looking for one because the company I bought my unit through takes care of that. Having all these expenses paid for by rent allow me to rent somwhere else. 2-3 years from now I will be able to sell my condo and buy a better one with my gain!


----------



## none (Jan 15, 2013)

Here in an article in the globe today. Unfortunately the linked spreadsheet omits the opportunity cost of money in the house and therefore paints a biased rosy picture of home ownership.

Still, renting (of course) comes out the winner (assuming no home appreciation of course).

http://www.theglobeandmail.com/glob...-real-cost-of-home-ownership/article11668113/


----------

