Renting vs. Buying and Looking at the Numbers

Posted by Gurpreet Ghatehora on Saturday, May 31st, 2014 at 10:27am.

Renting is common and certainly the most convenient way to get a roof over your head when you are first starting out. Everyone has rented a property at one point or another, either as a student, newlywed or bachelor. Renting is quick and easy and doesn’t involve the financial or legal commitment that comes with home buying, however, the renting vs. buying debate isn’t much of a debate when you consider all the facts.
In the Beginning
Initially home ownership may seem like a pipe dream because saving up a down payment can be hard and requires a lot of discipline (not to mention excess funds). But if you can stash away a little bit of money each month you will be successful. It may take you years to achieve your goal but its worth it in every way. Renting vs. buying is a no-brainer once you do the math.
The Math
When you run the numbers, renting is way more expensive than buying. Although you have to save up that initial lump sum to purchase a property, once you do your month payments are typically MUCH lower than the comparative rent you would pay on the same property. Depending on the market you live in, you could see huge mark-ups. In hot market such as Edmonton, Calgary and most places in British Columbia, a property that only costs $800 per month in a mortgage, is often rented out for $1200 or more per month. When you consider renting vs. buying from this perspective, it gives you a whole new appreciation for financial self-control, and saving up for that down payment.
At the end of the day buying just isn’t practical for everyone. If you move around a lot for work or are juggling multiple financial obligations such as children, loans, and/or spousal support payments, setting anything aside for a home seems impossible. Keep in mind, however, that you will be saving money in the long run and forking out less money month per month if you do buy. Renting vs. buying is a no-contest argument, so if you can manage to buy, now or later, do it!

Leave a Comment