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Which is better, renting an apartment or buying a condo?Renting an Apartment vs. Buying a condo, Which side are you on? This question has been going around for as long as I could remember. Some people are still renting their homes when their income qualifies them to actually buy a condo. Some were way in over their heads that they bought a condo only to default in their monthly payments ending up renting again. There are actually negative and positive sides to both, let us enumerate each: Your age: Say you just graduated from college. You are on your way to build your investment nest. You found a good job within the metropolis and things are going as planned. Would you rent or buy? As young professionals, we tend to skip from job to job, business to business, location to location for we are in the process of actually finding what works when it comes to work. In this sense, renting would be better because it gives you the flexibility to transfer to where you want to be. It would be hard if you bought your home and then you got transferred to another location that is miles and miles away, you end up spending more because of transportation costs. Your finances: As of the moment you may not have much and paying all those monthly amortizations, maintenance and taxes. Do not be disheartened for you will be able to buy your home soon but as of the moment it would be logical to give a one time payment of rent rather than paying all those incidentals of property ownership. Your length of stay: Again, it would be best to rent if you have no plans of staying in your desired location for long. A property does not completely sell itself immediately when you want to transfer. If you have plans of staying for just five or less years, it’s suggested that you rent rather than buy. As time goes by, it will be actually better if you just bought a home considering the expenses that you will have. We will do the math later in this post. The sad part about renting: Depending on your agreement with your landlord, rent increases every year at around 3 to 10% a year depending on the economy. Be aware of it and weigh your options well. In renting you’re actually paying your landlord’s monthly amortization while they build up their investments, they are building their equity each time you hand over your monthly payments. In essence your landlord is getting richer and you’re not. If you’re an out-of-the-box person, renting may not be such a great idea since you do not actually own the place you are renting, you will have restrictions in the usage of the property; you cannot repaint the house to the colour that you want, you cannot just take a down a wall to build a passageway or do whatever you wish with the property simply because it’s not yours. Your mortgage: Property Appreciation: Ideally, property value increase overtime. Do not expect it to go up each and every time because we cannot actually say the turn of events in politics, economy or even the climate. But usually, property values will always increase and it will weigh out the potential decrease. So, if you actually own a property and the value increased overtime then you will end up with a property that has more value than the day you bought it. If you have plans of selling, you will actually profit simply because you have time on your side. Tax incentives: Good news for Canadian homeowners, the Canadian government offers a $750 non-refundable home buyer tax credit. They also offer an up to $3,500 tax rebate on Provincial Land Transfer Tax for first time homebuyers. Lastly, they also offer a Home Buyers Plan that allows you to withdraw up to $25,000 payable in a maximum term of 15 years. Now for the math: Homeprice: $110 000 Down payment set at 20% Buying, Year 1 Renting Year 1 want to compute for yourself? click on this link. http://www.nytimes.com/interactive/business/buy-rent-calculator.html Recently Posted Articles |