Once in a while someone who has only ever rented will ask me roughly what their place would cost to buy and they are wondering if they can afford to get out of the situation of paying a bill every month that they have nothing to show for the following month. (I talk about that in detail a fair bit in my post called “When Should I buy my First Home?“)
The short answer is that once you get your financials debts, income, credit rating and down payment the monthly cost is roughly similar in most cases. I have long since noticed a connection between the costs of owning a given Property and what it would cost to rent it on a monthly basis. Like so many other aspects that drive people to choose option A over option B, there is an self regulating balance in markets that I believe naturally makes owning versus renting a given property similar in terms of month to month costs. At least, on the surface.
Like most things the comparison starts to break down a little once you get into the details. First off, not everyone can qualify for the mortgage due to current income, debt or credit. They would also need to have that down payment. That’s the financial hump one needs to get over in order to get their foot in the door of home ownership. Once that hurdle is accomplished things have a way of going downhill difficulty wise providing there is a balance of financial stability, planning and home maintenance. What one owes the bank goes down over time and regardless of what the market is doing at the moment, the property is expected to increase in value long term.
If you were to rent that property long term, you would of course not have to worry about maintaining it and you would be in a position to pick up and leave with less hassle but you would also have nothing to show for it each month and unless you have lucked out and gotten an amazing landlord and are an amazing tenant yourself, that property is going to become less attractive over time in terms of condition and looks. You wouldn’t be able to call the shots on what gets repaired and altered in the property or how it is done. Generally speaking, landlords are not going to be paying to make the place shiny for you because you’ll probably be gone before too long and there is no telling whether you (or the next tenants) care enough to not wreck it. Most landlords believe it’s unlikely that anything more than a basic fix is going to mean more money in their pocket long term. But that’s not even the major point. The major point is that in the long term you are shelling out more for use of the property than it is costing the landlords to own and maintain it. That’s the whole point of being a landlord and providing they have the patience and foresight to manage a rental properly they will make more and more income off of it as the years grow on.
This post first appeared on Move To Nanaimo | Buy And Sell Realestate On Vanco, please read the originial post: here