Rent vs Buy

Rent vs Buy

I hear this all the time and don’t understand the question. 

The question is asking is it better to buy then to rent. The reason I don’t understand the question is that for every person their situation is different and this will provide a different answer to this question. The question should not be answered by numbers first, it should be looked at after you have decided where you are going to live. 

For tenants trying to decide if they are going to buy instead of rent is not the question that needs to be asked. The first question is where do I want to live and how long am I going to live there. If you anticipate moving in the next five years the answer is rent, irrelevant to what the numbers say. 

How does this translate to landlords? It is the same question. If you are looking to buy a rental property. The question is how long are you prepared to hold the rental property. If you are not prepared to hold the rental property for five years, you should not buy an investment property. If a person who wants to own a property to live in and they are planning to move in the next five years they will be hit with many transactional fees during the buy and sell process and they won’t make any money, the same happens with an investment property.  

This is true with rental or investment properties as well. I speak to many potential clients who have bought a condo and say we are going to rent it for one or two years and then sell it.  

I advise them you will not find it profitable to do that. In fact some who have rented for one year have come back and said it is not as profitable as they thought. Investment in real estate is a business and with any business it takes time to grow and make a profit. The real profit in investment real estate is in the length of time you hold the property, no different than any other investment.  

Landlords often fail to consider all the expenses related to owning a rental property. There will always be repairs needed at the property, tenants may fail to pay rent and cost for owning the property including strata fees, mortgages and property taxes may change. 

When you factor all of these issues you can make an informed decision, to buy the rental investment property?  

Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com