Myles of Investments

Read about my successes and failures. Learn from my experiences and gain insight without losing any cash!!!

Lesson: Catching a Falling Knife
Lesson: Currency Exchange
Lesson: Mutual Fund
Lesson: Paid to Wait
Lesson: Pricing in a Downturn

This is where you’ll find find my Blog. I will comment on the latest news relating to investing, real estate, and the financial markets.

Own or Rent?

There are many people on either side of the debate of whether to own or rent, and there is an easy way for you to figure out which way to go, just perform a simple comparison. The own or rent comparison is simple and is based on an analysis of cashflow, and requires just a bit of research. To start, look into buying real estate that you know you can afford and would qualify for a mortgage for. To do this, go to a bank and get a pre-approval. This will tell you the amount of a mortgage that you will qualify for. Remember, you should still calculate whether you can afford the monthly payment, just because the bank qualifies you, does not mean you should use the maximum allowable mortgage. Next, meet up with a real estate agent and look through areas that interest you, and properties that you can afford. The last step is to get your total cost of owning per month: total the mortgage payment, property tax, and utility bills, and you get your cost of owning total.

Be sure to take note of your criteria (i.e. Two bedrooms, or in-suite laundry, or city centre location etc.) that way you are comparing apples to apples, when you decide to either own or rent. Now, go through the local paper in your desired area, and view rental units that meet the same criteria you chose for owning.

Next, compare the total cost of owning, with the total cost of renting. If you can own a property that meets your criteria, and it is about the same or better than the rental, don’t rent, buy! You just figured out that you could own for about the same as renting, and build net worth, to eventually own the property outright. Now you can feel confident in the fact that you used research, and not feelings and emotions to decide whether to own or rent.

My wife and I used this process in our own lives, when we were transferred across the country to a new city. We had decided to keep our old home, and wondered whether to own or rent in the new city. We thought that we couldn’t afford to buy another home, but when we did the comparison, we found it was actually much less expensive for us to buy rather than rent! We knew we would be crazy to pay high rents when we could own another property. We left that new city two years later, and our property had doubled in value, giving us the ability to pay back debt and improve our life. If you can scrape together even a small down payment, and you choose a home within your means, you can find the same opportunity in your area, so go take action and get to the bank for the first step!