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Should You Rent or Own?

To rent or to own? It’s a constant debate among those looking to make a change in their living arrangements. Whether you’re someone moving out for the first time or someone who has rented for years, making the leap to home ownership is a big deal.

The main barrier to entry for those thinking of owning their own home is the upfront cost. The down payment, closing costs and taxes can seem daunting, and result in a potential buyer deciding that purchasing a home isn’t going to make enough of a price difference for them. That’s why we’ve broken down how much you can save over time, by comparing and contrasting similar homes in Winnipeg’s St James.

COST COMPARISONS

1. APARTMENT, 2 BEDROOM, 1 BATHROOM, 959 SF

Open concept living/dining room, master bedroom with small walk-in closet, good sized balcony.

Upfront Cost
$1000 security deposit

Monthly Cost
$1350 monthly rent (with possible yearly increases)
$20 insurance
$50 storage locker
$40 parking spot
$1,460 Total 

Yearly Cost
$17,520 Total

Total Cost After 5 Years
$87,600 Total

2. APARTMENT STYLE CONDO, $125K 2 BEDROOM, 1 BATHROOM, 880 SF

Open concept living/dining room, master bedroom with small walk-in closet, good sized balcony.

Upfront Cost
$8,750 – $9,375 (5% minimum down payment plus closing costs

Monthly Cost
$522.96 monthly mortgage, $465.11 condo fees
Water included
$80 hydro
$40 insurance
$150.48 taxes
$1,258.55 Total 

Yearly Cost
$15,102.60 Total

Total Cost After 5 Years
$75,513 Total

Resell Value After 5 Years
$132,000

3. HOUSE, $200K 2 BEDROOM, 1 BATHROOM, 957 SF

Front porch, good sized kitchen, open concept floor plan, back deck and fenced in yard, plus a large unfinished basement not included in square footage.

Upfront Cost
$14,000–$15,000 (5% minimum down payment plus closing costs)

Monthly Cost
$836.74 monthly mortgage
$50 water
$80 hydro
$195.03 taxes
$90 insurance
$1,251.77 Total 

Yearly Cost
$15,021.24 Total

Total Cost After 5 Years
$75,106.20 Total

Resell Value After 5 Years
$230,000
As you can see, the upfront costs can be much higher when purchasing a home, but you are paying less on a monthly basis, while building equity for your future. 

Note: Resale value stats were an average of 5E, 5F, 5G, 5H sold. YTD totals Dec. 2015 compared to Dec. 2020. All numbers are estimates but deemed to be correct.

LIFESTYLE COMPARISONS

There’s more to consider than just cold hard cash. This is going to be your home, and where you live significantly affects your daily life, big picture plans, and overall happiness. Let’s take a look at the pros and cons of living in each home specified above.

1. APARTMENT, 2 BEDROOM, 1 BATHROOM, 959 SF

Living in an apartment, you will be subject to the rules of the landlord and property manager. This particular building does not allow pets, vaping/smoking, and loud music after 11pm. You will also not have any freedom to customize your place with changes such as painting or minor renovations, so if you’ve been wanting to try your hand at trendy home DIYs, they will have to remain on your Pinterest board a little longer.

This building also only allows for one parking spot per suite, so if you are planning on sharing this space with a roommate or partner, one of you will have to find street parking.

As for laundry, there is a laundry room in the basement of the building, not in the suite itself.

Now, these drawbacks may not be dealbreakers for you. You may be attracted to the kind of freedom apartment living will bring. With only a yearly lease and sublet opportunities, you don’t have to commit to a neighbourhood, building, or even city for the long term. If your life plans are currently in a state of flux, with a career or family change on the horizon, it can make sense not to put down roots with a house or condo.

2. APARTMENT STYLE CONDO, $125K 2 BEDROOM, 1 BATHROOM, 880 SF

A condo will offer you much more freedom than an apartment, but there are still some limitations. You still won’t be able to smoke or vape at will, but you can have a cat or small dog with their pet policy, which allows animals up to 18”. The Great Dane or St Bernard puppy will still remain a dream for the future! As for customizations and renovations, you will need to petition the condo board for approval before going forward with your plans. Paint and minor renovations will be approved, but don’t count on getting the green light for any major overhauls.

One outdoor parking spot is included, and there is coin operated laundry in the building (not in suite).

Many people see condos as a good balance between renting and purchasing a house, and that is certainly true. You still have some restrictions on your freedoms, and have to deal with everything that comes of sharing walls, parking lots, and laundry machines with strangers, but it does allow you to start building equity with a less steep up front cost. Keep in mind, though, that condos will not have the resale value a house will. This is partly due to the general market demand for condos, and partly due to the fact that you won’t be able to make the structural upgrades that increase house prices.

3. HOUSE, $200K 2 BEDROOM, 1 BATHROOM, 957 SF

When living in your own house, you have ultimate freedom to set your own rules. Want to convert the second bedroom into a walk-in closet? Go ahead. Want to put a bathroom in the basement? Great idea! Want to adopt an entire sled dog team? Your house, your choice! Of course, this freedom also means that you are responsible for all repairs and maintenance that may arise.

However, much of the money you put into the house will eventually be seen as added value when it comes to selling.

Laundry is right downstairs, and this house has a single garage and driveway, allowing for ample parking space for residents and guests.

NEXT STEPS

Did this make you rethink renting? Good! Nobody likes to waste money.

The initial costs of owning a home are where a lot of people struggle and that’s normal. It’s not always easy to save up, just know that it is possible. Setting a budget is not meant to restrict you and your living situations, it will allow for more freedom and help you reach your goals. Set a goal that’s right for you.

Considering a condo or starter home? Let’s chat! Even if this isn’t in the cards for you for another couple of years, I can help you figure out your home-ownership goals and guide you down the right path! Call or text Sam at 204-930-7930. 

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