These days we all are hearing about \"Why Rent when You can own your own house\" from many real estate agents.
I would like to invite the readers to share their real life experiences with house investments in Canada. Is this really TRUE? I think when one buys a house there are other several expenses related to it over and above the principal and interest payments for the mortgage, which makes it hard to believe that renting and paying mortgage is same.
For example, we can take a ball park number of $200,000.00 investment in a house and how much one really pays every month ( I mean the real payments ) which could include, but not limited to:
a. Principal and Interest
b. Property Tax
c. Water
d. Sewer Charges
e. Waste disposal (garbage)
d. Hydro
f. Average Maintenance
g Condo fee (if applicable)
h Insurance
i. Others not included above.
The above discussion will help new home buyers to think twice before blindly investing based on the saying "Why rent when you can own your own house".

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Sunil Sharma, P.Eng.

I was renting a two bedroom apartment at 975 per month, including parking.

Now compare it with what I am paying

$1050 - Mortgage installment (on 190000 at 4.95% rate)
$175 - Prop Tax
$250 - all utilities
$25 - security
$150 - average maitenance cost
$50 - Prop Insurance

So the total is: 1700.

Out of 1050, there is principal component of $400 per month. We should deduct it from 1700 that comes out as $1300.

Now I am renting my basement at $700 per month, so it comes out as $600

We also need to consider prop appreciation.

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A Proud Indian Canadian

i believe we r talking apples to apples comparison
a. did u not have to pay for downpayment
b. lawyer n other paper work not considering moving expenses
c. how can u deduct principle out of motgage instalment doesnt that money out of yr pocket
d. what about the possibility of your tenant leaving your place and you having to advertise till u get another one and how many times would u hv to do that till u pay off?

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there is nothing greater than an I D E A whose time has come…
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On the downpayment - yes we need to consider that.

For example I paid downpayment of 70,000.

If I put it at bank or any where else with 5% interest rate - it can give me about $300 per month.

If I invest in a business that can return me 20% return a year - it can give me $1100 per month.

The moving expensis should be consider, but anyway they are there evenif you change your rented accomodation to another rented accomodation. Second, considering big amount involved in buying a house, it is not much.

The lawyer fees etc. will cost you about $3500 one time.

The problem you mentioned is right about having vacant basement. You can conider 2 months a year as it vacant and recalcuate it.

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A Proud Indian Canadian

I think a sum of down payment in the range of $70,000 is a big deal. The basic discussion is for the immigrants who cannot afford to pay that much amount as down payment and would still get attracted to the statement "why rent when you can own".
Garvo, in your case, you wanted to buy a house, and not attracted by the statement.
One more thing, one should not take in to account the rent from the basement, that to me is not the option to pay your mortgage against your privacy.

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Sunil Sharma, P.Eng.

Quote:

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Orginally posted by sunilosharma
The basic discussion is for the immigrants who cannot afford to pay that much amount as down payment

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Mumbai Maazi Ladki ...

I agree Sunil. One should not rely on rent, for those looking for privacy, but there are many people looking company and for them privacy is not a problem.

However when we count rent coming from basement - it must be deducted against the usage. For example the utilitized I mentioned in my example have 50% share from the tenant. On top of that there should be more maintenance. Looking that out of $700 you can have only $400 in your pocket.

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A Proud Indian Canadian