An Article From Nevin Briand : Sales Representative Specializing in Lease's and Sale's.
To Lease or Not Lease: 10 Helpful Tips to Determine if Leasing is for You
Monday mornings typically start with “How was your weekend?” and most people answer with, “It was great”. As a realtor, I can honestly say that my weekends are usually fantastic! Often, I spend them with clients, viewing properties or negotiating deals. This weekend was no exception.
My client (son of my high school Physics teacher...small world, eh?) is currently living in Burlington but is interested in finding a rental property in downtown Toronto. The daily commute is becoming rather tedious and being a young, single guy, he’d like to spend more time enjoying fabulous restaurants, trendy bars, and socializing with friends, rather than spending several hours a day traveling to and from work.
As a real estate agent, I have dealt with a lot of different clients who have come to me looking for a rental property. My first question to them is always, “Why rent, not buy?” They almost always say the same thing, “Because it’s cheaper than buying.”
While this may be true in some cases, there are certainly many advantages and disadvantages to renting. It might be a short-term fix to your housing needs, but it’s not always the best long-term answer.
So before you decide to become a tenant, consider the following:
Advantages of Leasing
· LOWER UPFRONT COST – Upfront costs tend be much lower when renting. Upon signing a rental agreement, you’ll have to provide first and last month’s rent, and maybe a security deposit. When buying a home or condo, you’ll need to have enough money saved up for a down payment (typically 5 - 20% of purchase price), as well as money for closing costs (1.5% of purchase price).
· FREEDOM & FLEXIBILITY – When renting, you are only bound to staying at your rental for the duration of the lease term (usually 1 year). If you decide you don’t like where you’re living because your neighbour’s yappy dog is keeping you up at night or the view of the hairy, naked, fat guy in the adjacent building is too much to stomach, all you have to do is give the agreed-upon amount of notice to your landlord. If the same is true when you own, you must put your home on the market (and hope that it sells quickly) or find tenants who, hopefully, are dog lovers or closet voyeurs.
· LESS HEADACHES WITH REPAIRS – Let’s face it, we’re not all as handy as Mike Holmes or Brian Baeumler. If the sink gets clogged while full of dirty dishes or the air conditioner breaks on a sweltering July afternoon, as a renter, all you have to do is call your landlord. It’s his property and his responsibility to fix it. No need to stress out over finding money to pay the astronomical handyman bill or to spend hours wandering through Home Depot, trying to figure out what nuts, bolts, screws or tools you’ll need in order to try to repair it yourself.
· LOWER INSURANCE – When renting, you are only responsible for obtaining content insurance which comes at a much lower monthly premium than homeowners’ insurance. If your home is broken into, catches fire or floods, the insurance company should cover any losses you incur. (ALWAYS read through the fine print)
· LIVE IN YOUR DREAM NEIGHBOURHOOD – Since the average price of a single-family, detached home in the Greater Toronto Area is close to a million dollars these days, renting could get you into your desired neighbourhood, without the enormous price tag. Instead of pinching pennies to make your next mortgage payment, you’ll have extra money to invest in other things like a family vacation on an exotic beach or a state-of-the-art home theatre system in your very own man cave!
Disadvantages of Leasing
· LIMITED FLEXIBILITY – When renting, you are bound to the rules as stated in the lease agreement. If you decide this isn’t the place for you, unfortunately, you must stay until your lease term is up. If you own, getting out is as easy as calling me and listing it for sale.
· IT AIN’T YOUR PINTREST PINBOARD – If you dislike the purple shag in the bedroom or yellow floral wallpaper in the kitchen, you’ll have to grin and bear it. Before you can decorate, renovate or even landscape, you’ll have to get permission from the landlord first.
· MONEY DOWN THE DRAIN – Paying rent is paying someone else’s mortgage. You’re investing your hard-earned money in your landlord’s future, instead of your own. Period. It’s as simple as that.
· NO SECURITY – As a renter, you are at the mercy of your landlord and have no guarantee that the lease will be renewed. The apartment or neighbourhood might be great, but if the owners decide to sell or need the place for themselves, you could find yourself having to call me to find a new home.
· PET LOVERS BEWARE – If you’re considered the crazy cat lady with 10 “kids”, or the guy with 2 pit bulls that no one else appreciates, you might be out of luck. Many rental properties have strict restrictions to owning pets...some landlords don’t allow them at all. When you own your home, you’re free to have as many animals as the city will allow... and free to build that luxury cat condo in the middle of your living room if you so desire.
Now that you have more insight, you are one step closer to deciding if you should rent or buy your next home. The next step is to call me and, together, we can further discuss your options.