Skip to main content

Rentefits: The Benefits of Renting

blue fabric loveseat

"Renting is throwing your money away."

"You're just paying your landlord's mortgage."

"My dad's friend's uncle's house tripled in value!"

We've all heard some variation of above from well-meaning friends and family. However, like most things in life, the decision between renting and buying is much more nuisance.

Right off the bat, renting is NOT a waste of money. You're paying for a place to live, that's pretty important. Paying $1000 for a brick, now that's a waste. 

There are definitely benefits to homeownership. Your property can go up in value, your mortgage acts as a forced savings account, greater privacy and control, and most importantly, the bragging rights!

Before you sign those mortgage papers, understand there are benefits to renting too. The benefits are rooted in its simplicity and flexibility. Renting is paying a fixed cost to occupy a home for a fixed period of time. You always know what you're paying and what you're paying for.

Unlike homeownership, there are no realtor fees, no mortgage, no property taxes, no homeowner's insurance, no unpredictable maintenance costs. Costs can be large and unexpected for homeowners, especially when it comes to maintenance. The roof could get damaged by a storm, a busted pipe could leave you with water damage, over time you can get cracks in the foundation. There are endless issues that can barrage your home. As a renter, when trouble comes looking, just call up the landlord, sit back and let them handle (and pay for) it.

Renting is flexible. Leases are typically a year and can be as short as a month. Renting allows you to easily change your housing to match your evolving lifestyle. Over time, you might find yourself needing more space, maybe you want to move in with your partner, or maybe you found a great job in another city. A renter can move around with very little friction.

Renters also move for cheap. When a homeowner moves, they pay a substantial amount in transaction costs. Realtors charge on average 5% on each side of the transaction. If your home is worth $500K and you move to another home worth $500K, that'll cost you a total of $50K. $25K to sell and another $25K to buy. The $50K doesn't even include the time and money involved in getting your home ready for sale (i.e. repairs, staging, showings). A renter doesn't have to pay any of this, just finish off your lease and go.

When you're a homeowner, you don't just own the home, you own all the risks that comes with the home. You're rooted into a fixed plot of land, in a single neighbourhood, in a single city. What if a major employer leaves the city? Noisy neighbours move in? A natural disaster hits? As a homeowner, you have to consider all these scenarios. These are your problems to own. 

As a renter,  you don't own the home, so you don't own the problems. The landlord does and it's their job to worry about them. If something happens causing the home to become unfavourable, a renter can simply pack up, dust off their hands and move.


Popular posts from this blog

The Art of Giving Feedback

Constructive feedback is an awkward affair. You don't want hurt feelings, but recognize the importance of honesty. You've tried the classic "hoping things will get better on its own" and unfortunately it hasn't played out. When giving feedback, here are a few things that I try to keep it mind. Start with empathy. Step into their shoes and understand their story. If you don't know, ask. Be genuinely curious. Feedback is a dynamic affair. Shared communication with a shared goal towards progress. Take the emotion out of it. Focus on the situation, not the person. Focusing on the person adds unnecessary weight to an already emotionally-bloated event.  Be specific. Give clear examples. Vague feedback equals dismissed feedback.  Doing above won't de-awkward things fully, but it will dampen it and increase the chance of better outcomes. 

ELI5: The Stock Market

Today we get back to basics and answer some of the most common questions about the stock market.

Step One is Knowing

In school, we listen to our teachers. At home, our parents. Throughout our childhood, following instructions is praised and rewarded. When we're young, there's value in this. We don't understand how the world works quite yet, so guidance can be lifesaving.  The bias to just accept obviously has drawbacks. Insert old jumping off a bridge adage .  This conditioning is especially strong for kids from lower income households. Their parents are more likely in working class jobs involving strict order-taking. Parents of middle-class households tend to be knowledge workers where influence is essential.  Studies have shown kids from middle-income households are more willing to negotiable with their teachers. They learn from their parents that things are not set in stone. This leads to better grades and learning outcomes when compared to their lower income counterparts who don't negotiable.  In business, if we simply accept things as they are, we would never innovate. In work, w