The author did not factor in Condo fees or property taxes.
You're going to pay the fees through your rent if you're a tenant, so they're not a differentiator anyway.
Toronto Condos: Should you rent or buy?
21–30 of 63 posts
Re: Toronto Condos: Should you rent or buy?
#22Neither. I had to do it all over again, I would buy a detached house in the middle of boondocks ( like Mississauga, Brampton , Vaughn ,Markham , Richmond hill etc. ) . The supply of detached houses is limited whereas condos in Toronto are growing like weed. The detached houses have grown more in value and they are not encumbered with maintenance fees.
Detached houses could end up costing far more in maintenance. From experience.
One time maintenance fees versus monthly HOA fees that you are required to pay.
Re: Toronto Condos: Should you rent or buy?
#23The assumptions made by the author are ridiculous, namely: - In the 10-year comparison, rents paid are not factored in at all. - In the forward-looking comparison, condo prices are assumed to be flat, mortgage rates go up (why? can't they be locked in now?), while equity prices go up 6-8% per year - Taxes are not factored in at all - capital gains on a primary residence are tax-free, while investment gains will be ta…
+1. It's also assuming you are getting the same amount of money to invest in stock than to invest in your condo. Banks are more likely to finance your primary residence than your stock investment.
Re: Toronto Condos: Should you rent or buy?
#24Hey I'm Tim, the author, really glad people are into this. Interesting situation in Toronto. Check out the model and input your own assumptions if you'd like!
https://docs.google.com/spreadsheets/d/1ZJnbA2MO7iuQc4xEX9E2...
Re: Toronto Condos: Should you rent or buy?
#25There's something big missing: you can sublet your condo, therefore building income after it's paid off or to offset the mortgage. You will never be able to do this with stocks.
Re: Toronto Condos: Should you rent or buy?
#26The last time I bought was because I got tired of rent increases.
Insurance and taxes do increase with time, but more slowly than rent.
Re: Toronto Condos: Should you rent or buy?
#27Myth #1: Toronto condos have outperformed the stock market by a long shot Isn't it disingenuous to include automatic dividend reinvestments in the price calculation for stocks but not include net income from rents reinvested into more condos?
Hey there, we assume that the condo you purchased you live in not as a rental property. The spirit of this post is to show that there isn't a straight yes or no answer to rent vs. buy...The shorter the time frame the less likely is you should own.
Re: Toronto Condos: Should you rent or buy?
#28> Myth 4: Renters throw cash away, at least owners build equity It's no myth, because you have to live somewhere. (Well, you could put your money elsewhere, and go live in a cardboard box under a bridge, but let's be realistic.) Owners are building equity with the money they would otherwise be completely throwing away on rent, and they got into that situation with just a little money down. (Depending on area), curren…
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Re: Toronto Condos: Should you rent or buy?
#29The assumptions made by the author are ridiculous, namely: - In the 10-year comparison, rents paid are not factored in at all. - In the forward-looking comparison, condo prices are assumed to be flat, mortgage rates go up (why? can't they be locked in now?), while equity prices go up 6-8% per year - Taxes are not factored in at all - capital gains on a primary residence are tax-free, while investment gains will be ta…
Great comment DMAC. The model shows what will happen if rates go up 1% and condo prices are flat. Rents paid are definitely factored in the model as are taxes. The investor is in a TFSA & RRSP which means capital gains are a non-issue. Property taxes cant be avoided though. Its a real advantage of investing in Canada to use the RRSP & TFSA vehicles.
You're right, mortgages can typically be locked in for five years.
But really people can check out the model and use their own assumptions:
https://docs.google.com/spreadsheets/d/1ZJnbA2MO7iuQc4xEX9E2...
Re: Toronto Condos: Should you rent or buy?
#30Earlier quoted context omitted.
>> (Depending on area), current rents are in about the same ballpark as payments on a new mortgate, > Not in Toronto, which is like the whole point Then what is the rent/mortgage situation in Toronto? That was never discussed in the article. In my area rent is 2-3x higher than a mortgage, all I know about Toronto is that property values are high.
The early-90s harbourfront towers by Bay and Queens Quay rent studios/1bds for $1500-1600 incl utilities or buy for $400-500k + maint fees $500-700/month + tax + util
1+1 in the area at the moment will go for around $1800-1900/month. Based on two places I've rented in the Pinnacle centre over the past 3 years(and looking for places in that complex and ones near by).