Absolutely fantastic video. Full of information. In my case, as a single dude without kids, I prefer to rent. No upfront costs (actually first month's rent was free) and I do not want to have that cloud of debt over my head. Interest rates was also a concern. I rent a one bedroom just 20 minutes away from downtown TO for $1500. I save and invest the difference every month, which is about 50% of my income. I may not eventually have the same equiety after all is said and done but as my net capital slowly grows I sleep a whole lot better each night...
With the current crisis its hard to see a scenario of 5% per year for the next 5 years. Fair to say its a buyers market, and that can't raise the prices, specially considering the inventory sitting there. I have a condo for sale in Montreal, 475 sqft and only 2 visits in the last month with no offers, and the price is 278K, which seems like a fair deal to me when I study the area of current listings and those sold. A buyer could easily negotiate this price down.
Good video, but you should assume the 92k differential was invested evenly over the 5 years and the 40k upfront difference at about 7% to 10% to make this a fair comparison. Also would you rather have 92k actual money or 30 to 93k kind of money?
Interesting video, but this overlooks some key considerations. Buying offers more price stability, because if you rent for 5 years and then you're evicted for renovations, you will be paying a lot more in rent. When you buy a house for 900 000 it always costs 900 000. Interest rates might fluctuate, but you paid what you paid and that never changes. Rent changes constantly and never in a way that favours tenants.
@CassiusJohnAdams Great question! It's typically applied immediately at the time of closing. This means that eligible first-time homebuyers do not need to pay the full amount of land transfer tax upfront and then wait for a rebate. Instead, the rebate is deducted from the total land transfer tax payable at closing, reducing the amount the buyer needs to pay directly.
Good question @aman4u18 The answer is, we can't know for sure how much values will actually go up (or down). No one has a crystal ball! In the video I propose 2 scenarios (both of which are below the 40 year average): - one where values appreciate 3% per year - one where values appreciate 5% per year It's of course possible that neither of those numbers are accurate, and that values will appreciate at a lower (or higher) rate for the next few years. Feel free to take the numbers I used in the video and run a few other value-appreciation scenarios for yourself to see how those would play out. Thanks for watching!
@howy333 Thanks for watching, Howard! I didn't cover selling the condo in this video. I'm thinking of doing another video that compares: i) selling the condo to buy a larger property versus ii) keeping the condo and putting the equity towards buying a larger property (or an investment property).
Totally misleading analysis. There is 90,000 CAD differential which renter was saving why you are not adding that to an investment. The simplest thing you can do is put that in an ETF. 10% growth on a minimum. Second part buying a home means you have to stay at one place meaning job losses is a problems for you now. Second if somewhere there is better opportunity you can not go. Consideration - You have super stable job owning seems to good idea - You will not get more money if you move owning seems to be a good idea. - Kids Then definitely you don't want shitty shoeboxes . Its better to rent and move where you can raise your children. - Real estate is very illiquid - You are not diversified. All you money is put in one city. What is it goes the Texas way. Investment is all about risk. - Renting your house is not passive income Dividend from stock is. - You have 10 millions dollars and like to waste money owning house makes sense.
Thanks for taking the time to comment @leetcse In the video I do acknowledge the question, "What if I were to just rent instead, and take all of that extra money that I would've otherwise spent on owning and invest that elsewhere?" And I go on to say that, for some people, that actually might be the better path forward! I do plan on doing another video that compares buying VS renting & investing in the S & P 500. - Ultimately, this video is not a comparison between someone who buys VS someone who rents and invests the saved money elsewhere; it's a breakdown showing where you'd be if you bought (and spent the $90,000 extra over 5 years) VS someone who just rents.
Opportunity cost is also not mentioned but this is still a fantastic springboard to start lookging into buying vs renting in Toronto. It's a good starting point. Otherwise the video wouldn't have been an hour long and nobody sits through hour long videos on UA-cam.
Nice summary. What about 1.) out of pocket costs for repair/maintenance issues in the unit? Sink/toilet leak? 2.) shitty renter - misses a payment? 3.) special assessments from condo board for bigger repairs over time? It seems to me your P/L should include some estimates for those three items. For the renter, with so many tax free accounts (FHSA, TFSA, RRSP) and index funds like VOO (earn 7% on average doing nothing) savings options have never been better. Now that interest rates have normalized ‘investing’ in real estate looks an awful lot like a speculation (not an investment) - singularly hoping bubble prices go ever higher. Could happen. But if prices go sideways for 5 years the investor will lose a boatload of money. If prices actually go lower the investor will be bleeding cash. Eyes wide open…
Thanks for watching & commenting @vikingvancouver9832 These are all fair points! For point #2 (“shitty renter”) I would say that my comparison is focusing on renting a condo vs owning a condo as your PRIMARY RESIDENCE (as opposed to owning a condo as an investment property to be rented out). - You're right though, when looking at a condo as an investment to rent out, you definitely need to factor in vacancy rate (or unpaid rent from a bad tenant). - And yes, if the value does not appreciate at the rates I used in the video (or if they don't appreciate at all, or even go down in value!) then your financial position would be quite different.
@@Bondy-Sawyer_RealEstateTeam He also assumes 2008 or Dotcom crash will never happen again. Also never mentioned eviction as vacancy rate in major places like Vancouver is less than 1%. There's also leverage which I can't do for stocks unless I trade on margin which is extremely risky. I own seven properties, six of which are rentals. The income from those properties are now getting piled into my Dividend Portfolio while the equity in those properties is used to buy more properties so I have a double edge sword. Try using stocks as collateral to buy properties.
why didn't you just do it based off a condo bought 5 years ago today, we have the interest rates and prices and rental costs of the past. and then compared it vs just renting and buying s & p 500 with the difference
@paulshealthfitness7922 Great question, Paul. I wanted the video to appeal to someone who is CURRENTLY looking at whether they should buy or rent. I thought that using current sale/rental values and current mortgage rates would be the best approach. You're right though, if I would've used a condo bought/rented 5 years ago I wouldn't have to speculate about what MIGHT happen with future value appreciation :-) And yes, I'm planning on doing another video that compares buying VS just renting and investing in the S & P 500!
right now and I pay $5000 a month like living alone DT Toronto. Been there for 8 years moving out in end of Aug to a property I own cash out at in a 4.5 star hote room. My month cost will be about $800 now. I never had a mortgage before because I bought that property 100% down. So would I qualify got first time home buyer? My monthly income is 20,000 a month take home.
To qualify as a first time homebuyer for Land Transfer Tax rebates, you cannot have owned a home or interest in a home anywhere in the world, at any time. It down't matter whether or not you had a mortgage on the property. And the method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.
500-599 sqf with no parking at the price of $575k? That is outrageous price. Even if I have the cash, I rather buy GIC to collect interest. It is better to rent.
This guy is too young to understand how real estate market work. It's not necessary that in 5 year time-frame market with have a constant growth of 3 to 5 %. It could be negative also. So people who bought couple years ago would be in this negative situation. Unlike stock market that can bounce back in couple years, real estate market can take up to 5 years and some cases up to 10 years to recover. Anyone old enough to remember the financial crash of 2008-10 where you saw showing in usa crash. We saw Florida condos can be purchased for less than 50k. It took those over 10 year to recover where the price was originally at. Market is never a constant. It does not go in a straight line. Don't just create some video with wrong information to create a side hustle for you.
Good point. Not all condos go up in price. Also, if the neighborhood goes to hell you might take a loss. Maybe a real estate crash like in 2008 is a actually a good buying opportunity if one chooses wisely.
This was to the point and easy to follow. Thank you !!
You're welcome!
Absolutely fantastic video. Full of information.
In my case, as a single dude without kids, I prefer to rent. No upfront costs (actually first month's rent was free) and I do not want to have that cloud of debt over my head. Interest rates was also a concern. I rent a one bedroom just 20 minutes away from downtown TO for $1500. I save and invest the difference every month, which is about 50% of my income. I may not eventually have the same equiety after all is said and done but as my net capital slowly grows I sleep a whole lot better each night...
With the current crisis its hard to see a scenario of 5% per year for the next 5 years. Fair to say its a buyers market, and that can't raise the prices, specially considering the inventory sitting there. I have a condo for sale in Montreal, 475 sqft and only 2 visits in the last month with no offers, and the price is 278K, which seems like a fair deal to me when I study the area of current listings and those sold. A buyer could easily negotiate this price down.
Damn, I would love to buy something for $275,000.
Good video, but you should assume the 92k differential was invested evenly over the 5 years and the 40k upfront difference at about 7% to 10% to make this a fair comparison.
Also would you rather have 92k actual money or 30 to 93k kind of money?
Interesting video, but this overlooks some key considerations. Buying offers more price stability, because if you rent for 5 years and then you're evicted for renovations, you will be paying a lot more in rent. When you buy a house for 900 000 it always costs 900 000. Interest rates might fluctuate, but you paid what you paid and that never changes. Rent changes constantly and never in a way that favours tenants.
Does the land transfer tax rebate for first-timers happen immediately, or is it paid up-front and then returned the next year?
@CassiusJohnAdams Great question!
It's typically applied immediately at the time of closing. This means that eligible first-time homebuyers do not need to pay the full amount of land transfer tax upfront and then wait for a rebate. Instead, the rebate is deducted from the total land transfer tax payable at closing, reducing the amount the buyer needs to pay directly.
Thanks for sharing this insightful comparison. Could you please do the same comparison for two bedrooms condo?
Thanks for watching @samben8915
That’s a great idea for a future video.
Thank you for this great educational video. Keep up the good work!
Will do. Thanks for watching!
But how do we know, it will go up 5% per year i next 5 years? There been a scenario like Lost Decade in the past.
Good question @aman4u18
The answer is, we can't know for sure how much values will actually go up (or down). No one has a crystal ball!
In the video I propose 2 scenarios (both of which are below the 40 year average):
- one where values appreciate 3% per year
- one where values appreciate 5% per year
It's of course possible that neither of those numbers are accurate, and that values will appreciate at a lower (or higher) rate for the next few years.
Feel free to take the numbers I used in the video and run a few other value-appreciation scenarios for yourself to see how those would play out.
Thanks for watching!
2013 my condo fee was 350. Now 2024 condo fee is 900. As much as my montage and this Canada Ontario
This assumes a small down payment. The opposite occurs if the down payment is much larger.
Great video! Only thing you forgot is selling costs!
@howy333 Thanks for watching, Howard!
I didn't cover selling the condo in this video.
I'm thinking of doing another video that compares:
i) selling the condo to buy a larger property
versus
ii) keeping the condo and putting the equity towards buying a larger property (or an investment property).
What a great comparison - thank you so much !
Glad you liked it!
Totally misleading analysis.
There is 90,000 CAD differential which renter was saving why you are not adding that to an investment. The simplest thing you can do is put that in an ETF. 10% growth on a minimum.
Second part buying a home means you have to stay at one place meaning job losses is a problems for you now. Second if somewhere there is better opportunity you can not go.
Consideration
- You have super stable job owning seems to good idea
- You will not get more money if you move owning seems to be a good idea.
- Kids Then definitely you don't want shitty shoeboxes . Its better to rent and move where you can raise your children.
- Real estate is very illiquid
- You are not diversified. All you money is put in one city. What is it goes the Texas way. Investment is all about risk.
- Renting your house is not passive income Dividend from stock is.
- You have 10 millions dollars and like to waste money owning house makes sense.
Thanks for taking the time to comment @leetcse
In the video I do acknowledge the question, "What if I were to just rent instead, and take all of that extra money that I would've otherwise spent on owning and invest that elsewhere?" And I go on to say that, for some people, that actually might be the better path forward!
I do plan on doing another video that compares buying VS renting & investing in the S & P 500.
-
Ultimately, this video is not a comparison between someone who buys VS someone who rents and invests the saved money elsewhere; it's a breakdown showing where you'd be if you bought (and spent the $90,000 extra over 5 years) VS someone who just rents.
Opportunity cost is also not mentioned but this is still a fantastic springboard to start lookging into buying vs renting in Toronto. It's a good starting point. Otherwise the video wouldn't have been an hour long and nobody sits through hour long videos on UA-cam.
Nice summary. What about 1.) out of pocket costs for repair/maintenance issues in the unit? Sink/toilet leak? 2.) shitty renter - misses a payment? 3.) special assessments from condo board for bigger repairs over time? It seems to me your P/L should include some estimates for those three items. For the renter, with so many tax free accounts (FHSA, TFSA, RRSP) and index funds like VOO (earn 7% on average doing nothing) savings options have never been better. Now that interest rates have normalized ‘investing’ in real estate looks an awful lot like a speculation (not an investment) - singularly hoping bubble prices go ever higher. Could happen. But if prices go sideways for 5 years the investor will lose a boatload of money. If prices actually go lower the investor will be bleeding cash. Eyes wide open…
Thanks for watching & commenting @vikingvancouver9832
These are all fair points!
For point #2 (“shitty renter”) I would say that my comparison is focusing on renting a condo vs owning a condo as your PRIMARY RESIDENCE (as opposed to owning a condo as an investment property to be rented out).
-
You're right though, when looking at a condo as an investment to rent out, you definitely need to factor in vacancy rate (or unpaid rent from a bad tenant).
-
And yes, if the value does not appreciate at the rates I used in the video (or if they don't appreciate at all, or even go down in value!) then your financial position would be quite different.
@@Bondy-Sawyer_RealEstateTeam He also assumes 2008 or Dotcom crash will never happen again. Also never mentioned eviction as vacancy rate in major places like Vancouver is less than 1%. There's also leverage which I can't do for stocks unless I trade on margin which is extremely risky. I own seven properties, six of which are rentals. The income from those properties are now getting piled into my Dividend Portfolio while the equity in those properties is used to buy more properties so I have a double edge sword. Try using stocks as collateral to buy properties.
why didn't you just do it based off a condo bought 5 years ago today, we have the interest rates and prices and rental costs of the past. and then compared it vs just renting and buying s & p 500 with the difference
@paulshealthfitness7922 Great question, Paul.
I wanted the video to appeal to someone who is CURRENTLY looking at whether they should buy or rent. I thought that using current sale/rental values and current mortgage rates would be the best approach.
You're right though, if I would've used a condo bought/rented 5 years ago I wouldn't have to speculate about what MIGHT happen with future value appreciation :-)
And yes, I'm planning on doing another video that compares buying VS just renting and investing in the S & P 500!
He either forgot it or trying to mislead us. 90K CAD plus growth on it assuming S&P 500 was missing from entire calculation.
Didnt they get rid of the first time home buyers incentive rebate?
That's right @matt9955, as of March 31, 2024, the First-Time Home Buyer Incentive was discontinued.
right now and I pay $5000 a month like living alone DT Toronto. Been there for 8 years moving out in end of Aug to a property I own cash out at in a 4.5 star hote room. My month cost will be about $800 now. I never had a mortgage before because I bought that property 100% down. So would I qualify got first time home buyer? My monthly income is 20,000 a month take home.
To qualify as a first time homebuyer for Land Transfer Tax rebates, you cannot have owned a home or interest in a home anywhere in the world, at any time. It down't matter whether or not you had a mortgage on the property. And the method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.
Who needs lower mortgage rates? 1% Who needs lower home prices? 99% ⏰️ It's time to wake up⏰️ #GTAOntario
Thanks for the video ❤🇹🇷
Glad you enjoyed it. Thanks for watching!
500-599 sqf with no parking at the price of $575k? That is outrageous price. Even if I have the cash, I rather buy GIC to collect interest. It is better to rent.
GIC's are yielding only 3% to 4% and are variable. There is no "better" or "worse". It all depends on the person.
500 sq ft of shoebox living
This guy is too young to understand how real estate market work. It's not necessary that in 5 year time-frame market with have a constant growth of 3 to 5 %. It could be negative also. So people who bought couple years ago would be in this negative situation. Unlike stock market that can bounce back in couple years, real estate market can take up to 5 years and some cases up to 10 years to recover. Anyone old enough to remember the financial crash of 2008-10 where you saw showing in usa crash. We saw Florida condos can be purchased for less than 50k. It took those over 10 year to recover where the price was originally at.
Market is never a constant. It does not go in a straight line. Don't just create some video with wrong information to create a side hustle for you.
Good point. Not all condos go up in price. Also, if the neighborhood goes to hell you might take a loss. Maybe a real estate crash like in 2008 is a actually a good buying opportunity if one chooses wisely.