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Should You Buy or Rent a Condo?
Buying or renting is an age-old debate in the real estate industry. While some people might think that there is one correct answer, it all depends on your lifestyle and needs. It is also essential to consider at what stage you are in life and compare your priorities accordingly. If you live in a big city, condos offer a practical and convenient way of life.
However, the fact remains that condos are a significant investment. For this reason, many potential home buyers are weighing in their options – if buying or renting is a smarter choice. Each option will require its own set of considerations that you need to take into account more carefully.
The pros and cons of buying vs renting a condo
When deciding between renting versus buying a condo, most people think that buying is more money-wise. While this isn’t always the case, there are several instances wherein you can enjoy lots of advantages when you choose to buy.
The primary reason for choosing to buy a condo is that the median cost of condo rental has consistently gone up in the past decade or so. This is especially true in big cities in Canada such as Toronto, as well as smaller towns like Leslieville and Riverdale.
Checking out condos in Leslieville Riverdale for sale is a good idea if you’re worried about rising rental costs. The amount you pay monthly towards your rental can be allocated to your monthly mortgage payment. According to Mortgage Reports, 54% of the US market is opting to buy a condo instead of renting.
- But what if you are worried about your finances?
- Is buying still the right choice?
Mortgage experts recommend that you look into three main criteria when deciding if it is a good idea to buy a condo.
The first criterion is that you need to have a stable income or excellent financial stability. The next factor to look into is that you do not plan on moving in the next three years. Whether you have a secure job or you have decided to settle in a particular location, buying a condo would make sense.
Finally, there should be no significant life event to come within the foreseeable future. For example, you are not going through a divorce or about to get married within the next year. When there is some stability in your life, then it would be an excellent time to buy a condo. It is also essential to consider the significant life events that could impact you financially.
While you might have to tighten your budget now and shortly, the payments made towards your mortgage will pay off. After some time, you will gain ownership of the condo unit and not have to worry about making rental payments. A lot of real estate experts discourage rental as much as possible, especially among those with a stable income. Renting is like throwing money away.
When you make rental payments, they line the pocket of your landlords. On the flip side, buying your condo enables the money to work for you. Buying the apartment establishes your ownership of the unit and also helps to build your credit. When you make payments to your mortgage, not only do you gain ownership of the real estate property, but you also reduce debt.
The best part about buying a condo is that you can get a fixed monthly mortgage payment. You no longer have to worry about your landlord raising the rental fee. With the rental rates consistently on the rise, buying is the way to lock in the cost of property ownership.
Renting a condo: When it makes more sense
If you want flexibility, it makes more sense to rent a condo (instead of buying one). This is the primary reason why you must choose this option over condo ownership.
A good example is when you intend to move to a new city in a few years or months. It could be that within that span of your time, your needs could change and you have to move to another location or city that would better suit your needs.
Renting offers you the flexibility of being able to move to a new and more desirable location. Unlike buying a condo, you are not tied to the property and are free to move whenever it suits your needs.
A vast majority of the people that make up the workforce are inclined to move to a new city to find new jobs or seek out better opportunities. If you own a condo, being forced to sell that property can consume a lot of your time.
You, as the owner, will also have to shoulder a percentage of the closing costs and the commission fee. You would need the property to appreciate by at least 10% to recoup the cost of buying the unit. If you do not want to be tied up to such a big financial responsibility, then it would make more sense to rent a condo.
Another critical yet practical factor to help you decide is in terms of the maintenance required. When buying a condo, you will have to pay any fees such as the homeowner’s association fees, real estate tax, and other maintenance works.
On the other hand, you won’t have to shoulder these costs if you are merely renting a condo unit. And yet, you can enjoy the perks of condo ownership along with the amenities and great location.
Finally, the process of renting is more straightforward compared to the amount of work needed when you decide to buy. Getting approval for a mortgage loan varies depending on the requirements set by each lender. The process is more time-consuming and stringent than getting approved for a lease.
How to decide
As with everything in life, there are benefits and drawbacks to each option. There is no right or wrong answer between buying versus renting a condo. It is all a matter of your circumstances. You have to determine your priorities, needs, lifestyle, and budget.
These factors come into play when making a decision. The most important thing to remember is that you have to thoroughly consider these factors to help you decide what would give the best return for your investment.
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If you enjoyed this post and have time to spare, why not check out these related posts and dive deeper down the rabbit hole that is homeownership.
- Save Money To Buy A House
- How To Start House Flipping For Profit
- How To Turn Your Home Into A Smart Home
- How To Prepare For A Home Renovation