Difference between buying and renting a condo
Jordon Scrinko
Published by Jordon Scrinko
Last Updated On: May 24, 2024

Buying a Condo vs Renting – Looking at the Pros and Cons

With extensive experience in the real estate market, I’ve encountered countless individuals grappling with the decision of whether to buy or rent a condo. This choice is not one to be taken lightly, as it involves weighing various factors and considering long-term implications.

In this article, we’ll explore the nuances of condo ownership versus renting, offering valuable insights to help you navigate this important decision.

By delving into the advantages and disadvantages of each option, we aim to provide clarity and guidance as you embark on your condo living journey.

Keep reading as we unravel the complexities of condo ownership versus renting, and discover which path is the right fit for you.

Quick Summary

  • Owning a condo allows you to build equity and benefit from property appreciation over time. In contrast, renting requires fixed monthly payments to the owner without building personal equity.
  • Condo owners face mortgage payments, maintenance costs, property taxes, and fluctuating interest rates, which can be stressful. Renters avoid these financial burdens, paying only a fixed monthly rent.
  • The price-to-rent ratio helps determine whether buying or renting is more beneficial. It is calculated by dividing the average condo cost by the average annual rent. Ratios between 1 and 10 favor buying, 11 to 15 indicate a closer call, and above 21 suggest renting is better.
  • The choice between buying and renting depends on individual circumstances, financial readiness, and long-term goals. Both options have their pros and cons, and the right decision varies for each person.

Both situations have their own set of factors

confused couple

Over time, the value of every property appreciates and the equity increases. The monthly mortgage payment goes down over some time and reduces the principal amount of the mortgage.

On the other hand, when you think of someone who has a rental unit, he has to pay fixed rental fees each month to the owner and does not have to pay any money as a mortgage.

Only then he or she is getting the property for use. Instead of having personal equity in the rented property, they are assisting in building the apartment owner’s equity.

Now, let’s find out what happens if we flip the coin. When you have a rented property, you do not need to worry about mortgage payments, any possible maintenance costs, property taxes, assessments, and interest rates that keep changing all the time.

You get an opportunity to enjoy your life at the rented property in peace without having any monthly mortgage payments. However, if you own a property, these financial obligations can get stressful in the long run. Therefore, it is safe to state that all the different factors narrow down to the same element – affordability.

The dilemma of whether you should be owning a condo or renting one is going to be there for long. People have an advantage as they can build their equity by purchasing a property. Or, they can go down another road and decide to make their wealth by investing in other business opportunities over real estate.

Real estate is often recognized as a risky affair because the market conditions can change at any time. You need to be ready to take risks if you want to invest in property. You must be prepared to pay the mortgage costs too.

What are the benefits of buying a condo?

When you think of condo ownership, you can be sure that you are making an excellent investment for future security. You can safeguard your living space for countless years. This is a list of all the benefits you get when buying a condo unit instead of renting it.

Financial benefits

do not disturb sign

  • When compared to other forms of housing, it has been noted that condo ownership does not burn a hole in your pocket. They are highly affordable and available at competitive rates. Even if you are a first-time home buyer, you can be sure to get personal space.
  • When you’re a condo owner, you get the perfect chance to construct equity and participate in property market growth. You can use the market conditions to your advantage.
  • When buying a condo, you can make extra money by renting out your condo to someone else. Thus, you can become a landlord and earn in the form of rental fees every month.
  • It is recommended that you buy a condo unit in its pre-construction phase. The fees are very low, and they are more affordable than fully constructed condos, which are made in established vicinities. Developing properties are right now available at cheap rates. Later, their prices will boom [1].

Lifestyle benefits

  • When buying a condo, you get a chance to live in a central location. This can be close to all necessities, transport lines, and market areas.
  • Living in a condo allows you to use amenities like pools, exercise rooms, lounges, saunas, etc. Everyone can’t own these facilities until they live in a condo.
  • The condo living is usually linked to higher options of socialization and an increased feeling of community spirit.

What are the benefits of renting?

moving out of condo

Though not everyone wants to rent a condo, you must know the benefits nevertheless. Knowing both sides of the coin will help you make an informed decision.

  • Renting is best suited for millennials. When you own an apartment, it becomes very tedious to sell it when you have to move out. But when you are taking it on a lease, you can serve a notice period and move out whenever you want. The younger generation needs this facility to embrace new job opportunities and constantly switch from one place to another.
  • Renting has often been recognized as less stressful than buying a condo unit. When you rent an apartment, you have to pay attention to expenses like renovation and maintenance. All these are the responsibilities of the landlord.
  • Renting is highly suited for some real estate markets. This depends on your city and individual neighborhood. It is recommended that you check each property and location.
  • When you rent an apartment, you are not responsible for condo fees.

Should you rent or buy in Canada?

Buying a condo in a prime location such as Canada might be a tough task, but it is one of the most exciting feelings. This is because the Canadian real estate market trends are at a great high.

There are always plenty of new condo projects coming up that you need to look through and compare if you are planning to buy a property in Canada. Every property that you visit has several different features to offer.

They are all built at locations that facilitate an entertaining lifestyle. The main aim of the condo developments is to enhance your lifestyle and bring you closer to sophistication.

Not everyone has the vision to see what a good property can get them in the future. Prices keep changing as per market conditions.

Therefore, you must always stay updated with the real estate market. These will tell you when to take the plunge. Owing or renting is entirely your choice. They both have their pros and cons.

The Price-to-Rent Ratio

The price-to-rent ratio can be defined as the ratio between home prices and the average rent prevailing in that area.

The calculation for this ratio is quite simple. Simply take the average cost of the condos in the region and divide it by the average annual rent [2].

After calculating this price-to-rent ratio, you will get a much better idea of comparing it to the thresholds.

Here’s how the ratio should be treated:

  • Between 1 to 10: Owning and buying a condo in the region is a better idea
  • Between 10 to 15: Buying a condo might be a better choice. However, other factors such as renovations can incline more toward renting
  • Between 16 to 20: Buying can be somewhat more beneficial than renting
  • Greater than 21: This ratio shows renting to be a better choice than buying a condo

This comparison can provide a better idea to you and will help you make a better decision about it depending upon the location where you are seeking a property.

There is no fixed policy as to which is the right choice. There are going to be other factors coupled with it. This ratio can add to the favourable factors and help you in making a choice.

Emotional Readiness Is Essential Before You Own a House

couple moving in

When you compare renting and owning properties, the most significant benefit is flexibility. Renting allows you to move freely from one spot to another. There is no feeling of being locked in.

You get a wider choice to grab on to great job opportunities in other localities and countries. But this can be tricky when you own a condo unit.

Being a homeowner is not easy. It is an enormous responsibility that you must take on only if you feel that you are emotionally ready. Daily life comes with its set of stressful events. You need to meet deadlines, ensure physical fitness, maintain a personal life, and much more.

Amidst all that, owning an apartment can be tiring. You will have to consider closing costs, then after the purchase, take care of the minute things such as the water bill, electricity maintenance, and other associated costs.

The cost of maintenance only keeps piling on as the property becomes older. Thus, it is you who needs to figure out if you’re able to factor all these costs in.

There are always going to be factors both for and against your idea of buying a condo or renting one. It is a little difficult to pinpoint one idea and frame it to be the best one.

This is because the situations, as well as the needs of every individual, are different. Some can’t afford to buy a condo with mortgage payments.

On the other hand, there are plenty who might be able to purchase a condo and take out enough funds to pay for the property and other costs and make a well-settled life for themselves in the future.

The Choice Is Yours

Depending upon the consequences, decide it for yourself.

One thing here is certain, taking today’s conditions and trends, living in condos is a luxury and convenience that you shouldn’t miss out on. It applies despite the stress of the considerable down payment and closing costs.

There are ample amenities, basic facilities, and much more about condo buildings that suit today’s lifestyle better. So, whether you own one or rent one, living in a condominium building is a perfect idea!

If you’re looking to purchase a condo, visit our homepage for all up-and-coming pre-construction condos in Canada.


References:

  1. https://www.ratehub.ca/pre-construction-condo
  2. https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

 


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