At this time of the year in Edmonton many people contemplate the possibility of firing their landlord and buying their first home.
The current glitch in the Alberta economy is making some potential buyers second guess themselves. Are you one of these people? Are you wondering if your job is secure? Whether you pay rent or a mortgage, it’s still a commitment you must face, so it might not matter about your job security, at least in the long term.
And what about home and condo values? Are you hoping that they will crash? Not likely. Just a few days ago, I compared values for Edmonton area homes sold 30 days back with the same period in 2014. Guess what? Values were still 2.75% UP on the same time last year.
Owning over Renting - The Cons
1. Purchase Costs – When you rent you need first and last month’s rent. When you buy you will need: a down payment, costs for home inspections, mortgage applications and lawyer fees etc.
2. Responsibility - When you rent, you are in effect ‘borrowing’ someone else’s property and therefore your life is a little more carefree with respect to things like maintenance. As an owner, you will be responsible for fixing items that require repair and for some this can seem daunting. However, you are in control. Remember the last time you had to harass the landlord to fix that annoying dripping tap, or leaky sink that drove you nuts for months? When you own, a fix is only a phone call away.
3. Lack of Flexibility - The costs associated with purchase and selling later make no sense to the transient resident. If you don’t plan on staying around long, it would be better to rent for a 12 month term with an option to renew your lease.
Owning over Renting – The Pros
1. Certainty - As a renter your home is only secure as long as you have a lease. Once the lease is up, all bets are off. Sure you may be able to renew the lease, but only if the landlord agrees. When you own you have security. You have a home for as long you want it.
2. Pride of Ownership - It’s not usually very hard to spot the difference between a rental home and one that is lived in by the owner. An owned home often has a well-kept yard and the inside is spic and span. Tenants do not usually have the same regard when they are simply paying the rent.
3. Store of Value - Historically real estate has gone up in value. This is true for all parts of the world where there is a functioning real estate market. Sure there are ups and downs, but in general we see growth. Do your own research for your market. Ask your grandfather or mother what they paid for their homes. Be comfortable. Over the long term, your home will grow and create a store of value for your use later.
4. Income - When you rent, subletting is usually strictly prohibited. When you own, there is nothing to stop you renting out part of your home to someone you know and trust. I have friends who rented out so many rooms that their ‘roomies’ not only paid all of the bills, it generated an income for the owner.
5. Quality Neighbors - Not always but often, the quality of your neighbors will be higher when you own your own home. Why? Because you are likely to be surrounded by other home owners who take pride in their possessions just like you.
Thinking of buying? Contact us for more advice. We would be happy to discuss our cash rebate options with you. In 2014 we gave back not less than $8200 to our buyer clients when they moved in. To reach our broker owner Stuart Neal, please call him at: 780-760-2014 or visit www.CashBacktoBuyers.com.