If you're stuck in your current living condition and feel the time is right to get a new place, choosing between renting or buying a condo may pose a huge challenge. While buying a condo is a no-brainer for first-time homeowners on a limited budget compared to houses. However, the decision becomes a little more delicate when you've already settled on condos but need to know whether to rent or buy.
Both options have pros and cons, and there is no universal answer to which is the best among them. Your chosen option should be based on your needs and which best satisfies them. For example, considering real estate in Canada and the rising cost of acquiring a property can be demoralizing for people interested in condominiums.
Owning a condo will take up a lot of capital. Still, it would offer you a chance at a growing investment over time, whereas renting offers lower living expenses with a chance for extra income to invest elsewhere. Still, it means you don't enjoy any future increase in the property's value. We'll see more about what sets these two options apart and guide you to a suitable solution.
Pros and Cons of Renting a Condo
Renting takes a lot of responsibilities off your shoulders and allows you to remain flexible, but it can also be a problem. Here are some of the pros and cons of renting a condo:
Pros of Renting a Condo
- Inexpensive: paying a small amount of money monthly as rent is cheaper than saving up a down payment for the same condo. Renting will provide you with a place to stay without the added stress of paying a huge amount of money.
- Less Maintenance burden: as a renter, some of the maintenance in the condo is done by the owner, so you have a lesser burden to handle. The owner handles maintenance like a leaky toilet or damaged walls.
- Flexibility: renting gives you much flexibility as you can easily move condos without worrying about selling your property and making a profit. If you don't like your new place, you can move to another location.
Cons of Renting a Condo
- Difficult to Make property changes: as a renter, you'll find it difficult, sometimes even impossible, to make changes to the condo. Changing the paint or floor to a more suitable design may prove difficult.
- No equity: you do not have a share in the condos, equity neither do you get to enjoy any increase in the value of the property.
Pros and Cons of Buying a Condo
Depositing a down payment and then owning the condo can be an exciting journey into real estate for you; however, several obstacles may make this option unreasonable.
Prosof Buying a Condo
- Ownership: buying a condo gives you ownership and a sense of belonging. Ownership comes with a certain level of pride and satisfaction that cannot be put in monetary terms.
- Equity: when you own a house, you make payments towards equity and your mortgage instead of your landlord's. You also enjoy any future property price increase even when you've not paid off your mortgage.
- Stability: rent costs are unstable and fluctuate easily, which may have a huge bearing on your plans. Buying a condo, on the other hand, you get a fixed mortgage rate which will help you plan
- No limitations: buying the condo means you own the space, and there are no limits to how you use it. You can remodel, and you deem fit, have as many friends over, and paint with whatever colors you which without repercussions.
Cons of Buying a Condo
- Expensive down payment: the major stumbling block to buying a condo is the first-time payment you must make before subsequent mortgages. The minimum down payment percentage you can make in Canada if the cost of the condo is less than $500,000 is 5%, while you'll pay more if it is higher than $500,000. You also have to buy mortgage loan insurance if the down payment is less than 20% of the cost of the condo.
- Maintenance cost: as the condo owner, you'll have to bear the burden of any repairs and maintenance required in your condo, no matter the size.
- Makes it difficult to move: buying a condo will make it difficult to move as you have to sell before moving. See, if you work a job requiring you to move quickly, buying a condo may be a limiting factor, even if you can quickly sell it off. In most cases, you may have to have lived in your condo for up to 5 years before you can break even on the cost.
When You Should Rent
Since no option is wrong or right but dependent on your specific needs, here are some instances when it is better to rent than buy a condo:
- There are uncertainties about your future: if any uncertainties may require you to move, it is better to rent. Getting married, having kids, getting a divorce, getting a new job, or transferring to a different location can make you leave your condo. It'll be easier to move when you don't have to worry about selling the condo.
- Not enough money to buy: buying is expensive even if you decide to make a down payment and mortgage. If you don't have enough money to buy a condo in the location, it is better to rent.
- You prefer less risk: buying comes with many risks as it involves a lot of money too. From the value of the property to possibly selling in the future. So many variables which can even make you lose money. If you prefer less risk, renting is better.
When You Should Buy
Certain instances make buying a condo the better option than renting, so you want to see some instances to understand if you fall into any of them. If buying is for you, you can check out condos in choice locations in Canada.
- You can afford it: affording to buy a condo covers more than just paying the mortgage and other fees; you should also be able to live comfortably. Even though you may have to make sacrifices when buying, you don't want to be stretched too thin that you can no longer afford the basics.
- You intend to stay for a long time: if you intend to stay in a particular location for up to 5 years, buying instead of renting may be better. In the long run, buying becomes less expensive.
- You want your income going towards your mortgage: if you would prefer your income go towards your mortgage instead of your condo owner's, buying may be the right choice for you.
Renting or buying a condo will continue to be a hot topic for many, but with the right information about each option, you can easily decide which to choose. Buying a condo requires a down payment that may be out of reach for many.
Still, it offers a sense of ownership while renting gives the flexibility to move and lower costs but without a chance to get any profit for any future value increase.