3 Ways Renters Lose Money

Are you still renting a home or apartment for yourself or your family?

If so, you're losing money. Think about these three ways you lose money by renting:

1.  You're paying for someone else's mortgage payment. You're missing out on the appreciation that the property gives to the landlord. Appreciation is a term used in accounting relating to the increase in value of an asset, which means in real estate terms, added value to the property. Over the past five years, houses appreciated significantly, making money for many new real estate investors.

2.  Renters don't get to freeze their monthly housing expenses like home buyers can. Of course, many home buyers get mortgage payments with adjustable interest rates and their payments go up over time. However, these payments will not go up over the long term like rising rents. Just think about how much an apartment costs today compared to ten years ago. A two bedroom apartment in White Rock, BC leases for $1,300 today. The exact same apartment rented for $425 in 1996, when it was brand new. Home buyers who had low monthly payments in 1996, who did not refinance their mortgage, enjoy low payments today and don't have to worry about rising rents.

3.  Renters don't benefit from tax advantages. Home owners get income tax deductions. Tax deductions for interest costs, for instance, save tax payers thousands of dollars.

Emotional Satisfaction of Home Ownership

Besides losing out on making money with real estate, renters don't get the same satisfaction of home enjoyment that benefits home buyers. Many landlords won't allow you to paint your walls in colors that you desire. Also, you won't feel like fixing up the property with custom window coverings and you get little say in flooring materials. Because you can't make your personal statement, you won't feel like you're HOME as much as home owners who feel emotionally connected to their property.

How to Buy Your First Home

The biggest barrier to home ownership is often accumulating funds for a down payment. People think they have to have thousands of dollars for a down payment. However, if you have good credit and a decent job, you can get a mortgage for a home with little down. With great mortgage rates, you may be surprised to find out how much of a home you can afford with payments similar to what you currently pay in rent.

You may have to go out of the major metropolitan areas to buy a home. That's why so many people commute in Metro Vancouver. Affordable housing costs much less in outlying areas such as South Surrey White Rock. But so do the rents. If you're renting an apartment for $2,300 in Vancouver, you could afford a $500,000 townhouse in Grandview Heights. Perhaps your monthly rent is only $1,000 and you would be happy in a $240,000 apartment in White Rock

Talk to a mortgage loan officer and see how much of a home you can afford. If you don't have one, Danielle would be happy to recommend a couple great options.

If you're renting, make one of your priorities to buy your own home.