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Rent or Buy?

Rent-vs-Buy Despite being in the mortgage business, we’re the first to admit that renting entails a big cost difference (read savings) in a lot of cases.

Here’s one example.  We know a couple that was considering purchasing this townhome in West Vancouver for $879,000 (this is the actual photo).  A similar unit down the road was listed for rent on Craigslist at $3300 per month.

On an $879,000 property with 10% down/6% interest/25-year Am., the monthly payment would have been $5061.  Add in property taxes and strata fees and it came to $6003 a month.

That’s over $2700 more per month than same-style rental unit down the street.  That doesn’t even speak to all the other purchase costs.

The moral is that you can do a lot with $2700 cash each month (which is about $4500+ before taxes).  The house would need to appreciate at least 3.7% a year for you to break even.  (That’s been an easy target in Vancouver lately but who knows what the future holds).

Naturally, if you invested that $2700 savings each month the break-even point would be significantly higher.

Food for thought…