A few months ago, I wrote about my experience of being a homeowner on the outside of the city, looking to move back into the core. Based on a multitude of factors, it seemed that renting was a no-brainer. Fast forward to today and I'm indeed a renter in downtown Toronto.
I couldn't be happier.
While I love the condo my girlfriend and I moved into, there have been some issues that I would be quite concerned about if I was an owner. The building is relatively new, but tenants who have been there almost a full year are only now enjoying some amenities. Others, like the party room, gym, and outdoor spaces, were perpetually delayed. A few unit owners I've met in the elevators are upset, since they have been paying maintenance fees during this time.
There appear to be further problems on the horizon. In the underground parking lot, cars have slowly sunk into the asphalt under their own weight. Re-paving will soon be needed, which will likely be time-consuming, inconvenient and expensive. Maintenance fees for newer buildings seem to have a funny trend of shooting up after a few years.
If maintenance fees do indeed rise, I won't have to worry about the increase affecting the unit's appeal to prospective buyers. We can just walk. And as a renter, the knowledge that I could just leave after a year is comforting.
The view from our condo is great . We can see the city skyline, which is gorgeous at night. But we can also see a bunch of cranes and new developments. I could see myself getting grumpier as new buildings pop up and that view deteriorates. With so much change over such a short amount of time, I can also only imagine traffic getting worse.
That being said, in the past 30 days, I've used my car exactly three times. The weather has been nice, so I've been able to walk to most of my meetings. Groceries are walking distance, but then again, so are some great restaurants. So transportation expenses have gone down, but money spent eating out has risen. I'm giving myself until the spring to see if I end up using my car even remotely enough to justify continuing to own it. I think I already know the answer, and it should save me another $200 a month, even after factoring in the occasional taxi fare and memberships to vehicle sharing services.
I'd like to say that being mortgage-free feels great, but the truth is I don't feel any different about that aspect. The day before our house sold our net worth was the same as the day after. Instead of having a big liability and a big asset, now we had neither. Feeling great about being mortgage-free is really reserved for homeowners that just have the big asset and no liability.
What makes renting really work for us is that we have the discipline to save the savings. We're experiencing a 33 per cent cash flow saving between owning and renting the same unit. It's only been two months, but so far there hasn't been any trouble putting that away. As usual, I recommend automating the savings. You'll barely feel it, especially if you could afford the potentially higher outlay of the mortgage and other costs associated with ownership.
While I have no idea whether the stock market or Toronto condo market will do better over the next 10 years, the deck certainly has the appearance of being stacked against this pocket of real estate. I realize many renters may not save the savings, and that is a key factor to weigh when making your own decision.
Preet Banerjee, a personal finance expert, is the host of Million Dollar Neighbourhood on The Oprah Winfrey Network. You can read his blog at WhereDoesAllMyMoneyGo.com and follow him on Twitter at @preetbanerjee.