Debunking Renting vs. Home Buying Myths

Since I have the honour of working with so many of Edmonton’s first time home buyers, I’m frequently asked whether it’s better to rent, or to buy a home.





Now, you might expect that my answer is always: BUY, because, after all, I’m a Realtor and not a landlord.





However, that’s not the case (not the part about the Realtor/landlord – that part is true!). What I mean is, is that I don’t always advise my potential clients to buy a home.





That because, for some people, it actually makes sense to rent. And since I’m ethically committed to only doing what’s in the best interests of my clients, I will actually advise them not to buy – or at least, not to buy right now – if I truly feel that it’s the right thing to do.





I know this may seem kind of strange, and maybe it’s an old-fashioned way of doing business. But I’m OK with that. There are some things that should always stay old fashioned, and putting client needs ahead of mine is something that should never change.





However, part of the conversation I often have with first time home buyers is really about debunking some very entrenched rental myths. These are beliefs and views that people have about renting that actually aren’t true – and, unfortunately, many folks find out too late and have to pay the price for not having the correct information.





So to help you avoid that fate, below I present some rental myths that you can certainly live without, regardless of whether you rent, buy or both.





Myth: When you rent, you can simply move out whenever you want.





Fact: In most cases, you have a tenant agreement that spells out how much notice you must give your landlord before leaving. And if you vacate the premises prematurely, you will almost certainly be sued by your landlord (and will almost certainly lose, since he’ll provide the judge with a copy of your tenant agreement). So if your goal is "maximum flexibility" to suit your lifestyle, don’t presume that renting is any easier than buying. In fact, in a hot housing market, you may actually be able to short sale your house in a matter of weeks – which could be less than the notice you have to give a landlord!





Myth: As a renter, you never have to worry about property taxes since that’s the landlord’s problem.





Fact: Landlord’s do what businesses do when the government adds a tax: they pass it on to the end user. And in this case, that’s you! So when property taxes go up, it’s not just your home owning friends who will take the hit. Your rental amount will go up at the earliest legal opportunity. And based on the city’s assessment of the house, your increase may be much more than your property tax increase would have been (or could be). In other words, you may end up paying more than your home owning friends when property taxes go up!





Myth: When you rent, you don’t have to worry about repairs and maintenance.





Fact: That’s only partly true. You don’t have to worry about repairs and maintenance provided that you’re not deemed responsible (even in part) for the problem. So for example, if you decide to break out the street hockey gear and someone fires a slapshot that breaks the mailbox, a window, or pulls down a clamp holding a gutter in place, then guess what? You’ll be getting a bill from your landlord, and you won’t even own the asset (the mailbox, the window, the gutter) when you pay.





Myth: It’s cheaper to rent than to buy.





Fact: Often, this actually isn’t the case – not in the long term. When you own, you’re at least building equity, and you can recover that when you sell. Furthermore, you have more options with a mortgage – say, paying bi-weekly instead of monthly – that can lower the total amount you owe in the long run. As a renter, it may seem like you’re paying less, but you’re no building any equity. Rather, you’re building your landlord’s equity.





Myth: Renting is the only option for people with less than great credit.





Fact: The truth is, is that there are many lending companies out there – not just big banks – and they’re all interested in competing for your business. After all, the only make money when they lend money! So even if your credit isn’t perfect, you can and almost certainly will qualify for a mortgage of some kind. And besides, you can always take steps to polish up your credit rating before you apply for a mortgage, which can help you get the best terms possible.





Myth: Renting is simpler than owning.





Fact: Again, as discussed above, renters are subject to a comprehensive tenant agreement; one full of clauses that could end up leading to extra (or excessive) costs. So while renting seems simpler, it’s really no simpler – and sometimes, even more complicated – than buying a home.





So there you have it: the most persistent myths out there regarding renting. And now that you know all of this, should you buy instead of rent?





Honestly, there’s no single answer to that. It all depends on your unique situation, goals and financial picture.





However, I will share that once I provide these facts to my clients, they always look at home buying in a new, clear and beneficial light.





That’s not great news for their landlord…but they can always send him or her a thank you card, and the return address on the envelope can be their very own!





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ABOUT THE AUTHOR:





My name is Chris Proctor, and I am a Realtor with Realty Executives - Devonshire Realty in Edmonton. I specialize in helping Edmonton home buyers find a great home that meets their needs, budget and goals. Search Edmonton MLS homes and condos here.