Rent vs Own – Our experiences after 10 months

In our previous post, we discussed our decision to rent instead of buying after downsizing our family home of over 22 years.  As we head towards the New Year, we did a quick summary of how we have fared financially after living in a rental townhouse for about 10 months.P1070553

We figured that the we are saving about $1,400 per month in living expenses in our rental home as compared to living in our previous owned home.  This can be broken down as follows:

  • property tax, water & sewer utility $420
  • heating and electricity $100
  • home insurance $180
  • vehicle depreciation & fuel of less driving $50
  • house maintenance & amortized appliance costs $500
  • lawn and landscape maintenance $75
  • parking at work $75

From the proceeds of our house sale, we calculated that we just need to achieve a 1.4%  after tax return (at our marginal tax rate) to pay for our net rent expense.  At this time, this net rental expense is far less than the dividend incomes we are earning from our investments.

We cannot determine if the overall rent vs own strategy will work in our favour in the long term yet.  The capital gain of Vancouver real estate versus the capital gain of our investments will require a longer time horizon to determine which is a better investment strategy.

So far, we are happy with our chosen investment vehicle, and are enjoying the lifestyle of urban and maintenance-free living.

P.S.  There are many opinions on this topic out there.  Here’s one we read this morning …. http://onemoredime.com/2015/11/18/real-estate-versus-stock-market/.  He does a good job comparing the two.

 

 

 

 

 

2 thoughts on “Rent vs Own – Our experiences after 10 months”

  1. $1,400 a month is big money. I am so happy for you guys.

    Great that you gave a breakup of the costs – but aren’t some of these not related to buy v/s own at all? For example, heating, vehicle costs, parking etc are the same whether you buy or rent. These costs reduced perhaps because you downsized and changed locations etc.

    I love the way you talk about after tax returns and dividends v/s expenses, you might enjoy reading my post on peer to peer lending ( http://wp.me/p6V9kv-2n )

    1. Yes, these costs are reduced because we are leaving in smaller space (less heat) and in a more central location closer to work and shops (less driving to shop, walk to work, and no monthly office parking fees).
      Peer to Peer lending is just starting to take off in Canada, so will look into it. I really like your blog on market timing also.

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