Buying a Home

Is it better to buy a home, or choose some other investment? Charlie’s* story

Now that he’s making more money from his new job, Charlie is wondering if he should stop paying a landlord and start making payments on a home of his own. He has $20,000 saved so far. He tries to estimate how much he will have at the end of 25 years if he buys a home, compared to investing those savings.

This chart sums up how he estimated his return with each option:

Option How much the investment goes up in value over 25 years How much the investment will be worth after 25 years
Put $20,000 down on a $200,000 home • Increases 4% for the first 5 years, then 3% a year • $440,000
Rent and invest $20,000 • Increases 6% • $360,000

Charlie decides: Charlie compares the $360,000 with a home potentially worth $440,000, and decides to buy the home. However, he knows these numbers are estimates only. There is no guarantee on what he will make on either investment. Housing prices in his area may not increase, and may in fact fall. Stock markets could drop, dragging down his investment return.

Also, he will have certain costs to pay with each option. For example:

You can find the multiplexes/investment listings on webs sites as under

If Charlie buys a home:

  • He will have to pay for repairs. These costs could be higher than he expects.
  • If he buys a condo, he will likely pay monthly fees. These fees can increase over time. There may even be extra fees from time to time for major repairs.
  • There is no tax on the money he makes on a home, as long as it is his main home.

If Charlie invests his savings and rents:

  • He will likely pay less for home repairs.
  • He will likely pay fees to invest. He may also pay taxes on the money he makes.

So why does Charlie buy the home? Like many people, it’s not about the math. He simply decides he wants a home of his own.

 Learn more:

Canada Mortgage and Housing Corp.: information on a wide range of topics ranging from finding a contractor, to home maintenance checklists

Free How-to-Renovate videos from CMHC

Canada Home Builders’ Association – Resource Centre Worksheets: worksheets and checklists you can use when planning a renovation

Find a renovator or contractor who belongs to the Canadian Home Builders’ Association

 (The comments contained on this site are for information purposes only and do not constitute legal advice.)  *Charlie is fictional character

If you have any questions/suggestion or require more information, please do not hesitate to contact me for buying or selling and also I will be happy to assist you negotiating your investment needs.

You can find the multiplexes/investment listings on webs sites as under

Vijay Gandhi,
Sales Representative- REALTOR®,
RE/MAX Dynasty Realty Inc. Brokerage*
C: 647. 267. 6338 (Direct-Leave message or text)
P: 416.335.4335 | 905.471-0002 (page me-Have me)
F: 905.471.7441
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Please call me TODAY for a No Obligation Buyer Consultation or Pre-Listing appointment!