Stay a renter or buy a condo?

If you only look at purchase price and related expenses (e.g., down payment, taxes, condo and maintenance fees), you may well conclude that renting is your best option, given that the monthly cost is generally lower. But it’s important to take a longer term view. Buying remains a worthwhile option for many people.

Condo ownership = compulsory savings

With a condo, you have no choice but to pay down your mortgage. In doing so, you’re investing in an asset that could increase in value—and that allows you to recoup your investment if you sell—which isn’t the case with a rental unit. Of course, disciplined renters can always invest the difference between the cost of renting and owning. After 25 years, that will add up to a nice nest egg! But in real life, few people manage to stick to their guns because, unlike a mortgage, rental payments never come to an end.

Financial assistance for a condo purchase

The provincial and federal governments offer various incentive programs for the purchase, renovation, or construction of a home (tax credits, tax refunds, etc.). For those still not sure, these incentives can sometimes tip the balance!

Is it possible to lose money on a condo purchase?

Unfortunately, yes, and for several reasons:

• The market is saturated.
• You sell at a bad time (e.g., after a separation) or too soon after purchase.
• Interest rates suddenly go up.

When is it better to rent?

Renting can be smart option in certain situations. It makes sense if:

• You travel often
• You can’t afford to buy in the neighbourhood you want to live in
• Your budget is limited
• You expect to move in the not-to-distant future (during the first years of a mortgage, you pay more in interest than in principal)
• You want to give condo living a “test run” before you buy

How to choose between buying and renting a condo

 “Location, location, location”—everyone's heard the classic real estate expression And with good reason: the neighbourhood you choose and the state of the market are very important factors to consider when assessing your options. For example, it could make sense to buy a condo at given moment in a specific part of town, but not in a different city.

The best thing to do is carefully analyze your situation. You can:

• Consult a financial planner
• Talk to the experts at CAA-Quebec Residential Advisory Services (for members only)
• Use the Autorité des marchés financiers (AMF) calculator (AMF) to compare buying vs. renting costs and help make the best decision

Whether you buy or rent, you’ll need home insurance

If you’re a condo owner, you’ll need two insurance policies:

• Co-owners insurance covers your personal property and any improvements you have made to your condo unit, along with civil liability.
• Condo corporation insurance covers common areas, the original construction of each unit, common property, and condo corporation civil liability.

In the event of a problem, compensation is paid under one or both of the policies, depending on the type of damage. Remember that home insurance is worth shopping around for. It’s best to request up to three quotes.

Renters are also well advised to opt for an “all risks except” tenant’s insurance policy including civil liability. Take it from us!