Save. Spend. Splurge.

Ask Sherry: What would you pay now for your home or would you rent?

You asked, and I am answering every Friday once I have enough questions!

You can ask any question using the form here.

Would you have a maximum price that you would pay now for your home, above which you would prefer to rent instead? If so, what would that purchasing price be? Thank you.

To be honest with you, we had a budget, but it was loose. We were more concerned with the location, the neighbours, noise-level and potential resale value.

All that taken into account, we looked at what there was in our area, also the age of the building, the maintenance fees, etc.

From there, we narrowed it down to being able to afford at least a 1-bedroom if not a 2-bedroom, and then if there were extras like 2 covered parking spots instead of just one, this was a great benefit for us as well.

Our limit was likely $1M in terms of budget

If the condo was $800K, closer to $1M, we would have stayed as renters if the rent was $2100/month for the same spot with basically the same amenities.

We also really wanted to pay in cash. We could have swung $1M even though I would have cried. Our initial budget, to give you an idea, was $400K.

We ended up going over by $179K or 44.75%.

I have friends who had a $500K budget only to spend $800K.

That’s pretty much how it goes – once you start looking, you realize that what you can afford is beer, not champagne.

Was it really cheaper to buy? Debatable.

I thought it was initially, but then I run through the numbers quickly and maybe for where we were, renting was better financially, although in recent years we have seen homeowners sell off their units to release the capital for their retirement so… we’d likely have to be ready to move every 2 – 5 years as a result.

We were originally renting at $2100/month for a 2-bedroom apartment, with 1 covered spot which was $25,200 a year.

We paid in cash $579K for a 2-bedroom apartment with 2 covered spots and pay around $700/month for condo fees or $8400, plus municipal taxes of around $6200. The total we pay is around $14,600 a year just to maintain the place we bought.

Don’t forget that renting also covers municipal taxes that the homeowner pays, along with condo fees.

If we factor that in, the rent we “paid” on top or the “profit” the owner got was $11,000 a year.

If we just use that $11K as a benchmark and take a simplistic view of it, it would mean we’d have to live here for 50+ years for it to be the equivalent of renting.

But, I still think it was a better deal for us overall mostly because we didn’t take a mortgage (although some would argue it would have been better to take a mortgage and invest the money for a 10% + average return instead of the 4-5% we’d have paid).

Also, we can’t assume rent would stay at $2100 a month forever, obviously if there was a 3% inflation factored in each year, we’d be at a much larger amount in 10 years.

With homes, you have to look at more than just the money

We are definitely not planning on upgrading or buying another home – we knew that if we bought, we would buy once and buy the right place we needed. We aren’t the type of people to want a huge home (I see extra cleaning and maintenance costs).

What also isn’t factored in those amounts, aside from just money, is that the unit we bought is in a MUCH BETTER spot than the previous unit we were renting which was dark, felt like a bowling alley and sort of made me depressed. Where we live now in our home, it feels like we are outside with the windows, and the light coming in is lovely.

We also have 2 covered spots (this costs more for the homeowner as only one parking spot came with the units), and the spots are very close to the elevator (super coveted as you don’t have to walk as far and all the carts are there), plus the spaces are bigger.

It also depends on you – your neighbourhood, lifestyle, preference. Some people are happy renting forever. It is certainly easier without children.

Some people, want their own permanent nest to decorate and fill with walls of books – this is very difficult to pack up if you are constantly on the move.

Lastly, peace of mind – renting is fine, but with all things considered, we didn’t want to be at the mercy of a homeowner who may or may not be committed to renting 100% forever, and may sell the place to release the capital and then have to kick us out.

If we rented, we’d go with a professional rental company that is exclusively renting, but this means living in an older building in an area we may not like as much, in an apartment we could definitely live in forever unless the new neighbours annoyed us as they would shift constantly.

Buying a home is a personal choice

If it is your principal residence, I can safely assure you that it is not an ‘investment’ in the conventional sense and you’re going to ‘lose’ money on paper over time with your home especially if you’re taking a mortgage.

Buy a home if you want a home, and can comfortably afford it. Not because you think it’ll make you money.

(Well, unless you house hack it and have 6 roommates…)

It sort of drives me crazy when people say: WOW I’m a great investor! I put $150K on my home 30 years ago and now it is worth $450K! I AM SO SMART!

You may see that you got it at $579K 40 years ago and now it is worth $1.5M, but that doesn’t take into account the inflation, condo fees, taxes, mortgage fees, interest fees, and all the other stuff you paid including lost value in just renting and investing the money in the market instead.

There are so many factors, so unique to you, your family, your country, city, county, district, neighbourhood… that it is hard to really say for sure.

I wouldn’t pay half the price to live in the boondocks in a massive home. I’d rather pay more to be centrally located in a smaller home.

But how much smaller? How much closer? There’s a balance of money, space & location that only you can know and work out for yourself.

Our only main concern above all was: LOCATION, LOCATION, LOCATION for resale value but also for proximity to highways, and issues like flooding that is now happening in some areas of Montreal due to global warming.

If you want to read more on renting versus owning, I wrote:

Do you use a mouse with your computers? If so, what mouse? Or do you use a trackpad?

I don’t use a mouse, I use the Apple Trackpad – this one that is rechargeable.

If it wasn’t important how much money you earned, what job would you like to try? Why would you choose that job over any other?

Something as a stylist and/or with shopping involved. Maybe interior decorating. Or clothes. Or a graphic designer of some sort.

I really enjoy fabrics, colours, putting things together, making things looks pretty, graphic and exciting. This is why I am so into fashion/style and watching interior decorating shows. I’ve always enjoyed seeing what goes together and have a pretty good eye for what I like to achieve the look I want or envision in my head.

I’ve been reading your week of money posts for a long time, and have noticed that you have a recurring theme of being tired.

Maybe you aren’t able to really pick up on it, because it’s your day-to-day but it might be worth something delving deeper into.

Oh I know. I am exhausted mentally all the time. It is the sleep interruption, it is the early wake-ups, it is him napping and I cannot nap at all (although lately I have been…)

It seems like a lot of the tiredness is because your son wakes you up so early or has disturbed sleep. I’m wondering if his sleep patterns (eg. early wake up, napping in the afternoons, late “kid” bedtime) feed into a cycle where you end up bearing the brunt of it.

All of the above!

As a parent with three kids – 7,5,2 – my kids do wake up before me on a regular basis. But they’ve learned (mostly bc I’ve yelled at them lol) to go downstairs, watch tv, play legos, get their own cereal, fruit, milk out etc.

He can’t get anything on his own. Everything is too high up for him to reach including the cutlery, so….. we kind of have to get it all.

They have also learned (again, from the yelling) that they shouldn’t try to wake us up before 7am because we’re not open for business. Even the kid who comes into our bed in the middle of the night – every night – just wakes up and heads downstairs. Obviously they aren’t perfectly quiet and sometimes we need to get up and manage the fighting, but for the most part it’s working decently well.

We also cut out naps around age 3.5-4 unless it’s obvious that they NEED the sleep. It was brutal at first because they are SOFA KING cranky and annoying as they learn to manage without a nap, but it did mean earlier bedtimes and longer sleep. Now with the virus, we have instituted quiet time in the afternoons so the two older ones can draw quietly or read – sometimes it leads to a 20 minute nap but mostly they just chill. We adults needed that time, though, to just be off duty.

We do the quiet time thing at 13:00 every day until 15:00. It helps me greatly, and I am able to do what I want while he naps or doesn’t nap, but at least he is quiet!

Anyway, if you’re open to “fixing it” (I mean, who knows?) since everyone is home all the time now, it might be a good chance to work on creating some good sleep behaviours without messing up your regular work-day routine. (We are working on potty training our youngest- think good thoughts for us, please!)

Potty training is the worst. I remember wishing I drank!

Thank you for the kind thoughts/words and the concern. I am most definitely sleep deprived. In the past week, I was so nauseous and something went wrong in my body that I completely shut down and slept for 3 days straight. I only woke up to go to the bathroom, eat a little, and then I slept. I slept in the morning, afternoon, through the night… and I am still tired/sleeping.

I know you can’t make up for lost sleep, or have a sleep debt.. and I think a lot of it has to do with not just my son’s terrible sleeping habits, but his nightmares, nosebleeds, and that the stress of this virus is sort of killing my brain capacity.

I need another project to jump start my brain, because it is a slow slide into nothingness right now.

Still have a burning question?

You can ask any question using the form here and all of my previous Ask Sherry posts are here.




  • GYM

    Having children is so tiring though! I am so tired. We got a gate for my toddler and that has helped a lot with the wake ups, obviously you can’t do that with your boy as he’s 5-6 I think.

    Having no mortgage no debt, and no need to pay anything except utilities/ maintenance/ property taxes is very freeing, and I think a better feeling than renting and investing the difference. But everyone has their own preference.

    • Sherry of Save. Spend. Splurge.

      Mentally, I like not having to owe anyone money. I just think of my immediate needs for bills and then control what I can. Unless buying was VERY expensive versus renting, I’d likely prefer to be a homeowner than a renter just to ‘secure my nest’ but that is a very common feeling amongst women, moreso than men from what studies have shown.

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