The Benefits of Renting Instead of Buying

20 August 2012

Have you ever heard the saying “renting is like throwing your money away”? As a current renter I whole-heartedly disagree. Renting a place as opposed to living with your parents rent-free or being a professional couch surfer is not a terrible investment, despite what real estate agents and homeowners may tell you. If you are saving up for a down payment, or can’t afford to buy a place in your area quite yet, then renting is by far a better option than getting stuck in a 30-year mortgage that you can barely afford to pay.

That’s not to say that I think you shouldn’t invest in property. I seriously believe that buying property is one of the best investments you can make, if you can afford all of the risks and extra expenses that come along with it. Before you jump the gun and start house hunting, I encourage you to consider all of these benefits of renting first. You may be surprised how much money you can actually save by being a tenant instead of a homeowner.

1.) You can negotiate to lower your rent.

Just like when you are low-balling an offer on a home when the market is low, you can do the same when putting in an offer on a rental. If there is a surplus of rentals in your area and not much demand, negotiate a lower rental rate or threaten to walk. Without any competition, the owners may have no choice but to accept your offer to ensure they get a tenant giving them a cheque every month as soon as possible.

2.) Your only risk is losing your damage deposit.

There are a ton of risks involved with buying a property, including expensive repairs or the housing market taking a dip and you losing thousands of dollars of value on your home. When you are renting, the most money you’ll ever risk losing is the couple hundred dollars you gave your landlord for a damage deposit. To prevent that from happening, make sure your place doesn’t turn into the Jersey Shore house, and repair any cosmetic damage (fill in holes, paint the walls, shampoo the carpets) before your landlord comes in for a formal inspection.

3.) If anything breaks, you don’t have to foot the bill.

Most rentals are usually older places, which means a broken pipe or leaky roof may be inevitable. The good news is since you aren’t the owner you don’t have to pay to fix it. As long as you didn’t cause the damage, you aren’t responsible for footing the bill on any repairs. That being said, landlords are notorious for taking months to fix the simplest repair. As long as you are patient, you could end up saving a lot of money.

4.) If you hate your place, you can move.

Although most rentals come with a 6-month or 1-year lease, if you realize once you start renting that you can’t stand the mystery smells coming from the suite across from you, or your noisy neighbour who loves to blast reggae at six in the morning, you can move. However, if your lease isn’t up yet, you may risk losing your damage deposit. Then again, if the reason you want to leave is because of a violation with your tenancy rights, you can fight your landlord to make sure that money is returned to you before you leave. As a homeowner, it could take months or even years to sell your place and buy a new one. As a renter, you have the freedom to give your notice, pack up your things, and get the heck out of there whenever you want.

5.) Rent is almost always cheaper than having a mortgage.

Even if you are living in a really expensive city, paying rent is still most likely cheaper than having a mortgage. If you want to make sure that in the next couple of years you are able to save up as much money as possible to either buy a place or fulfill some life long travel plans, then renting is definitely the way to go.

Bargainmoosers, why did you choose to rent or buy your home?

(Photo credits: mollyali)

Editor's Note: When signing a lease, whether it's for one month, six months, a year or more, please read the fine print! If you wish to leave a lease at the end of its term, you may need to give your landlord several months notice. Otherwise the lease may renew automatically. In addition, if you want to break a lease early (leave before the leasing period has expired) you may be on the hook for rent for the remainder of the lease if the proper precautions aren't taken.

All of this information should be in your copy of the lease. For any questions about the ins and outs of renting, and what rights you have as a tenant, please contact your local rentals-man. They exist to help out tenants and landlords. A Google search should be able to locate one for you pretty quick.


  • Lyne M.
    I don't disagree with some of the points you are making, but ultimately, in renting, you are not building equity - you are putting money in someone else's pocket. In a sense, paying the mortgage means paying yourself, for the day you sell your house, even if you do not make a profit, it means that you have been living for free as you get your money back. And these days, in Canada, the mortgage rate is so low, that often paying the mortgage means paying less than rent. What one needs to do, is to buy something they can afford and not go for the BIG house and get house poor. I actually recommend all the youth I know NOT to buy a car when they graduate, but to buy the tiniest condo they can find... over time, the car will die on them, but the property will be profitable.
    • Sarah
      You forget that when you have a mortgage, you are essentially renting from the bank. All that money paid towards interest is lost. Considering renting is almost always cheaper than purchasing the same property, the smart thing to do is to rent, and put the difference between the rent and what the mortgage payment would be into savings.
  • Stephanie
    I don't agree ... renting should be for short-term only. When you own, you are building equity. I have a friend who's husband owns an apartment building. He told me there's one eldery lady there who has spent about a million dollars in rent. If she would have put that into a home instead, she would be owning a very nice place right now instead of having nothing to her name to leave her children/grandchildren when she passes!
  • heather
    It is impossible for that old woman has spent 1 million on rent. In order to spend that much money on rent she would have to pay 1200 dollars per month for almost 70 years. Considering the average wage in in 1950 (62 years ago) wasabout 400 dolalrs a month and rent was 150-250 per month there is no way she has been paying 1200 dollars every month for 70 years. She may currnely pay that but more likely to pay under 1000 and that would be for teh last decade but for most previous decades she would have paid far less per month.
    • Stephanie
      I think he meant when you factor in interest? ...
  • Chris F.
    Great post. You cover off the investment part of owning a home (a huge bonus) along with some of the risks and benefits of each.I do agree that I much prefer to pay my own mortgage over another persons mortgage. I live in Metro Vancouver. Rent is horrific here and the vacancy rate very low. I couldn't negotiate a lower rent and I pay less to own than I would to rent. Landlords here regularly 'upgrade' the building to get higher than normal rent increases, forcing even long term tenants out. Even with the special assessments I've paid over the years, my property value has doubled since I bought almost 14 years ago. That said, I may have the opportunity to move into a coop now (a bigger place) and I'm taking it. It's with a bit of hesitation of course. I love my place and my neighbors are amazing but I share a 1 bedroom apartment with 2 toddlers and that can't last forever. I cannot afford to buy a 2 bedroom and it would cost me almost double my mortgage to rent one. The coop is in my neighborhood and I have friends there already so I'll move once a unit comes up. When my current place sells, I'll invest the money and maybe when the kids are grown up and I can use a smaller place again, I'll buy.
    • Jessica M.
      I've had some friends that have lived in co-ops before and they absolutely loved it. That's definitely something worth looking into for sure. And I definitely agree that in the long run owning is a good investment, but only when you can afford a 10-20% down payment and all the extra costs that go along with it. As someone in her twenties, I've still got a fair bit of saving up to do before buying instead of renting is really an option. Thanks for the comment!
  • Jessica M.
    Wow, some great comments, love the discussion here!
  • Davide
    Having just moved to my new place I would like to share my experience about deciding whether to buy or rent. I would say all the points above in favour of renting are true. However, three years of renting at my former place cost me about 45,000$, which now represents a complete write off. Someone may say that is the cost of worry-free housing (i.e. no worries about maintenance and repairs). I created a small spreadsheet to estimate the costs of renting over a 20 years period (typical mortgage length) and assuming a 1% rent increase per year (which was the standard at my former place). Renting my former place (1 bdrm, about 650 square feet) would have cost me about about 336.626$. Including the interests, I would think buying the same place would cost about 500,000$ to 535,000$ over the same period, with the difference that at the end of the 20 years you can live rent-free and only worry about repairing costs. I calculated that the cost of renting a similar place to the one I now own (about 900 square foot, newly renovated, in Kits) would be about 475,000 (for a 20 years period), which is very close to the actual value of the property. So my philosophy is that now I'm actually paying a premium (i.e. the interests) plus the rent to my bank. I think over the short-time (1-5 years) then renting is the possibly best option, provide your rent is reasonable. It also depends on how many people are actually contributing to the house costs (easier to pay the rent, or the mortgage for that matter, when two people are sharing the costs). Overall, I think that if you can afford at least a 10% down payment, then buying is probably better. House prices may go down but as with pension funds, over the long period it is safe to assume that the overall trend may be flat to upwards.
  • Gary W.
    First of all, there is no such thing as a "damage deposit" in Ontario. Also, here, you cannot just walk away as your lease makes males you responsible for the duration. Perhaps, if someone tales your advice you make wind up with a law suit.
    • Jessica M.
      Hi Gary, as mentioned in the editor's note there are of course certain stipulations to ending or breaking a lease, so that's why it's very important to read your lease agreement and know your rights as a tenant before signing anything. And although a damage or security deposit may not be collected by landlords in Ontario, those deposits are required in many other provinces such as British Columbia, Manitoba, and Alberta as noted on the CMHC website Cheers :)
  • Mrs. P.
    We're definitely in the buyer's camp now, but we didn't buy until we knew we were ready for it financially and prepared to stay in the same location for a while. That being said, there are a lot of places right now where rent is much MORE than a mortgage payment. But, that assumes it's a mortgage payment based on good credit, a 20% down payment, etc... if you don't have those things, then the equation gets a lot fuzzier. Glad renting's working out for you right now, and it sounds like you've got a pretty good idea of when you'll know you're ready to buy.
  • bina e.
    good points!!! we are lucky, our mortgage has always been around the $430 mark (PIT) but we live in a small town, not the city, so the costs are quite a lot cheaper. Our nearest city is a university town so I know that rents are pretty high and places harder to come by (I went there for 3 yrs myself) I've grown up in small towns, so the preference to raise a family was small town, but the city itself is only a 20-25 min drive (When I worked there, I could get to work faster then people who lived on the east side of the city LOL) And people have to realize that you have to put money back into your investment, in the 11 yrs we've been here we've done the shingles, put in all new doors/windows, done the siding and put insulation into the roof, and we had to buy a hot water heater this weekend

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