Читать книгу The Wealthy Renter - Alex Avery - Страница 4

The Stakes Are High —

Where We Live Defines Our Lives

We all have to live somewhere. Because of that, every one of us will need to make housing decisions at various times in our lives. When we do, there are lots of things we think about and focus on, like the size and location of our home, its cost, and its features. But our housing decisions are about a lot more than size, location, and price.

It’s pretty hard to separate where we live from the rest of our lives. From a financial perspective, a career perspective, and a quality-of-life perspective, housing touches everything we do. It influences how we spend our time, how we fare financially, and how much we enjoy life. In many ways, how we house ourselves is one of the most influential decisions we’ll ever make.

Understanding all of the ways our housing choices affect our lives is crucial to making smart, informed decisions.

Understanding all of the ways our housing choices affect our lives is crucial to making smart, informed housing decisions. Not just for our financial success, but for nearly every aspect of our lives. This is true not just of the type of housing we choose. It is also true — and perhaps in a more significant way — of the decision of whether to buy a home or to rent one. Understanding the benefits — and drawbacks — to both is the first step in understanding the appeal of renting. As you will learn in this book, renting has many benefits, probably more than you ever imagined.

Every person who reads this book will have his or her own history with housing. It may have taken place in just one house — it may have taken place in two houses, or fifteen. It could have been a farmhouse, a townhouse in the city, a condominium by the lake, a bungalow in midtown, or a combination of several. You might have grown up in an owned home or a rented one. We all have different experiences, but each of us grew up somewhere, and all of us have lived in some form of housing our entire lives. This experience is the lens through which we see housing.

I myself grew up in the suburbs, on a dead-end street that backed onto a ravine where I spent countless hours exploring and playing with friends. My parents raised us in a house they owned. My sister and I went to the same primary school, the same middle school, and the same high school. We had lots of friends, many of whom are still our friends today. We stayed in this house from the time I was two years old until I left for university. It was a great house and a great neighbourhood. And until I went away to school, it was the only kind of house I’d ever known.

As the biggest expense of our lives, how well we manage the cost of our housing has a greater impact on our cost of living than any other factor.

Since I left home for university, I’ve rented more than a dozen places, including rooms in houses, apartments in apartment buildings, apartments in condo buildings, basement apartments, and detached single-family houses. I’ve also owned homes, in two different cities, and I’ve been a landlord, seeing the other side of renting.

So I’ve lived in many types of housing and I’ve rented and owned. I’ve also talked to family and friends about their homes. Having spent the last fifteen years analyzing real estate investments for everyone from pension funds, to the wealthiest Canadian families, to roommates, friends, and family members, I’ve helped hundreds of people make decisions about their housing. What I’ve come to learn is that, for most people, although the housing decisions our parents have made and we have made form the settings for our lives, we seldom think about the many different ways housing affects our lives. In fact, our housing decisions have much more of an effect on our lives than most people think.

Where we live defines how we live our lives. Our housing choices determine how long it takes to get to work. How much time we spend with our friends and family. If you have kids, it determines where your kids will go to school, where they play, and who they play with. It can affect how well we do our jobs. It can determine how much money we have for other things, like travel and the nicer things in life, such as cars, clothes, jewellery, electronics, and collectibles. It’s probably the biggest factor that determines when we can retire and how we retire.

Housing is the largest single expense in life for the vast majority of Canadians. For those who choose to own, buying a home is the biggest purchase of their lives. For renters, the rent cheque is usually the largest monthly expense and over a lifetime is almost certainly the largest expense. As the biggest expense of our lives, how well we manage the cost of our housing has a greater impact on our cost of living than any other factor.

With all this at stake, how can you afford to not know as much as you possibly can about housing?

Why is it that so many of us spend more time considering which car to buy or which wireless plan to choose than we do trying to understand the type of housing that makes the most sense for our lives?

And I’m not talking about the time spent going out to look at five, fifty, or a hundred places before we decide on the home we’ll live in. That’s house hunting. That’s the fun part. Whether you’re looking to rent or buy, house hunting is what you do once you’ve figured out what kind of housing makes sense.

I’m talking about sitting down and figuring out what’s right for our lives — right for our age, right for our family situation, right for our careers, right for our financial situation, and right for our peace of mind.

Examples of the choices people make are everywhere. I’ve got all sorts of friends who have made very different housing choices, and the effect of those choices on their lives has been profound.

 Andy lives in a small rented apartment just down the street from where he works. He loves the affordability, convenience, and time savings of a small, well-located rental apartment. He likes to travel, often on a moment’s notice, and the money he saves by renting a nice but small apartment gives him the financial flexibility to hop on a plane almost whenever he feels like it. He never has to worry about who will mow the lawn, shovel the snow, or otherwise take care of his place when he travels. He just locks the door and he’s off.

Because Andy’s job means he might be transferred to offices in other countries, renting allows him the flexibility to react quickly to opportunities to move where his work takes him, whether for his current company or for others. It also means he can take bigger risks at work because he hasn’t committed himself to paying a mortgage for the next twenty-five years — the kind of risks that will either vault his career to new heights or get him fired, like speaking his mind when he sees a bad decision or choice being made that he knows will hurt the business. Renting gives Andy the flexibility to be bold, and it’s allowed him to be an outspoken leader in his field.

 Kevin and Alison bought a large, beautiful home with a huge backyard outside of town. They probably took on a large mortgage (I haven’t pried); if so, it will take them decades to pay it off. Kevin now commutes a long way to get to work and back. His eight-hour work day is actually eleven hours, including an hour and a half of commuting each way, adding three hours to his “work” day. Alison works part-time, close to home, allowing her to spend more time with their kids. Fortunately, their extended families aren’t too far away, so they see them regularly and benefit from some very low-cost babysitting (a bottle of wine here and there). They have a spacious, beautiful home on a large piece of land — a great place to raise their family and a great home they take pride in.

 Jennifer and Chris rent a nice but small two-bedroom townhouse in an expensive neighbourhood where they couldn’t afford to buy a single-family house. Their townhouse is close to lots of friends and family, which is important to Jennifer and Chris. It’s also close to work, which means that, with their busy work schedules, they don’t spend any more time than necessary travelling to and from work. And that means they can spend more time taking their daughter to the local parks and to visit friends and family. Jennifer and Chris have traded the space they could have gotten in a larger house in a more affordable neighbourhood for the opportunity to be close to friends, family, and work. They’ve also decided not to commit a huge multiple of their net worth to a home they think might not meet their needs in a few years if their family expands again.

The choices each of my friends have made have created dramatically different effects on their lifestyles, their costs, and the way they spend their time.

The right home for each of us is different. We can all imagine our dream home — our society is obsessed with real estate. It might be a beautiful country home with a veranda stretching all the way around the house, overlooking a gurgling creek. Or it might be a luxurious penthouse condominium downtown with stunning views of the city. Odds are that your dream home is somewhere in the middle.

These dream homes we have are normal. I’ve got a dream home. I’ve also got a dream car, a dream job, and a dream life!

This isn’t unusual or abnormal. We’re conditioned to admire and want beautiful places to live. Home ownership is aggressively marketed to make people want to buy homes in the same way car companies run commercials featuring their cars racing through hairpin turns with their engines roaring. Vacation resorts are marketed with shots of attractive people smiling and joking around on the beach or around a candlelit dinner. Cigarettes used to be promoted with ads featuring glamourous actresses and actors having fun and looking sexy — until lawmakers put a stop to that harmful practice.

This marketing makes understanding housing a difficult thing in today’s world. There really isn’t anyone we can turn to for good advice. The people who we typically ask about housing are generally unqualified or too biased to give us good, impartial advice.

Whether it’s our parents, our friends, or our co-workers, or whether it’s real estate agents and mortgage brokers, the people we look to for advice on housing generally are not very good advisors. It’s not their fault. Our family and friends think they’re giving good advice. But they’re not likely to know much more about housing than anyone else. As for real estate agents and mortgage brokers, they stand to make money when you buy a house, and since that’s the case, and because the more you spend on housing the more money they’ll make, there’s obviously a real incentive for them to persuade you to buy a big, expensive home. That kind of advice is a recipe for a bad housing decision.

As if making a decision about a home wasn’t hard enough already, our perspectives on housing get further skewed by our society’s consumer culture and the media’s focus on housing as a status symbol — in other words, the idea of “keeping up with the Joneses.” Media picks up right where the industry marketing efforts stop, profiling condominiums in London, England, selling for over £100 million, the beach house in Miami that a rock star sold, and the semi-detached house down the block that just sold for twice what it sold for two years ago. Housing can inspire envy and excitement. And there’s a lot of money at stake.

On top of all that, there’s government. What does government have to do with it, you ask? Everything. Government is coach, referee, cheerleader, and fan in the game of housing. In virtually every developed country in the world, governments have stepped into the business of promoting home ownership. They do this by changing the rules of the housing market. In Canada, this is done by offering mortgage insurance through Canada Mortgage and Housing Corporation (CMHC), the principal residence capital gains exemption, allowing first-time buyers to use their RRSP savings tax-free for down payments through the Home Buyers’ Plan, and providing tax rebates on transaction costs.

Why would governments do this?

Isn’t it time to take a look at whether the old, conventional views on housing still make sense?

The reasons are many, and most are honourable. But by changing the rules, governments make it more difficult to understand the housing market.

Nonetheless, pro–home ownership housing policy is so pervasive and prevalent that it has become a part of the fabric of our society. It’s enmeshed in our belief system.

For generations, Canadians have dreamt of owning their own homes. Call it the Canadian Dream. Canadians aren’t alone in having a dream. There’s also the Australian Dream, the American Dream, the European Dream, the Russian Dream, the Croatian Dream, the New Zealand Dream.… Around the world, the belief in the value of home ownership is deeply rooted.

All of these belief systems revolve around the idea that freedom to determine our own destiny is best demonstrated through owning our own homes.

In fact, the dream of home ownership has become more than just a dream of a safe, secure place to call home. It a business. A big business.

All of this pro–home ownership propaganda might make you rule out renting, even though it’s often cheaper — much cheaper — and it might just be the right decision for your housing needs. But until you know more about housing, you probably won’t know if you should rent or buy.

It all sounds pretty scary so far, right? You might be thinking this book is about how evil the world of housing is and why no one should ever buy a house.

It’s not.

What this book is, actually, is a celebration of the virtues of renting. Not in a home ownership–bashing kind of way, but rather in a way that explores the appealing advantages renting can offer. It makes the seldom-heard case for renting and helps you figure out if renting makes sense for your life. I’ll debunk some of the myths about renting and discuss strategies for making a renting lifestyle create the kind of financial security and personal wealth so often associated with home ownership.

The world has changed a lot in the past twenty-five years, and even more in the past fifty years. Isn’t it time to take a look at whether the old, conventional views on housing still make sense?

With this book, I hope I can help you better understand housing and help you make better housing decisions that will improve the way you live your life. You might decide to rent or you might decide to buy. But after reading this book, you’ll better understand how renting can shape your life and whether renting is right for you.