Читать книгу The Wealthy Renter - Alex Avery - Страница 6

Repeat After Me: Renting Is Okay!

Renting is a beautiful thing, and don’t let anyone tell you otherwise. The unsung hero of the housing world, renting is beautiful in its simplicity. Pay a fixed amount of money for the right to occupy a space for a fixed amount of time. It’s that simple.

Some of the amazing things about renting are quite easy to see.

Commitment-Lite

Renting can be a casual relationship and one that you can change up with relative ease as your needs change. The length of a lease is typically quite short — usually one year or less, but often as short as thirty days, depending on how long you’ve been renting and what province you live in. That means that if your housing needs change, you won’t have to wait long to move to a new place that accommodates you.

Renting can be a casual relationship — one that you can change up with relative ease.

Maybe you need more space or less space. You might find the rent is too much or that you can afford a nicer place and the higher rent that goes along with that. Maybe you’ve decided to move in with a girlfriend or boyfriend. Or maybe you’ve decided to stop living with a girlfriend or boyfriend, in which case the ability to move quickly is particularly important. Having a kid? Or another kid? New place!

As life changes, so do your needs, and you’ll often find yourself looking for something bigger, nicer, smaller, or cheaper. Whatever the reason you might have for moving, sometimes you can’t wait to make a move. Renting allows you to move quickly and without a lot of costs.

Renters Move for Free! (Or Almost Free)

If you’re renting and you decide you’d like to move, there are no fees or commissions payable to move into a rental, and there are no fees when you leave. If you were to try the same thing as a homeowner, the transaction costs of buying and selling could be 5 percent or more for each transaction. If you buy a home worth two and a half times your gross annual income (a guideline that seems quaint and outdated, given Canada’s house prices — do the math!), you could easily spend three months of gross income selling one home and buying another. If you bought and sold the average house in Canada, at just over $500,000, that cost could be $50,000 or more.

As a renter, you might have to buy some beer for a few friends or even hire a mover, but it’s hard to see how that could cost even one month’s gross income. And that’s a cost that you would have whether you rented or bought. Also, for a number of reasons we’ll talk about later, people who own houses tend to buy bigger houses than they would live in if they rented, and when they do, they tend to accumulate more junk. More junk equals more junk to move, which equals more expensive moving costs … whether you pay in beer or cash.

One Fixed Rent Equals One Fixed Cost

Renters agree to pay a fixed rent for a fixed period of time. As a renter, you know exactly how much you’re paying, and you know how much it will be next month and the month after that. Having a single number for the cost of your housing makes it simple and easy to track. Life is complicated and expensive enough – why choose complicated and expensive housing?

With renting, you know exactly how much rent you’ll have to pay to continue to live in your home. Ask a homeowner how much it costs for them to live in their house and they probably can’t even tell you. They’ll know their mortgage payment. They might know their property taxes. The cost of their homeowners’ insurance? How about all of the utility bills and repairs and maintenance? How about the transaction costs of buying and selling? How much was the lawnmower and the gas you put into it? How about the opportunity cost? More on that last one later.

As a renter, you know exactly how much you’re paying, and you know how much it will be next month and the month after that.

While it’s true that your rent can change over time, most provinces have rent controls that limit the amount a landlord can increase your rent and how frequently they can make increases. Ontario publishes a guideline that states that rent increases can be no higher than 2.5 percent per year for most housing. In Quebec, the legal limit on rent increases is calculated each year based on the change in the cost of property taxes, utilities, and maintenance or improvements (all things that would also hit homeowners). In British Columbia, the provincial government publishes a maximum allowable rent increase that has ranged from 2.2 percent to as much as 4 percent over the past ten years and that is calculated as inflation, defined by the consumer price increase (CPI) for British Columbia, plus 2 percent.

Home to four of the six largest cities in Canada and 75 percent of Canada’s total population, Ontario, Quebec, and British Columbia have rules limiting rent increases that make renting a very stable, reliable way to arrange for housing without risking unexpected cost increases. Manitoba and Prince Edward Island have rent controls too, extending rent controls to almost 80 percent of Canadians.

As is often the case, Alberta is an odd man out among large provinces, imposing no restrictions on the amount by which a landlord can increase rents but restricting rent increases to once per year (increased recently from every six months). While this might not sound ideal — unlimited rent increases as frequently as every year — it’s important to remember that, as a renter, you can choose to leave and find a new place to live if you don’t like the rent increase. Aside from the hassle of finding a new place and moving your junk, there is no cost to moving.

No Budget Busters

Renters don’t have to worry about unexpected budget-busting repairs. Homeowners often silently, or not so silently, face the substantial and unexpected repair bills associated with owning a home. It could be a cracked foundation, a furnace that died, a leaky roof, or a special assessment from the condo board (if you own a condo — or strata-titled property, as they are called in British Columbia). There’s an unbelievable number of things that can go wrong with a home, and it’s impossible to know when they’ll pop up.

As a renter, when you have unexpected problems with your home, it’s a hassle. But that’s about it. Usually it means a little inconvenience related to having a contractor come in to fix the problem. You might be without a working shower or a stove or whatever might have broken for a day or two, or you might have to be home to let the contractor in. But the biggest parts of the problem — the cost and arranging for someone to fix it — are the landlord’s problems. As a renter you can even moan and gripe about the inconvenience the problem is causing. If the landlord doesn’t act quickly to fix the problem, most provinces have a provision in their rental regulations that allows a tenant to arrange and pay for repairs directly and then deduct the cost from their rent payable the next month.

Renting allows you to cast the widest net you possibly can as you look to build your career.

Better Labour Mobility

When you choose to be a renter, you’re improving your odds of finding a better job, one that might pay more and offer better career prospects. Why? Because you can cast a wider net in your job hunt, considering more jobs in more places. When you’re renting, it’s easier for you to move for work, and the cost of moving is significantly less. Owning a home raises the cost of moving (in the form of high transaction costs), significantly increases the amount of time it takes to move, and reduces the likelihood you’ll consider jobs in other cities or countries … or even on the far side of the city you live in, if it’s a large city with long commute times. Toronto, Vancouver, Montreal, Ottawa, and Calgary have regularly featured on the list of the twenty most congested cities in North America.

Labour mobility is particularly important early in a career, when you’re trying to establish yourself and haven’t necessarily narrowed down the focus of your work. Finding the right job opportunity early on can radically change your career path and provide exciting and interesting work. Renting allows you to cast the widest net you possibly can as you look to build your career.

You Don’t Own Your Place

Saying that it’s a good thing that renters don’t own their homes might seem a little obvious and also a little counterintuitive. After all, the cult of “Why Rent When You Can Buy?” has so thoroughly convinced most people that owning is not just a good thing, but the only way to live. But the truth is, owning is by no means the only way, let alone the best way.

Not owning means you don’t own the responsibility and risk.

In discussions of the virtues of owning, a lot of the responsibility and risk of owning a home gets lost. Some problems with homes end up costing owners money, and often it’s a lot of money. Other problems end up consuming a lot of time. Still others are things we can’t do much about, but they irritate us. Even when nothing is going wrong, there is a certain cost related to the responsibility of ownership. Owning a home means spending time managing the home. Making sure the mortgage payments are made on time and that the property taxes are paid. Trying to figure out why the toilet isn’t working properly or what that smell is.

If you rent your home, whether it’s an apartment, townhouse, or single-family home, not owning means that you don’t own the responsibility and risk of owning the home. If it turns out there is a problem with your home, like asbestos insulation, a noisy neighbour, a new garbage dump that’s opened nearby, or a tall building that’s been built across the street that entirely blocks your view (and all the sunlight!), you don’t own that problem. What if the biggest employer in town closes down? That might make house prices fall as a lot of people lose their jobs.

Not owning can be a great thing. Don’t like the way the neighbourhood is changing? Move. Want to be closer to the waterfront? Move. Have you decided to travel the world for a year? No problem. Move your belongings into a rented storage locker and hit the road!

A lot of people feel the stress of owing a lot of money in the form of a mortgage and worry about whether they’ll be able to continue to make their mortgage payments. The alternative is ugly — defaulting on a mortgage can mean huge costs. You could lose your entire down payment to things like transaction costs on the sale and legal bills, or, even worse, you could end up in bankruptcy.

When you rent, you leave all of those worries to the landlord.

All right, Alex. That all sounds great, you say. But isn’t renting still just paying someone else’s mortgage? You’re still throwing away all that money on rent, and at the end of the day you have nothing left to show for it.

Actually, everyone is paying rent, all the time. There are no exceptions. We’re all “throwing away our money on rent.” And that might actually be the best reason of all to choose renting.