Author Topic: Another sell and rent/or sell and buy question, but a bit different...  (Read 1855 times)

fuzzed

  • 5 O'Clock Shadow
  • *
  • Posts: 66
  • Location: SW Ontario Canada
I searched the forums and could not find a similar thread.

The situation, my spouse and I are considering a move to a different part of Canada, we are in south western Ontario, and are considering Kelowna or Edmonton. 
The net proceeds of the sale of our Ontario assets (house and cottage) would be approximately 400,000.  We are childless by choice, have good incomes and our only debt is a mortgage of approx 50k.  In our registered retirement savings we have approx 250k, and other misc savings around 100K.

The question is this, for our needs we could purchase a 2 bedroom condo in Kelowna for around 250K which would leave 130 or so to put away for a retirement.  That would leave us just paying property taxes, condo fees and utilities.   Or we could rent a similar place for around 1300 and just be on the hook for utilities.
One or both of us plan to continue to work, so we are not retiring just yet.

I totally understand the buy vs. rent if there is a mortgage involved, but in the case of no mortgage, what is the better option?

On one hand, having zero housing cost (building that is) would be great, but having an additional 400k in retirement savings is a pretty great feeling too.  But paying rent, when you could be living for "free"...
On the other hand, that 400K at a 4% return would net approx 1350 a month which would pay for the rent, but you would be losing out on any excess appreciation of over 4% you may have.

What is the better option?  I have been going over this for a while and am not sure, I then remember the mustachians, they will have lots of great suggestions and strategies.

Thank you in advance, and I apologize if this has been covered in another thread.

Zee

  • 5 O'Clock Shadow
  • *
  • Posts: 25
I have found these posts by jlcollinsnh to be well thought out and informative.  He provides a unique perspective when discussing the topic of rent vs own.

http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/

http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/

For what it's worth, I am a home owner...

(edit: typo)

SunshineGirl

  • Pencil Stache
  • ****
  • Posts: 735
"Rent for now" sounds like the perfect approach.

fuzzed

  • 5 O'Clock Shadow
  • *
  • Posts: 66
  • Location: SW Ontario Canada
"Rent for now" sounds like the perfect approach.

Given the scenario, should we ever buy?

fuzzed

  • 5 O'Clock Shadow
  • *
  • Posts: 66
  • Location: SW Ontario Canada
http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/
This posting is very interesting.  The House Price/Rent formula is very helpful.  Thank you for that link.