Tag Archives: renting

How to put your vehicle on a Budget

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By Gary Bordeaux

Special to the Financial Independence Hub

Everyone who owns a car or truck knows that there are regular maintenance and not so regular repair costs. For some vehicle owners, it seems their car is always breaking down. But what if you could cut the overhead on your vehicle significantly? The good news is you can! In the following paragraphs, we’ll discuss ways in which you can dramatically reduce the money it costs you to operate your vehicle.

Maintain, Maintain, Maintain

The first thing you want to do is to read your owner’s manual. If you don’t have one, then look online for one, or check with your dealer. The reason this is so important is that the manufacturer will tell you exactly how and at what intervals to perform or have services performed on your vehicle. Changing the oil at regular intervals is just part of it. Are you using the right kind of oil for your vehicle? It is wrong to assume that the more expensive oils are right for your vehicle. Read what the manufacturer recommends and adhere to their standards.

This doesn’t just go for oil, but for all the fluids and tires too. Not all tires require the same amount of air pressure. Use the kind recommended for your vehicle, and keep them inflated to the recommended psi.

Use only OEM parts

When you need to replace a part on your vehicle, insist on only OEM parts. Original Equipment Manufacturer parts are guaranteed to fit, and they will likely last longer, saving you from replacing the same part over and over. Make sure only certified technicians work on your vehicle, so you can rely on stellar work and new parts. While it is actually fun for some to go to a parts cemetery and find your own parts at a substantial savings, you won’t have the peace of mind you will have when you stick to the manufacturer’s recommendations.

Be mindful of the way you drive

Do you really need to beat the next guy to the red light? Often, that’s what happens when a car weaves in and out of traffic. Nothing is gained, and when you drive that way, you risk getting pulled over or injuring or killing innocent people or yourself. Expressing road rage is another way that some people carelessly treat their cars and their fellow citizens on the road. Just driving the speed limit and driving defensively will help protect you and your car. Many insurance companies offer cheap car insurance for safe drivers and those discounts and savings alone could be worth a lot.

Don’t ignore squeals and other sounds

You wouldn’t believe the difference in cost between a simple brake pad replacement and an entire brake job, with new calipers and rotors. Continue Reading…

Are high rent costs a hurdle to Condo ownership?

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

The rising cost of rent in markets across Canada has become an especially prevalent issue in recent years, as a sharp lack of supply and steep real estate prices put the squeeze on home seekers’ affordability.

The fact is, rising ownership housing values, exacerbated by the federal mortgage stress test, have kept more would-be home purchasers in the rental market for longer; a total of 31% of first-time buyers say they rented for at least a decade before buying their first home, according to a recent Canada and Mortgage Housing Corporation report.

As well, new data from Rentals.ca reveal steadily rising rent costs in Canada’s major markets: up 0.7% in Vancouver to an average of $1,987 for a one-bedroom, while Montreal unit costs rose 8.1% to $1,285. In Toronto, such a unit went for $2,262 in the third quarter of 2019, according to the Toronto Real Estate Board.

A look at one of Canada’s most expensive rental markets

With more Canadians remaining in higher-priced rentals for longer, could these overall higher shelter costs be crimping their ability to eventually move up into the ownership market?

To see whether high rental costs are limiting Canadians’ homeownership options, Zoocasa conducted a study in Toronto, one of the nation’s priciest markets, to determine the rent-to-homeownership-cost ratio in the city. The study sourced average sold prices for condo units in 35 neighbourhoods across the 416 region, as well as the average lease rates for condo rental apartments in each. It also crunched the minimum down payment required to buy a unit in every neighbourhood, as well as the equivalent number of months of rent.

The rent-free possibilities

The findings essentially reveal just how long it would take to save a condo down payment in each neighbourhood, if the saver didn’t also have to pay any rent; while this may seem a dream scenario for many of the city’s dwellers, it could be a possible approach for the 47.7% of young adults StatsCan says still live within the family home in the city. The numbers also illustrate the minimum financial cost required to own a home in each area, as well as how feasible it would be to make the jump from renting to owning.

For the City of Toronto as a whole, the numbers aren’t too daunting; in order to purchase a condo unit in the city at the average price of $628,074, savers would need to amass a down payment amount of $37,807. Doing so would take a rent-free individual 14.7 months if they didn’t need to pay the city’s average rent of $2,567 monthly. The good news is, there are a number of affordable locales where a buyer could break into the market much faster – within a year in a total of 13 neighbourhoods.

In exchange for this affordability, though, buyers will need to give up their ideals of a central location and convenient commute; the majority of these neighbourhoods are located on the eastern and western edges of the city, with less direct access to public transit route. Continue Reading…

Sharing for Profit: 7 lazy ways you can earn money through the Sharing Economy

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By Sienna Walker

Special to the Financial Independence Hub

Sharing is caring. Sharing something you own, sharing a little bit of your time, or sharing a skill you’ve cultivated can amount to a pretty decent payday. In fact, this is the very foundation of the sharing economy idea that has taken world by storm.

The best part about sharing economy gigs is that many of them are often easy. Since you set your own schedule and choose the way you participate, you can engage whenever you feel like it. If you want a boost to your income on your own terms, the sharing economy might be a perfect fit for you.

1.) Deliver Stuff

Sometimes, people want specific food, but for whatever reason, they can’t prepare it themselves or drive out to go get it. If you join an app as a delivery driver, it can become your job to drop fast food at someone’s doorstep. It’s as simple as that.

Most delivery jobs will score you a little money from the app company and a tip from the delivery recipient. If you limit yourself to your local area and make yourself available on the weekends when people might be a little too – ahem – tipsy to drive, you can make a decent amount of money for relatively little effort.

2.) Rent out stuff you aren’t using

You can rent out almost anything you aren’t currently using. People who only need something for the short term don’t want to purchase it: they don’t want to be stuck with it after it outlives its brief purpose.

You can rent bikes, skis, surfboards, cameras, or even clothes. Over time, you might even make more money than if you had chosen to sell the item. As long as it stays in relatively good condition, you can rent it indefinitely.

3.) Rent out your house while you’re away

You’re going on vacation for two or three weeks. That leaves your house vacant for an extended period of time. It’s just sitting there, not making you any money. Unless, of course, you rent it. A rental property calculator can help you determine how much you can realistically charge as a rental fee for your home.

If you have extra space even when you’re home or your trip is going to be short, you can use short term rental apps to help supplement your income.

4.) Drive people places

If you don’t mind driving, you can always sign up with a ride hailing service. You’re essentially making money from your driveway. Some people make enough money becoming a driver that they make it a full time job. Before you sign up, compare and contrast the differences between services to be sure you’re choosing the best one for you. Much like food delivery, ride hailing app drivers typically make great money on the weekends if their coverage area includes a lot of busy bars. Help people get home safe and make some extra cash. Continue Reading…

Should you rent a home or buy a home? That is the question

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By Dale Roberts

Special to the Financial Independence Hub

It’s a tough question, especially if you live in one of the major cities where home prices are skyrocketing. Or let’s say the home prices have skyrocketed over the last couple of decades. For many potential homeowners it’s a race against the clock. The price of entry might keep increasing at a rate that is faster than you can amass that initial down payment.

On that front the government agencies are working hard to help first time home buyers with greater access to RRSP home buyer’s plan funds and even down payment monies from the CMHC. Please have a read of Cream and sugar and tens of thousands of dollars for first time home buyers.

Trying to raise enough cash for that initial deposit is more than challenging, and discouraging, when you see home prices increase by several percent or more per year.  We’ll use Toronto area real estate prices to demonstrate the recent history.

Over the last decade average Toronto home prices have more than doubled. Of course, in certain desirable pockets the price increases have been outrageous. And if we head out to the west coast we’ll see periods when the Vancouver area market had rates of increase over several years that is nothing short of silliness.

You don’t have to own a home or property to build wealth

While home ownership is a wonderful goal, and it can help build that more than important total net worth, it’s not the only route to finding a wonderful place to live and growing your long-term wealth. You can rent and invest the monies that would ‘normally’ go to pay that mortgage and surprising list of costs that come with home ownership.

I recently had a question from a reader on the very subject of renting vs home ownership. For an answer I turned to John Robertson the author of The Value of Simple. John also operates the blog Blessed by the potato. And on that site here is the go-to post for Rent vs Buy. On that page you can click on a rent vs buy spreadsheet.

In an email reply to the reader and me John framed the proposition quite succinctly …

In some cases it can make sense to invest your money and rent instead. Indeed, I’m a renter myself in Toronto. It’s a bit more complicated than the scenario you paint, though. Remember that keeping that house is not just about your mortgage payment, you also have to pay property tax, maintenance, insurance, and somewhere account for the transaction costs for your eventual move — expenses that a renter doesn’t face (or are implicit in the rent). So when you do the math, you’ll have to back those costs out, meaning you need less of a return from your investments to help offset the rent. And exactly what (after-tax) return you use when estimating your investment performance will matter to the decision, too.

The main takeaway from John’s opening remarks is that home ownership (or condo with fees and such) is much more expensive than one might think. Beyond the mortgage and property taxes the additional costs of home ownership is quite surprising.

Check out this home ownership mortgage calculator on ratehub.ca. There are some incredible tools on that site that will help you determine affordability and the expected costs. You’ll discover that you have to add at least several hundred dollars per month in costs above your mortgage.

The Price To Rent Ratio

Continue Reading…

Is Renting throwing away money?

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Most people tackle the rent vs. buy problem incorrectly by framing it as the cost of monthly rent versus the cost of a monthly mortgage payment. The argument goes something like, “if your monthly rent costs as much as a mortgage payment on the same or similar property, then it’s a no-brainer to buy the home and build equity rather than flushing your rent money down the drain.”

Others argue that a better comparison looks at the true cost of home ownership, which not only includes the mortgage payment but also things like property taxes, insurance, and maintenance.

However, as PWL Capital’s Ben Felix pointed out in the latest Rational Reminder podcast, neither argument paints a truly fair comparison of rent vs. buy. What you need to look at, he explains, is the total unrecoverable costsin each scenario.

For example, a monthly rent payment is a total unrecoverable cost: an expense that does nothing to improve the renter’s net worth. A mortgage payment, on the other hand, only has partial unrecoverable costs: the interest paid on the mortgage. The other portion reduces your mortgage amount and therefore increases your net worth.

A winning point for home ownership, right? Not so fast.

We need to add up all of those additional costs that a home owner bears (property taxes, insurance, maintenance), plus any upfront money spent on a down payment, land transfer tax, title insurance, home inspection, etc. to close on the home.

There’s also an opportunity cost on the down payment and other closing costs. That money could have been invested instead of put towards buying a home.

Rent vs. Buy: Let’s Do The Math

Let’s look at an example of a renter in Toronto who’s paying $2,000 a month to rent a 575-square foot condo. The same condo is listed for $449,000.

To purchase the condo our renter would need to put down 5 per cent, or $23,450, plus add another $17,062 to the mortgage due to CMHC insurance (required on all mortgages with down payments of less than 20 percent), for a total mortgage amount of $443,612.

Our upfront costs are not done, however, as we need to add in land transfer taxes of $10,910, lawyers fees of $1,000, title insurance of $449, plus a home inspection for $500.

Total upfront costs = $36,309. The opportunity cost of this amount in 25 years at 6 per cent a year = $155,834.

Now let’s look at the unrecoverable monthly costs. The mortgage is amortized over 25 years and has an interest rate of 3.50 per cent. The monthly mortgage payment is $2,215. Of that payment, $1,200 goes towards interest and $1,015 goes towards paying down the mortgage principal.

Then we have property taxes coming in at $375 per month, and we’ll also add the difference between home insurance and tenant insurance, which is $40 per month. We also need to add expected maintenance costs, which we’ll estimate at 1 per cent of the property value per year, or $375 per month.

Total unrecoverable monthly costs (interest, plus property tax, plus insurance, plus maintenance) = $1,990

The unrecoverable costs for the renter and homeowner are nearly identical. The total monthly payment for the homeowner, including property taxes, insurance, and maintenance, is $3,005. Just $1,015 of that is building equity in the home. So, back to the rent vs. buy argument.

Rent and Invest the Difference

We have to assume our renter has an extra $1,015 available in their cash flow each month to invest. What are the expected returns for a 60/40 balanced investment portfolio over 25 years: maybe 6 per cent? Continue Reading…