I’ve been an advocate of keeping my housing costs low by renting rather than owning in an expensive market like Toronto, so it came as no surprise that many people told me to read this book, The Wealthy Renter. Written by Alex Avery, this book talks about the costs of home ownership and how it is possible to get ahead without actually owning your own home.
One of the main arguments that the book targets is the notion of “Why rent when you can buy?” and the “Why pay someone else’s mortgage?” rhetoric that goes around when Canadians talk about renting versus home ownership. The author tries to make convincing arguments why buying a house is not necessarily a great investment and why there is an alternative means to becoming financially independent.
Anyone reading this right now might think that the author is crazy because home prices in the Greater Toronto area are rising over 30% a year and most recently in March 2017 it was up 6.2% month over month. But that’s the point of this book. It brings the reality back to real estate investment and detaches the emotional euphoria from the basic facts. It’s always easy to get caught up with media numbers.
I particularly like the point that author makes about starter homes in the book. There are so many young professionals that graduate from school and want to get their hands on a piece of property because of how good an investment real estate makes. The author puts an end to that myth by stating the facts on how the extra costs associated to owning outstrips that of renting. Compound that with the fact that transaction costs in real estate exchange such as lawyer fees, commissions, and land transfer taxes will most likely wipe out any capital gains from selling a home in less than 5 years.
Of course reading this book won’t gain you any insight on how to make you richer. Nor is it a step by step guide on how to build up a good balanced investment portfolio. The purpose of the book is to enlighten people with the facts that there are alternatives to buying a home that can make you wealthy. You don’t need to follow the herd to be financially successful.
If you’re in the market to buy a home or you’re a happy renter, I’d highly recommend reading this book to understand the costs of home ownership. Maybe it’s not for you? Perhaps it still won’t change your mind that you want to be a home owner, but at least now you are aware of all the pitfalls that one might encounter after buying. It’s the knowledge that we gain that empowers us to make proper life decisions.