Rent versus Buy - The Most Misunderstood Financial Decision

By Tom Bradley

Should you rent or buy?

There are all kinds of reasons to buy a home – making it your own, establishing roots in the community, good schools, basketball hoop on the driveway – and they should be at the top of the list. From a financial perspective, however, the rent vs. buy decision usually lacks rigour (compared to the qualitative analysis) and is often just plain wrong. I cringe when I hear the rationale, “I don’t want to pay all that money for rent. It’s a waste.”

In the Report on Business last week, Rob Carrick wrote about a professor from McMaster University (Frank Tristani) who requires that his students go through a rent vs. buy analysis. This year’s calculation is shown in the column and while readers may not agree with all the assumptions, or the conclusion (in Hamilton, it makes more financial sense to rent than buy ... right now), the process is nonetheless instructive. It considers all the necessary factors and reveals the tradeoffs on both sides.

If you read Rob’s column, you’ll never put wasting money on rent on your ‘Reasons to Buy’ list.

Tom on BNN

By Scott Ronalds

Prepare for extremes. This is an essential element to being a better investor, and is particularly topical on a day when the Japanese market is down 7%.

Tom expanded on the five essential elements to being a better investor on BNN this morning. You can watch the clip here.