Consider this, what if the choice to rent or buy was the reason some of the world’s busiest stretches of road exist? If you’re thinking “No way, that seems like an illogical, impractical, improbable and completely absurd statement” then allow me to blow your mind with some recent calculations.
Let’s get down to brass tax here, the city of Toronto is infamous for being one the most expensive places to live, but also the most happening (so it sort of balances out). Toronto sprawls on forever and people commute in from an insane zoo of connected cities comprising of 31,000 square kilometres, or roughly a quarter of the entire land area of England.
So what created this incentive to commute all this way? Yes, there are great jobs in Toronto — some of the highest paying in the country, to be specific. The city is clean, beautiful, and is close to picturesque lakes and rivers. But unfortunately, as the saying goes, nobody could ever afford a house there. Average price for a detached residence is up to $1.05M, and even a car-commuter special runs you over $730K. If you don’t have that kind of money (like the rest of us), and you’re chomping at the bit to BUY, then take the standard realtor advice and “drive ’til you qualify.”
These prices are widely accepted by the general public, and unless you’ve secured at least a $400K salary, you’d better get creative with roommates or get out of the whole area altogether.
But what if you landed your DREAM job, doing what you love, with a great team, centrally located in the heart of downtown Toronto (hey that sounds like RentMoola!) — what would you do?
Ideally, we’d all like to maintain a luxurious lifestyle: living in a huge apartment in a modern or at least well-kept building, near the shore with beautiful views, within walking distance of work, the stadium, the train station, and all other amenities that downtown has to offer.
Time to hit up your best apartment hunting apps, and set your criteria to unlimited price, insisting on 2 bedrooms and 2 bathrooms, hit “search” and brace yourself for the inevitably unreasonable prices. But wait! Look at this, a brand new building overlooking a park with floor-to-ceiling windows, a sweet balcony, granite and stainless kitchen, with a gym and a rooftop patio! Scroll down to price, and to your astonishment…
$2300 per month.
Wait, what? This must be a scam.
People are commuting 40 minutes from $700K houses in the “closer” suburbs, which cost a minimum of $4K per month to operate (including mortgage interest, property taxes, insurance, heating/cooling and maintenance) plus 80 minutes daily in a car which translates to roughly 900 miles ($450) and 22.5 hours of your time (let’s say $900) for a grand minimum total of $5350 per month.
Surely this amazing apartment in the city must be a scam.
Are apartments really that cheap? Take a look at other listings in similar prime areas, yes, they are. If you’re willing to be really badass and step into a subway for your morning commute and move down to a less posh apartment building, you can find central-Toronto apartments for $1200 per month, and that includes free heat and an underground parking space.
Share one of those with a roommate and you can work a minimum wage job in the city, pay for rent and food, and still save almost 50% of your income.
If everyone lived this way, the majority of traffic jams would be eliminated. Not to mention, it would put an end to the harried lifestyles and stress that comes with a car commuting lifestyle.
“But what about a backyard? Everyone wants a backyard!”
Seriously? If you live in a high-end district, you literally have a multi-billion dollar backyard. The Toronto lakeshore is an endless expanse of beaches, bike paths, fountains, volleyball courts, patio restaurants and of course one of the larges expanses of sparkling blue freshwater in the world.
All of this is pretty convincing, but I haven’t even mentioned the greatest joy of renting: unlimited mobility! At the drop of a hat, you can move to a new place anywhere in the world. Never be subject to the pain of fighting with buyers in a hot real estate market, or begging for sellers in a cold one.
The moral of the story? If you live in an area where houses cost more than $300K, take a close look at the rent prices around the areas you currently drive. Budget your driving cost, and keep in mind that you can’t put a dollar value on your time (which might be used driving to/from work each day). Doing the math on decisions like this is one of the greatest steps that you can take towards your early financial independence.
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