On Tuesday, we looked at the overall advantages of Renting vs Buying. Today, we’ll tackle the real numbers.

Real Life Example:  Rent vs. Buy

rent vs buy

Rental Subject Property:

  • Unit 413, 100 Western Battery in Liberty Village
  • 1 bedroom  with parking and a locker
  • 500-599 sqft
  • Listed for $1,825 + hydro.

Purchase Subject Property:

rent or buy

  • Unit 712, 50 Lynn Williams in Liberty Village
  • 1 bedroom plus den with parking and a locker
  • 600-700 sqft
  • Listed for $339,900
  • Condo fees: 397.87 including heat and air conditioning



To help us with the math, we’re going to use this  Rent vs Buy calculator that I fell in love with a few years ago. While it is US based, I was able to adjust the inputs to reflect that mortgage interest is not tax deductible in Canada.


Costs to Buy:

Downpayment: 10% (or $33,900)
Mortgage length: 25 years
Interest rate: 3.19%
Closing costs of buying: 1% (land transfer costs for a first time buyer in Toronto + legal fees, total $3,438)
Property tax rate: 0.75% (city of Toronto rate, rounded)
Annual appreciation: 2%
Costs to sell: 5%

Costs to Rent:

Rent: $1,825
Interest earned on investing the downpayment elsewhere: 3%
Increase in annual rent: 2%

The Math:

The fancy-shmancy charts below show that buying is better than renting after 2 years. At the 3 year mark, if you buy instead of rent, you’ll have saved $12,889.

rent vs buy

Rent vs Buy


Other thoughts and conclusions:

  • This example assumes that if you rent, you’ll save the difference in costs – I’ve rarely seen anyone do this.
  • If you sell before the 2-year mark, you’ll have been better off renting.
  • Of course anything can happen – annual rates of return for investments and appreciation for real estate are estimates (and fairly conservative ones).

Tomorrow, in the final installment in our Rent vs Buy debate series, we’ll look specifically at who should be renting and who should be buying.

Missed Part 1? Click here

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