Ballooning real estate prices in Vancouver have seen an increasing number of property owners eager to cash in for a substantial profit. That means more and more renters are finding themselves with an interesting quandary: hunt down a new place to rent, or toss their hat in the ring and buy the property they’re in. Renting to own, is this a viable option in Vancouver’s overheated real estate market?
For those currently house hunting in the west coast wonderland, it’s an enviable position to find yourself already living in the house you will come to purchase. Not only does it completely omit the stress and hassle of house hunting, buying your current rental property affords you the luxury of taking a pass on Spartan-like bidding wars, no-subject offers, or the often cringe-inducing exercise of appealing to the home seller’s good nature. So if you have now or in the future, find yourself eager to buy the house you are currently renting, there are a few specific things to keep in mind.
The Lease Agreement
Let’s say you are currently renting an apartment in the building where your landlord owns multiple properties. Your landlord has decided to sell one of these units and you want to buy it. If you buy the property and it closes before the current tenant’s lease expires, you are now (for all intents and purposes) their landlord. This has the potential to have far-reaching financial implications based wholly on the current resident or residents.
Typically, the seller will pass on the damage deposit to you, which will cover basics. But if there is any damage to the property beyond that you are out of luck. In the best-case scenario, you already know your neighbour and have a pretty good idea of whether or not they’re trustworthy. Your move-in date will also depend upon the tenant who is presently in the property; you must wait until the lease of the current renter is up before moving in yourself.
Your Landlord Wants to Sell
If your landlord approaches you with the news that they are ready to sell the property you’re currently renting, think hard before making a decision. If you desire to enter the real estate market in Vancouver, but still feel anxious, being offered to buy your home can be a terrific solution. Not only do you have the benefit of already being familiar with the neighbourhood and the property, hopefully you have had a chance to get to know your landlord. This can go a long way towards making you feel more comfortable throughout the buying process.
Take the Leap or Face the 1%
Let me be clear; I am not suggesting that someone without the financial means put themselves in a precarious financial situation. But when faced with the option to go from renter to owner, you must think about our current rental market in Vancouver.
Vacancy rates in Vancouver are currently hovering around 1%. Even less depending on the neighbourhood. An article published by The Globe and Mail reported that this is true even in areas like Abbotsford that are far outside of the GVA. It goes on to note that Vancouver now has what is essentially a two-tier rental world. “In one, people who have been renting the same place for years and whose rents have been limited to legal increases, life is fine…. In the other, new renters find themselves facing limited choice and often the sticker shock of much higher rents than the statistical average.”
This is what you will be facing should you find yourself in a situation where your landlord has chosen to sell his or her property. The rents in Vancouver have been increasing exponentially, so if it is between renting yet another property at a slightly higher rate or buying a property—might the latter not be a better choice in the long run?
As the drama of the Vancouver real estate market continues to play out, residents must turn to increasingly creative measures. While perhaps not the solution for everyone, owning your current rental pad can provide a viable and cost-beneficial way to enter the housing market. Because you can be certain that if you don’t snap it up, someone else will.