The 3 Biggest Myths in Buying and Renting a Home
In the endless anecdotes of Canadian real estate, we are conditioned to follow a very specific, predictable script. Rent a sketchy apartment in your twenties, stretch your finances to the absolute breaking point to buy a starter home, and then spend the rest of your life aggressively upgrading until you land in your "forever" home, which obviously include marble countertops!
I know this script by heart because I spent two decades living it and eventually rewriting it.
Since 2008, I have been a renter, a first-time homebuyer, a divorcé executing a forced sale, a small-town transplant, an accidental landlord, and a multi-property investor. I have owned property in Toronto, London, St. Thomas, and Port Stanley, Ontario. I’ve ridden the waves of rock-bottom interest rates and sweated through the historic post-pandemic hiking cycles.
Looking back on a twenty-year journey, the lessons I’ve learned run completely counter to the conventional wisdom peddled by arm chair real estate quarterbacks and experts alike. Here is exactly what two decades in the trenches actually teaches you about housing.
My journey started in Toronto 2008. I was a graduate student moving out of my parents' place, renting a tiny, damp basement apartment in the city. My total rent, including utilities, was a staggering $650 a month.
For the next six years, my lifestyle was defined by steady frugality. My partner and I lived in modest, unglamorous walk-ups with noisy window AC units. These were nothing fancy, basically just the best accommodations we could find at the cheapest price point. We didn't know anything about index funds or the stock market, so we did what most twenty-something Canadians do: we hoarded cash in a basic savings account, determined to buy a piece of the city.
By 2016, we made our move, purchasing a modest bungalow in Toronto’s east end for $500,000. We scraped together a 20% down payment, aided by a generous leg-up from my partner’s parents, which allowed us to avoid mortgage insurance. Instead of burning extra cash on aesthetic overhauls, we funneled our remaining money into unsexy but vital upgrades: a new roof, new siding, exterior paint, and basic landscaping.
Two years later, real estate reality collided with personal reality. My partner and I separated, got divorced, and sold the house for $750,000. I took my share of the proceeds and plunged right back into the rental market. It was 2018, and I landed a modest one-bedroom apartment close to my work on Bay Street for $1,650 a month (plus utilities).
About six months into that downtown rental life, I was hired by the London Police Service. I packed my bags for my hometown, two hours west of Toronto, and walked straight into a housing market that was just beginning to heat up. For a staggeringly low price of $275,000, I bought a fully updated, two-story, three-bedroom old Victorian home with a nice backyard, located just a two-minute drive from work.
Fast forward to 2020. As we all remember, the global pandemic hit. Everyone lost their minds and froze in place, doom scrolling and watching the CNN death count on their televisions. Nobody in those early days was looking at real estate. They were terrified to even venture outside their house, God forbid go into somebody else's house.
In May of 2020, with my wife working fully remote, we bought what was our "dream" house in Port Stanley, Ontario, close to the beach, for $650,000. Financially, we were able to finance the down payment entirely from savings, allowing us to keep the London home as a rental property, which was our very first one.
By late summer, we moved to this half-acre property in a rural township and became landlords for the first time, finding a lovely family to rent our home to, who are still tenants to this day with zero issues.
A year later, the country's collective fog lifted. People woke up to the fact that real estate suddenly was an amazing investment because we were spending a shit tonne of time at home, and the housing market went insane.
I was on the lookout for an additional rental property, given that my first rental had appreciated considerably. In late 2021, I conducted a cash-out refinance on my first rental property to fully finance a down payment and renovation cost of a second rental, which I purchased for under asking in St. Thomas, Ontario for $375,000. After a few months of renovation, I rented this house out for $2,300 a month.
After generous COVID subsidies to individuals and businesses, inflation skyrocketed, and mortgage interest costs went right along with it. As is standard with many investors, my properties were on a floating-rate variable mortgage, since mortgage interest is fully deductible. Over time, variable mortgages generally outperform fixed mortgages 80 to 90% of the time, but this was clearly not the case here. Even with the historical hiking cycle, collectively my two rentals were still cash flow positive, just barely.
As inflation proved cyclical, mortgage rates and interest rates came down, and cash flow from my rentals accelerated.
In 2025, after five years of commuting 40 minutes back and forth to work, and after the birth of my first daughter and in preparation for a second child, my wife and I decided to sell our "dream home" and move back to the city.
This went against all of the popular depictions of housing, which say that you must constantly upgrade over time. The prevailing theory is that once you become comfortable with a certain standard of living, you can't possibly downgrade until much, much later in life because of hedonic adaptation, or whatever that bullshit is all about.
We sold the Port Stanley home for $200,000 more than we paid for it and moved into a neighbourhood I grew up in, buying a modest three-bedroom, two-bathroom home for just over $620,000. The proceeds of the sale went entirely into our registered retirement accounts.
Through this long backstory of renting a basement apartment, a dilapidated apartment, a nice modern apartment, and owning homes in a major city, a mid-sized city, a small city, and a rural township, I have learned three undeniable truths about Canadian housing.
Lesson 1: Renting is Cheaper Than Owning (But Only in the Major Leagues)
There is a glaring geographic asterisk to the argument that "renting is a waste of money". In Canada's largest, most populated urban centers like Toronto, renting is almost always the obvious cheaper option. However, that gap starts to shrink as you move from large cities to mid-market cities, and it disappears completely in many small cities and townships where rental accommodations are scarce, meaning owning can actually be the cheaper option.
But there is a massive psychological trap to renting when you live in the bigger cities. When you are a 20-year-old renter, it is incredibly difficult to save and invest when the city provides endless opportunities for entertainment, food, drink, cultural, and sporting events. As a young person who feels like they are being completely priced out of the housing market, it is easy to just spend the difference in housing costs on additional experiences, telling yourself, "I may not own a house, but I am living my best life."
This phenomenon is true in many aspects of life across different socioeconomic statuses because our life is ultimately run by layers of hierarchies. If we feel like we are falling behind in one area, we will overcompensate in another. It's a tale as old as time.
- The rich compete on what their yachts and vacation homes look like.
- The upper middle class will compete on how big and nice their home may be.
- Those folks who can't afford to own a home will then compete on how nice their car is.
If you choose to rent in a major city to reap the economic benefits, you have to possess the rare discipline to actually invest the difference, rather than blowing it on status compensation.
Lesson 2: Frame the Purchase Like an Investor and Build a "Buy Box"
This lesson usually divides people, and I have heard many smart people repeat the platitude, "I don't think about my house as an investment."
But is this psychological trick actually helpful? When people say this, they are usually speaking to how they view their home as a place to live, raise a family, and create memories. If you carry this kind of intense emotional priming into a buying decision, is it any wonder why people constantly overspend on housing? After all, if your house isn’t an investment, who can possibly put a price tag on happiness and memories?
But what if you viewed buying a primary residence exactly like an investor buying an investment property?
As an investor, I use something called a buy box, which details the core characteristics that work for me in purchasing a property. I personally like buying detached homes, typically two-storeys with at least 3 bedrooms, that require cosmetic upgrades like paint and new flooring. This is just enough work to scare off most emotional homebuyers, but it offers cheap renovations that create a great ROI.
These homes attract a tenant profile I enjoy working with, and they will appeal to a large group of emotional homebuyers when I eventually sell. For whatever reason, folks will pay a premium for the same square footage spread out over two levels. I guess they just like hearing their kids stomp around on top of them.
Lesson 3: The "1% Maintenance Rule" is Crap
For homeowners, home maintenance is perhaps the least understood aspect of the entire game. Many people will argue that you should estimate annual maintenance costs as 1 to 2% of the value of your home.
Just on the face of it, this claim makes absolutely no sense. If your home value goes up 15% to 20% in a single year, the inflation on fixing a pipe or replacing shingles in that house does not automatically jump by 15% to 20% the same year. Yes, the cost will go up but they are not directly proportionate.
If you purchase a new build or a home that is still under a builder's warranty, your effective maintenance cost for any repairs is virtually zero. What about if you bought a house that was recently renovated with quality upgrades?
When we talk about maintaining a home, there's a clear divide between required capital upgrades and aesthetic upgrades. Capital upgrades are the things required to maintain the structural integrity of the property over time, like a new roof, new windows, HVAC, furnace, air conditioning, and major appliances.
The other half of home maintenance is aesthetic upgrades, like putting in nicer floors, marble countertops, nicer cabinets, and designer light fixtures. These types of cosmetic upgrades are becoming a disproportionate part of the total maintenance cost of a house.
In all of the houses that I have owned, I have never approached even a 1% maintenance number based on my home value because I focus strictly on capital upgrades, not cosmetics.
So what does this actually mean for the average Canadian? It means that renters typically have an economic advantage in larger cities, but they must exercise immense discipline to invest all of their extra disposable income and avoid lifestyle creep in areas like food, travel, and entertainment. We know from the data that this is simply not the case for the majority of renters. The behavioural advantage of forced savings through a monthly mortgage is a incredibly tough hill to beat.
That said, homeowner can squander any financial advantage if they continue to view housing with so much intense emotion. Remember, it is a place to live, raise a family, and create memories, all of which can be achieved in a modestly sized home completely absent of marble countertops. Buying a house with an investor’s mindset will stop you from buying too much house and over-renovating.
In closing, I plan to enjoy my 90s bathroom title and beige vinyl flooring for a few more decades, or at least until my girls are done breaking stuff!
