The Wealthy Renter: How to Choose Housing That Will Make You Rich

by Alex Avery

The Wealthy Renter offers a clear, unbiased, straightforward approach to the biggest investment most people will ever make — their housing. Written by a top-ranked financial research analyst, it aims to help readers make wise housing decisions that will improve their lives.

Genres: Nonfiction, Finance, Personal Finance, Business, Money, Canada, Economics

263 pages, Kindle Edition

First published September 10, 2016

About the author

Mr. Avery earned his CFA designation, holds both a Master of Business Administration and a Bachelor of Engineering & Management from McMaster University, and is a Chartered Surveyor and Member of the Royal Institution of Chartered Surveyors. His area of research focuses on real estate & REITs.

Reviews

[Phobean · Rating 5 out of 5]

I walked past this book twice in the Cambridge Public Library before picking it up. I mean, how could a book about the Canadian housing and rental market apply to my so-called-American life? Answer: far more than I'd guess.

I'm so glad to finally gotten over my prejudice to check out this slim volume that broke down a lot of salient information and hidden complexities ("implicit rent", anyone?). Having grown up with the twin whispers of "renting is throwing money away" and "Black Americans were systematically denied the American Dream of home ownership so you MUST buy to help correct for the past", and watching my beloved neighborhood in Boston change into something I only partially recognize, I've been struggling for years with this issue. The choices have seemed to be: stay and buy and be house-poor or rent and leave and get pushed further away --let me tell you, those are crappy choices!

"The Wealthy Renter" doesn't fix any of above dynamics, doesn't even touch racial injustice and barely mentions class inequity, and yet reading it was like taking a GIANT sigh. Legitimizing renting by way of running the math, even getting so specific as detailing the demographic make up of major Canadian cities and describing which are the good cities to rent in, was a balm AND an interesting read. (This is literally the first time I've understood interest rates, what impact they have, and why they matter.) Mr. Avery has a clear and engaging writing voice, and book is both short with an easy-on-the-eyes layout.

Also, because Canada is, y'know, so close to the US, much correlates and could be applied to our way of life here. The housing crash of the late-aughts is discussed as well, including what Mr. Avery sees as Canada's response to what was occurring south of their borders.

My biggest take away was this quote: "Forced savings is the term used to describe mandatory payments that create savings for the person making them. The truth is that buying a house is a simple and structured forced-savings plan."

Simplifying this important aspect of home ownership, aside from the cultural and emotional appeal of owning, and discussing how home ownership benefits developed countries (and their citizens, to a good degree) makes this book a gem. Finally, the last two chapters are essentially a summary of points related to alternates to home ownership and ideas to consider for renters and home owners alike.

You know how they say knowledge opens doors? Yep. "The Wealthy Renter" embodies that adage for this humble reader.

[Martin Kline · Rating 3 out of 5]

This primer on the fundamentals of housing does two things well. It dispels common misconceptions surrounding the fallacy that owning real estate is the only way to effectively build wealth for the average Canadian, and it builds the case for renting consciously being a savvy choice, especially in the contemporary real estate environment.

I took issue with a couple of sections. Mainly I disagree with the premise that investing in index funds will provide more wealth than paying off a mortgage. The example given shows how stock markets have substantially outperformed housing prices over the past twenty years by a few percentage points that add up over time. Yet, by placing a discussion on leverage in a separate section, Alex Avery fails to draw attention to the fact that a mortgage is the only mechanism available to the average Canadian that will allow them to leverage a relatively low risk investment at 5x, 10x, or even 20x and beyond. Thus if housing prices go up over the term of a mortgage (which in many urban markets is very likely), index funds to real estate isn't a comparison of 7% to 4%, it's a comparison of 7% to 40%. There is simply no other low-medium risk way for someone to achieve these kind of returns in equity markets, and as such I found the book's understated take on leverage to be lacking.

I also didn't think it was fair to delve into the various aspects of the psychological burden of carrying a mortgage (eg. lack of freedom to make dramatic career moves) without considering the substantial sense of stability having a home of one's own affords.

Finally, the sections outlining the housing characteristics of six Canadian cities in turn was extremely tedious and unnecessary, in my opinion.

On the whole, "The Wealthy Renter" is well written and mostly insightful. I would recommend it as a devil's advocate to cultural norms for anyone considering home ownership.

[Thomas Margot · Rating 3 out of 5]

The book is focused on the Canadian market and therefore I give it 3 stars instead of 4. Nonetheless most of the advice in it can be generalized to other countries making it a book still worth reading for non-Canadians like myself.

In Belgium, much like in Canada, societal pressure to buy a house is enormous. Renting is throwing money away, it is paying off the landlord's mortgage, it is something you only do as a necessity and only whilst you are saving up for a downpayment. It seems like renting will inevitably make you poor and buying a house is the true path to wealth and happiness. The moment you can buy a house, you should buy a house. This is generally accepted wisdom.

A couple years ago I bought a house with an ex and when that relationship ended I was forced to leave. Being thus condemned to renting, I received a lot of good, or at least positively-intended, advice that I should buy a new house ASAP. Because renting, well, it's just a terrible decision, right? So I looked deeper into it and found a host of articles online. For me the biggest benefit of this book was not that it taught me something new - most of what can be read in the book can be found online - but that it bundled all the information in a nice, easy to read package. So for anyone who is interested in how it could ever be possible that renting can be a financially better choice than buying: read the book. I will never convince my parents, but maybe I can convince you.

For those who do not immediately want to read the book but still want some background in the topic, I will leave you with two links:

1) For the international crowd: Ben Felix's "The case for renting a home: part 1", https://www.youtube.com/watch?v=UuAZ4...

2) For the Belgians: "Kopen of huren: wat levert het meeste rendement op?" by De Tijd, https://www.tijd.be/vastgoed/woning-k...

[Brad Lockey · Rating 5 out of 5]

I like to challenge myself, and reading a book on "renting vs buying" is a personal challenge given my self employed career choice.
Now, for a lot of people (Canadians especially), home ownership is a right of passage and so ingrained in our moral fibre that (most of us):
a) attend high school;
b) attend post-secondary education;
b2) maybe throw a second or third degree in there for good measure;
c) get a job;
d) buy a condo/house (or more recently, try to buy a condo/house);
e) climb the property ladder;
It's a time consuming and expensive journey.

I, as a Mortgage Agent, am biased in that I believe home ownership is a fantastic way to build wealth.
As noted in this book though, just like any wealth building strategies, it takes discipline.
If I advise a client that their $480,000 mortgage at a 3.04% fixed interest rate amortized over 25 years and compounded semi-annually yields a monthly principal + interest mortgage payment of $2,281.44 they often cringe.
I then advise them to build this payment into a budget that also includes monthly property tax, heating costs, water bills, and to account for 1%-3% for annual maintenance costs for the house.
Things go wrong.
Roofs leak.
HVAC systems die.
Dishwashers need to be replaced.

The crux of this book looks at homeownership costs vs rental costs.
Renting is the right move for some people out there; no doubt about it.
Renting gives people location choice, more employment choice, more time (in most cases), etc...

This was an interesting read and reaffirms that I am doing the right things in my business to make certain that my clients understand what buying a home entails.

[David McKenna · Rating 5 out of 5]

I have read many, many personal finance books, and none has ever as robustly evaluated owning real estate as this one has. Simply because the author is that sole voice, is reason enough to add this to your personal finance reading collection and my choice for 5 stars. Many commonly accepted myths are challenged, and this should be a must read for anyone, particularly those retiring, or just starting their career and thinking of buying property.

[Kai Crawford · Rating 2 out of 5]

A variety of good points for renting rather than buying a home. However, there were not as many numbers and facts as I would have liked. It also kind of bothered me that the author did not present a very balanced argument, and totally downplayed the many pros to buying and owning a home. But then again, I guess the whole book is written from a biased viewpoint and tries to argue a specific point, so what was presented makes sense.

[Marc · Rating 5 out of 5]

"It's pretty much that simple: Put a savings program in place that will built wealth over time and let it work for you. I firmly believe the combination of renting and forced savings program should provide a strong financial outlook, and one that is significantly stronger than one that relies on home ownership".

Thinking about buying a home?
Read that first to get a better idea of all options available.

[Steve · Rating 4 out of 5]

Good book on the benefits of renting with special attention to Canada's big cities.

While I like the author's viewpoints, he overlooks income that can be gained by renting out an investment property, or utilizing additional room of a primary residence as an income source. This can quickly make Alex's comparison of stock market (S&P TSX total return which includes dividends) to house return look a lot more similar. Furthermore (as another reviwer pointed out) a mortgage provides an easy means for cheap leverage. The Smith maneuver could also have been mentioned, although that's probably getting too into the weeds.

Overall I'm happy as he brought up some points of view I previously never considered with regard to renting.

[Mason Mohkami · Rating 5 out of 5]

Without a doubt, the best book I've read after "The Wealthy Barber" for personal finance.

If you are not sure whether renting or buying a house is the right choice for you, you should give this a read.

He doesn't necessarily say that you shouldn't buy, but he says don't do that on emotions.
I have been wanting to do some calculation around how investing in stocks would be different than buying a house (investing in real estate in this sense). And he fully does it in one of the chapters of this book.

[Jason Cihelka · Rating 5 out of 5]

Wow! Finally a book that illustrates the other side of the “why rent when you can buy!?” argument. It’s very refreshing to see an author debunking the myths about renting from a financial (And emotional perspective), with numbers, statistics and charts to back up his points.

I highly recommend you read this if you’re considering changing your housing arrangements, or thinking about buying a home. This book will arm you with a more complete picture” of the pros/cons of different choices.

[Amanie Johal · Rating 3 out of 5]

This would be a 4 for content, but bumped it down to a 3 because I kept zoning out during the audiobook, so either the writing style or the narration couldn't keep my attention

Full RTC

[Geraldine]

This book is about the Canadian housing market but those in the US will be able to relate because money and spending is a universal phenomenon.

[Dylan Blanchard · Rating 3 out of 5]

This book was really skimmable. Relatively short and an easy read, each chapter consisted of a handful of pages where the main point of each chapter could have been distilled into a single sentence or two.

That being said, it was a real estate book that was mostly focused on the Canadian market which I really appreciated. Reading it was a bit like preaching to my choir, at least, in that my interest in owning a home is pretty low... I wouldn't say that the author was anti-home-buying, but his has opinion on the value of renting is pretty clear. It's also just really nice to hear that there's a path separate from home ownership — that contrary to the popular narrative, buying a home is not your only option — which, at the end of the day, is what the author's whole point was.

[Sylvie Recoskie · Rating 5 out of 5]

Anyone who isn’t sure if they should own or rent should read this book. It lays out a lot of important information about the pros and cons of renting and owning a home in Canada. Ultimately it encourages you to do what you value most with your money and there’s no real right or wrong.

[Céline des Ligneris (Carole) · Rating 5 out of 5]

Louer une solution pour s'enrichir

Très bon livre qui parle oui des avantages de la location, mais surtout décortique tous les coûts d'achat d'une maison pour permettre de prendre une décision éclairée.

[Hollywood · Rating 4 out of 5]

Great book, now I have some good fact to hit back at the people that are always cortisone me for not purchasing a house.

[KN · Rating 4 out of 5]

This book is a part of a category of highly recommended books related to the personal finance category that are specifically aimed at the Canadian resident. The first one that I read was Wealthing Like Rabbits. The Wealthy Renter is the second one. There are more down the line and you can definitely expect reviews on those books very soon. Moving on to the review.

Buying a house vs renting a house is one of the most important life decisions that most people have to take at some point in in time. Whether you’re getting married, or having children, or simply moving out on your own, this decision will make a lot of difference in your life and finances.

In this debate, the balance is heavily tilted towards the buyers. More people prefer to buy instead of rent, especially if they’re growing families. This is the trend across countries and there are common factors for this. The Wealthy Renter, by Alex Avery, however attempts to present the other side of this debate. Through the book, the author explains that renting has many benefits and if used correctly, it is not necessarily inferior to buying a house.

The author starts with describing the importance that the housing decision is for most people, considering that will be the biggest expense in their lives. The author explains the role of the government in pushing house ownership as an inevitable milestone for everyone.

But some of these reasons were valid during a time when there was not much mobility. People grew up, went to school, lived and worked in the same town they were born. They were expected to retire there itself. During such a time and age, house ownership probably made complete sense.

Thankfully the Wealthy Renter is full of arguments why renting can have multiple benefits in a young person’s life. Not only can it limit your housing expenses, it can also help you divert the balance of your savings into investments that can give a better rate of return than housing does. Although, the book is written keeping the housing trends in the Canadian economy in mind, the advice given in the book – like universal economic principles – can be adopted for people living anywhere in the world. One simply needs to be aware of the trends in their city – namely housing prices, average income levels, mortgage rates, etc. The book also describes the ongoing trends and compares the six biggest cities in Canada.

The author does a fabulous job in bringing to light many aspects of home ownership that are not apparent to someone who have never bought a home. He explains the hidden costs that are associated in owning a house. Property taxes, maintenance costs, legal fees, etc. often add up whenever you plan to buy or sell a house. He also talks about investment creep, which is real and significant mistake that many people make in their excitement of owning a new house for the first time.

The book makes convincing points on how housing should be seen as what it is – a combination of investment (the land) and expense (the building). The former can increase in value, while the latter can only depreciate.

By the end of the book, the author has laid out a persuasive argument on how renting can be better than buying. Of course this cannot be applied to everyone blankly. It definitely depends on one’s circumstances, priorities and financial health. But it does plant a seed in your mind that renting can be a viable strategy after all.

Housing works because it is a forced savings plan. Once you have a mortgage with a bank, you’re essentially forced to make regular payments to the bank. But if you can keep the same discipline by investing your savings from renting at a lower amount, you can have the best of both worlds – become wealthy and at the same time be flexible in your life decisions.

I would recommend this book if you are at such a stage in life. Even for people who have already decided one way or the author, this book can help guide your further actions. There is some amount of fluff in the book especially in the beginning. But thankfully one can skim over these parts without missing much. If you’re Canadian, I’d definitely recommend reading this book, if simply to understand the housing market comparisons across the country. If you’re not a Canadian, these chapters may not be relevant. But still go through the book for the commonsense financial habits that the author prescribes in it.

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Read a more comprehensive review of The Wealthy Renter

[Jenn S · Rating 3 out of 5]

Took me long enough to finish this! *cries on the inside*

Overall, this is a very informative book. I like that that data is Canadian-based, making it a relevant read for me. Having lived in the GTA, Ottawa and now Vancouver, some of the data and insight was easier to comprehend. I've grown up with the notion that renting is the act of throwing your money away. Now being a young adult, and now on my second rental, I'm starting to see a different side of renting and wished to explore the advantages and disadvantages of renting vs owning, before selling my very eyelashes to afford a downpayment. I believe that the book succeeds in demonstrating the two.

Although very informative and well-written, it took me so long to finish and was sometimes difficult to understand because of the financial terminology. I won't be putting this book too far in my bookshelf however, because I'm sure that the more I learn on my own time, the more this resource will become clear and make more sense. With my current lease expiring in the Spring, I've got a lot to consider!

[Kaleb · Rating 5 out of 5]

“There’s a very good reason we get a lot of advice that says we should buy a home: a lot of people stand to benefit from that kind of advice and from adding another person to the cult of ‘Why Rent When You Can Buy?’”

Think home ownership is the no brainer decision to wealth? Have you run the numbers? All the numbers? Probably not. Take a peak at Alex Avery’s thoughts on the idea that renting is a much better financial decision than many people suggest.

[Lana Smith · Rating 2 out of 5]

I think there were some good concepts and ideas in this book. Would like to learn from the author if there thoughts have changed post writing this book. I also think they could have spent more time on how to actually be a wealthy renter and maybe give some examples of people who successfully did that. I think there was a lack of focus on that and more just the housing market in general.

[Ayesha · Rating 5 out of 5]

As someone who has grown up hearing "why rent when you can buy?", this book was an interesting perspective on the benefits of renting and eye-opening in terms of associated costs with both buying and renting. Granted, this was written in 2016 and may not reflect the most up to date trends in the real estate market. However, as house affordability for so many folks becomes a much-later-in-life goal or possibly a never-to-be-realised daydream, this book provides a refreshing salve by espousing all there is to be gained by renting.

[Megan · Rating 5 out of 5]

Would love to see an updated edition.

[Valerie A. Sukha · Rating 5 out of 5]

REALLY OPENED MY EYES

Excellent, we'll written book. Most of us do not know or take into consideration all the costs of buying, maintaining, and selling a house, and how it affects our entire lives. I now realize that there are far more short and long term advantages to renting. Now I will advise my kids differently than I would have before reading this book. I highly recommend it to anyone who is serious about learning to manage their finances in the best way possible.

[Annie · Rating 5 out of 5]

It was quiet insightful and gave me a great understanding of the housing market in Canada that can be applicable to any country. A great read to anyone renting. Renting can turn out to better than owning as home owners in essence do pay rent plus more. With that renting isn't bad, it all depends on an individual's lifestyle, situation and goals.

[Christine Lussier · Rating 3 out of 5]

Interesting read on the housing market in Canada. Skimmed most as it did not pertain to the US. Idea is to rent & invest the remainder, thus hopefully making it out ahead

[Vinicius Carvalho · Rating 4 out of 5]

I picked this book to make it mentally easier to deal with the fact that I don't and probably won't have enough money to buy a house in Toronto.
The author gives many rational explanations based on historical and financial facts, understanding of the real state market, possible professional and life style paths that give the reader the peace of mind that renting your home may not be a bad choice in many aspects and can even be a better investment of your money in the long run, due to better diversification and considering many other risk factors.

[Ryan · Rating 4 out of 5]

The main argument of the book is that rather than putting a down payment on a house, you should rent and put that 'down payment money' into the stock market, because over the past 100 years the stock market has returned 8-10%/year whereas real estate has only appreciated 5%/year.
Real estate has a 4% transaction fee to buy/sell, and PIM (property, insurance, maintenance costs) are around 2% a year.
Real estate is a poor investment when compared to stocks.
Explores both sides of the debate from a sociological and quantitative point of view.

My notes:

Chapter 1 - The Media has Glamorized Home Ownership
Home ownership is marketed to people to want to make people want to buy homes, in the same way that car companies advertise to make us want to buy cars. Real estate agents, mortgage brokers push the idea that home ownership is the only sensible choice. It is the American dream that our freedom is determined by owning our own homes.
Housing is glorified through TV Shows like Flip This House
Home ownership appeals to our consumer behavior.

Real Estate is the investment vehicle of the lower and middle class because it is easy to understand. It feels much better to receive a cheque in the mail that says $1000 worth of rent, rather than seeing your a total gain of $2000 on your computer screen.

When someone says their house has doubled in value they are committing the logical error of not including inflation. The value of a chocolate bar from 20 years ago has doubled in price. Inflation is 2% a year, so the real rate of return is 60%

[Víctor · Rating 3 out of 5]

I'm biased and reading this book felt like an exercise in confirmation bias. As the title states, the book is about renting, and renting Alex Avery explains a lot of. In fact, so much renting that you might as well rent (borrow) this book because in the end you'll get nothing. Same as renting, you get nothing. Not really a book for the financially savvy.

Overall, each chapter reads as a blog post about the benefits of renting and the common misconceptions and pitfalls of home ownership. He even adds the paper napkin math that we all do in restaurants when discussing mortgages and rents with friends. As a someone smarter than me once said (and whose name I don't know): "When renting, the most you're going to pay is the monthly rent. When buying, the least you're going to pay is the mortgage." Meaning in the long term, renting is cheaper.

For each of the biased topics that poped into my head, there's a chapter addressing it, mainly Chapter 18 about forced savings. This is very important because that's how renters like me might build wealth because, let's be honest, I enjoy living in the city and can't seem to ever save enough for a downpayment.

For a future update, I'd like the author to talk about Home Buyers' Plan (HBP), which had an increase in the amount you can withdraw from an RRSP in order to buy a home. Also, given the state of humanity in 2020, rent and home prices have gone in opposite directions. I may have the answers, but as I stated from the very beginning, I'm biased.

[Dixie Flatline · Rating 3 out of 5]

Five years later the book came out, and the Canadian market (so far) continues to soar. The author acknowledges that leverage is the main reason investors choose real estate over equities, but does not illustrate the impact of leverage with nearly as much rigor as the "renter" alternatives. Indeed, in hindsight, in major cities of Canada the upside of owning vs. renting since the book came out is easily 30-50% over the renting+investing approach.

Overall the book is useful (for any market, not just the Canadian one) for its objective evaluation of the true cost of housing and the possible value plays should one decide to dip their toes in. There's no discussion of secondary properties / rentals, and it is appropriate - there are plenty of books focusing on that angle.

It's not a long book and I'd recommend it before considering a purchase, to gain an objective look and to ensure one is buying for the right reasons.

[Markus Ziegler · Rating 5 out of 5]

Informative

I appreciate this book as it goes against traditional wisdom. The author explained why there is so much pressure on people (especially young adults) to buy instead of rent. The author lays out clear points as to why renting can be a better way of choosing your housing. Great read!