The crisis

Did you hear that one in five people now turn to ChatGPT for help with life and mental challenges?

Silly humans. They should come here. We even do dogs. And marriages.

Today, let’s do Jon.

“I’m heading towards a mid-life crisis,” he says, “and I need a kick in the pants to set me in the right direction. From my years of reading your blog, I think you might be the only person wearing the right boots to provide it!”

Yes. The Libertys are on and polished. Wassup?

Turns out that Jon is 42, single, a teacher with a DB pension and expecting to retire in 15 years. His life sounds neat, disciplined and planned. Financially, he’s okay. “Thanks to your financial advice, I’m sitting on about $580,000 in a diversified, self-directed portfolio, held across registered and non-registered accounts,” he says.

Steady job. Good savings. Stable future. Where’s the crisis?

“During the pandemic, the pricey, but well-appointed, newly construction purpose-built rental building I was living in went downhill fast. I bailed on the rental and moved in with a parent – temporarily – until I could find a new place that met my needs,” he explains. “That temporary stay has turned into 5 years and counting, as my basement-bargain (pun intended) rent saw my portfolio grow over 5 times larger, thanks to diligent saving and investing.”

“This is not how I imagined my 40’s and the lifestyle certainly does not add to my appeal in the dating market. As my parent gets older, I also worry about the potential risk of becoming locked into the role of a live-in carer. At the same time, when looking at my accommodation options in the area and taking into account the opinions of everyone around me, I’m feeling some acute analysis paralysis and need to snap out of it.

“Here’s where I could use some advice, if you’d be willing to share it: Should I rent or buy a one-bedroom condo? Here are the considerations:

“Rental stock in my town is relatively slim pickings. For the going rate of about $2,500/month for a one-bedroom, the choices are (in order of availability) mom-and pop landlord rental condos, where I could be subject to a crappy landlord or eviction “for family use”, outdated purpose-built rental buildings with limited amenities and, in some cases, significant social challenges amongst the tenants, or newer purpose-built rentals, similar to what I rented previously, that ended up being a whole lot of lipstick on a pig.

“A one-bed condo larger than a postage stamp, with parking, will cost about $500,000. After using my $45k FHSA for a downpayment, such a condo purchase would carry a monthly mortgage of $2,700 for the first 5-year term. The mortgage and condo fees (~$400) alone would add up to about 60% of my take-home income. This is, of course, before municipal taxes and other big daily life expenses, like leasing a vehicle. After estimated total expenses, the money left for “living” would be limited, and the money left for saving and investing would be pretty much non-existent. To me, this doesn’t seem smart, yet everyone from my family, to my colleagues, to my therapist, is suggesting that this is the best option, as “renting is just throwing money away”. To add to my ambivalence, as you’ve shared on your blog, condos are now on sale and seem to have hit their bottom, in terms of pricing.

“The third option is, of course, to remain a basement baby, destined to wither and die, rich, but alone, underground. Not desirable. I need a kick in the right direction, or perhaps some ammunition for shooting down the arguments of those who oppose my plan, regardless of which path I choose.

“I’m bracing for impact. Thank you for all your free advice over the years. My current financial situation is owed, in large part, to the decisions I was able to make based on the advice you provided to all of us in your blog.”

Rule #1, Jon. Never take real estate advice from your therapist. Even worse than your relatives.

Well, you know the risks here. They’re not financial.

A dude in his parent’s basement – even with a good gig – is not prime husband or partner material. And you’re 42, after all. Tempus fugit. Male pattern balding. Love handles. The works. Five years with your mother is far too long to stay subterranean and be out of the game.

Second, you obviously understand that morphing into a caregiver is assured if you don’t move. Your parent will become more and more dependant upon you. Your choices will narrow. Your guilt will swell. Her independence will wane. Her self-sufficiency fade. Nobody wins.

You must leave. Or stay and accept your fate as an eternal child. Even if you were to take over title of the property, and ship mom into the basement (a totally vulture move) your life would still be forever impacted. Not for the better.

Without knowing your location, Jon, it’s impossible to comment on the value of local real estate. But buying a condo almost anywhere these days means facing the potential of a capital loss over the next five years. We may be far closer to a bottom than a year ago, but we’re not there yet. Prices could stagnate or dip further, depending on local supply and demand plus interest rates (and then next move for the Bank of Canada is up).

Why would you buy a unit you can rent for a third less every month – plus tie up a downpayment – with no real prospect of a future profit to offset the ownership premium? You sound smarter than that. The advice not to ‘throw money away’ applies in this case to buying, not leasing.

So, rent. Do that for a year and shop for a little house with dirt in the meantime. Your future hot GF will like that better. Mom can come over for dinner. You can get a beagle.

As Lao Tzu said, the longest journey begins with a single step. Take it.

About the picture: “Haven’t seen a dog in a backpack quite like this before,” writes Victor in BC. “Air holes and a chill doggie. Blanchard and Hillside intersection, Victoria. Thanks for your tireless efforts Garth. Appreciated.”

To be in touch or send a picture of ytour beast, email to ‘garth@garth.ca’.