In a universe of perfect capitalism, everybody always makes the most economically viable decision, creating an incredible balance of goods and services that exactly parallels the wants and desires of consumers. Sadly, we aren’t all perfectly rational consumers, in part because we have incomplete information. There are even economic decisions you might not even know you can make; for example, did you know that you can opt to either rent or buy a furnace? Well, you probably did, given the title, but did you know that before you read the title? Even if you did, you probably don’t know the advantages and disadvantages of each, so let’s run through them!
Renting a furnace – what circumstances would you even do this in? Well, more often than not, you’ll do it when your furnace breaks down to the point that it’s not worth repairing anymore, but you don’t have the funds to purchase a new furnace outright. Furnace rentals are usually on month-to-month contracts, and might include things like regular maintenance and free repairs. That’s a lot of upside! The most obvious flaw with renting a furnace is that you don’t actually own the thing, so when you sell your house, you’ll have to sell it furnaceless – not an enticing proposition for anyone looking to move within Winnipeg.
Buying a furnace comes with the obvious disadvantage of higher upfront costs; you also have to repair the thing yourself. In this way, renting or buying a furnace is somewhat like renting or buying a house; one costs more upfront, but can be a bit more of an asset later on. The difference here, of course, is that while houses are an appreciating asset, furnaces usually depreciate in value over time. Of course, a house without a furnace will probably be quite a bit less valuable than one with a furnace, so when you plan on selling, you’ll likely have to buy a furnace anyway to extract maximum value out of the house.
Here’s another thing to consider: cost over time. You want to ask yourself how long you expect to be in the same place for; the longer you’ll be there, the more valuable buying instead of renting might become. Why? Well, after X amount of time, you’ll have paid off your purchase of a furnace; conversely, with a rental, you’ll pay monthly for as long as you have it. Considering that when you sell your place, you’ll want a furnace installed anyway, this might not even be that big a factor.
All in all, we’re quite inclined to favour buying instead of renting. When money is a problem, there’s a lot of financing options; we offer some, as does Manitoba Hydro. While repairs might not come free, a new furnace shouldn’t need repairs very often at all; we also act as a furnace maintenance company, so we can swing by every year to make sure everything is running smoothly. In the end, stay smart, consumer: compare the costs of renting to buying, see how much of a difference it makes for home sales, and consider how long you’ll be in your home for. You’ll make the right decision if you’re informed!