How to Retire in just 10 Years? Rent, apparently.

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FIRECracker is Canada's youngest retiree. She used to live in one of the most expensive cities in Canada, but instead of drowning in debt, she rejected home ownership. What resulted was a 7-figure portfolio, which has allowed her and her husband to retire at 31 and travel the world. Their story has been featured on CBC, the Huffington Post, CNBC, BNN, Business Insider, and Yahoo Finance. To date, it is the most shared story in CBC history and their viral video on CBC's On the Money has garnered 4.5 Million views.
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photo by Ching Ching Tsui @Flickr

The week after I came back from my world trip, my friend Selena invited me over to her place.

Selena lives with her husband, Rick, in a shiny new condo building in downtown Toronto. Even though it has a pool and roof top patio, Selena and Rick hardly ever uses them.

“I’m so happy you’re back”, she said, giving me an air kiss on each cheek. “I was worried you’d have too much fun traveling and never come back.”

“Actually…” I said sheepishly, “I’m just here until June. Then we’re heading off to Japan.”

“What?! You’re going to keep traveling? How?”

I resisted the urge to roll my eyes. Selena was one of the first people I told when we become Financially Independent, and one of the last people I saw before we left on our trip. “Passive income, investments. Remember? We talked about this?”

“Oh wow, that sounds so awesome,” she said, sighing. “I wish we could do it too…but we’re never going to be able to stop working.”

“Why? “ I asked.

“Well”, she said, averting Rick’s, eyes. “Because we need at least $100,000/year to live on.”

I looked around. Montauk Sofa, Herman Miller office chair, Harry Winston catalogues on her desk. No surprise there.

Rick rolled his eyes but didn’t say anything.

“And with those kind of expenses, we’ll NEVER retire.”

“Does the $100,000 a year include your mortgage?”


“Okay, so how much was this place?


For a condo? My eyebrow shot up.

“I know, I know. It’s expensive. But you know me and expensive things.” She said, picking up her Louis Vuitton purse and cradling it like a $10, 000 designer baby. “I mean, look how pretty Sally is! How could anyone resist her? Don’t you think she deserves to have two sister bags?”

Selena is more protective of her bags than most people are of their kids. One time she left “Sally” on the couch under Rick’s coat, and he, unknowingly, sat on it. When she found out, she pulled out the Lego Millennium Falcon he spent 8 months putting together, smashed it to pieces, and then threatened to set the whole thing on fire. To this day, she leaves the Lego pieces near the front door, a warning to would-be bag abusers.

But Rick, clearly hadn’t learned his lesson. “You already have ten of those things! And they cost at least $5000 a pop!”

Selena didn’t say anything, just glanced at the broken Lego pieces, then back at him.

“Okay, Selena,”I said, hands up in surrender and stepping back a safe distance from “Sally”. “What if you could rent this place instead, keep all your expensive things, and still retire sooner?”

“What? How is that possible?” She demanded.

“Well, let me show you…”


Scenario 1: Buy the $588,888 Condo and Live the Boomer’s Dream.

With a 25% down-payment, 2.89 mortgage rate, 25 years amortization, Selena and Rick’s monthly payment is: $2065.

Doesn’t sound too bad, right?


Since she owns, she also has to pay for condo fees, insurance, and property taxes, utilities, and parking.


Monthly Payment $2065
Condo Fees $697
Insurance $200
Property Taxes $250
Utilities $100
Parking: $100
Total: $3412

(All costs above are monthly)

To rent, she can get a similar condo in the same area with 2 bathrooms (Selena’s only has 1) and FREE parking, for only $1990/month!

If we look at the Price-to-Rent ratio:

PR ratio = selling price / rent *12 months

= $588,888 / $1990 *12

= 24.66

Okay, so what does this weird number mean?

You know how Wall Street suit people love throwing around the term P/E ratio? Like “this P/E ratio is WAY too high. That stock’s heading for the crapper. “ or “Man, that is a sweet P/E ratio. I could totally go for some of that…”

Well, what they are referring to is the Price/Earnings ratio—a measure of the stock’s price relative to the company’s earnings earnings. Historically, a P/E ratio of 16* is considered pretty good. Anything above that, and it’s considered overvalued.

And in this case, the Price/Rent ratio is just like that. The rent is that home’s “earnings”. Now if we invert that number, 1/24.66, we get a return of 4%. This is pretty shitty by real-estate investor standards.

If you ever get a chance to check out Paula Pant’s “Afford Anything” blog, read her “Renting is throwing Money away?” article . It’s mind-blowingly awesome. (Seriously, go check out her blog. The woman made a cool $1 Million with real-estate investments by the time she was 28! And I, um, sort of have a secret girl-crush on her. Ahem.)

If she says she won’t touch a property unless the P/R ratio is 8.33 or less**, you know this Condo is an investment dud.

That being said, with a combined income of $200K/year to blow, Selena and Rick can pretty much party it up right?



Okay, ladies and gents, let’s see what happens if Selena and Rick continue owning this non-producing piece of real-estate trash.

Assuming that their take home pay is around $150K (not exactly the Millennial norm, I know) and their costs are 100K, their savings rate is around 30%. Pretty good, considering the national savings rate is a paltry 5%.

Now, if you look at the graph I made below, you can see that with a 30% savings rate, they have to work for 30 years. (I don’t want to bore you with all the math behind this, but if you really want to see it, click here)

Screen Shot 2016-03-30 at 12.01.18 PM

When I told Selena this, she just glared at me and crossed her arms. “Yeah, 30 years is a long time, but so what? How is renting going to fix that? I still need to keep working forever to pay the rent, don’t I?”

“Actually no. By renting you can bring that number down from 30 years to 10 years”

“Yeah right.”

“No really. I can prove it”…


Scenario 2: Follow the Millennial Revolution Instead:

Monthly Payment $1990

So now that we know their expenses are 100K/year (hey, purse dry cleaning is expensive! Don’t judge), that means her variable expense is $100K minus the cost of rent, or 100K – $3412*12 = $59,056.

So if they rent instead, their total expenses go down from $100,000 to $82,936 ($59,056 + $1990*12). That’s a WAY sexier, WAY bigger 45% savings rate!

Now, I know an extra 15% doesn’t sound like much, but…

Look what happens when we plug it into the FI chart:


Her retirement period goes from 30 down to 20!

BAM! She got 10 years of her life back, just like that! And not a single LV bag was harmed in the process. All she had to do was switch from owning to renting.

But that’s not all.

Another thing I noticed when I left my 9 to 5, is that your costs actually go DOWN (by around 25%) once you stop working. Not a lot of people realize this, but retired people can actually live on WAY less.


Because when you stop working, you no longer need daily transportation, fancy work clothes, or expensive dry cleaning services.

And you have lots and lots of free time to make delicious, healthy meals, so you no longer have to choose between grabbing a Big Mac or greasy Panda Express takeout in between urgent work meetings (I never really got what’s the point of marking meetings “urgent” if they are ALL marked urgent?)

And because you’re no longer fighting other Corporate drones for vacation packages, you can travel for 50% -70% less money. (I used to spend $6000 on a 2-week vacation package in London. Once we stopped working, going to UK only cost us $2500/ for 2 people for 2 weeks. And that was the MOST expensive part of our Round-the-World trip).

I can go on and on about the wonders of not being forced to work a 9 to 5 job, but that’s an article for another day.

Anyway, because their work-related costs are now gone, Selena and Rick will only need $62,202($82,936 * 75%) per year to live.

Using the 4% rule, they’ll need to build a $1.56 Million portfolio ($62,202*25).

Sounds like a lot? Well, it is…but totally achievable with the magic of investment gains and compounding.

If they invest the 67K they save each year ($150, 000 take home pay – $82, 936) at an average market return of 6%, it’ll only take 15 years to generate a $1.56 Million portfolio!

Year Balance Contribution ROI (6%) Total
1 $0.00 $67,064.00 $2,011.92 $69,075.92
2 $69,075.92 $67,064.00 $4,144.56 $140,284.48
3 $140,284.48 $67,064.00 $8,417.07 $215,765.54
4 $215,765.54 $67,064.00 $12,945.93 $295,775.48
5 $295,775.48 $67,064.00 $17,746.53 $380,586.00
6 $380,586.00 $67,064.00 $22,835.16 $470,485.17
7 $470,485.17 $67,064.00 $28,229.11 $565,778.28
8 $565,778.28 $67,064.00 $33,946.70 $666,788.97
9 $666,788.97 $67,064.00 $40,007.34 $773,860.31
10 $773,860.31 $67,064.00 $46,431.62 $887,355.93
11 $887,355.93 $67,064.00 $53,241.36 $1,007,661.28
12 $1,007,661.28 $67,064.00 $60,459.68 $1,135,184.96
13 $1,135,184.96 $67,064.00 $68,111.10 $1,270,360.06
14 $1,270,360.06 $67,064.00 $76,221.60 $1,413,645.66
15 $1,413,645.66 $67,064.00 $84,818.74 $1,565,528.40


Shocking isn’t it? That’s the advantage of being a Millennial. We have time on our side, so our money snowballs with the power of compounding.

But wait. There’s more.

Renting also will also give Selena more free time. She no longer has to worry about the extra paperwork, lawyer fees, and maintenance headaches that owners have to deal with.

Now Selena can use that extra time to pursue her dreams, and start working towards a side income.

And by the time she retires, if her and Rick can generate $15,000/year each from freelance writing and coding (and again, from my experience, this is easily achievable because this is how much I earned doing exactly this), she can lower her passive income requirements from $64,432.52/year, to $34,432.17 ($64,432.517 – $30,000 combined freelance income).

And that’s another amazing thing about becoming Financially Independent. Normally you wouldn’t even consider quitting your stressful job for a flexible, fulfilling job you love that only pays $15,000/year.

But with the passive income from your Portfolio boosting your income, there’s no reason why you can’t.

So now, Selena will only need $860,804.25 ($34,432.17 * 25) to retire. By investing $67K/year at 6% return, that’s only 10 years away!

Year Balance Contribution ROI (6%) Total
1 $0.00 $67,064.00 $2,011.92 $69,075.92
2 $69,075.92 $67,064.00 $4,144.56 $140,284.48
3 $140,284.48 $67,064.00 $8,417.07 $215,765.54
4 $215,765.54 $67,064.00 $12,945.93 $295,775.48
5 $295,775.48 $67,064.00 $17,746.53 $380,586.00
6 $380,586.00 $67,064.00 $22,835.16 $470,485.17
7 $470,485.17 $67,064.00 $28,229.11 $565,778.28
8 $565,778.28 $67,064.00 $33,946.70 $666,788.97
9 $666,788.97 $67,064.00 $40,007.34 $773,860.31
10 $773,860.31 $67,064.00 $46,431.62 $887,355.93
11 $887,355.93 $67,064.00 $53,241.36 $1,007,661.28
12 $1,007,661.28 $67,064.00 $60,459.68 $1,135,184.96
13 $1,135,184.96 $67,064.00 $68,111.10 $1,270,360.06
14 $1,270,360.06 $67,064.00 $76,221.60 $1,413,645.66
15 $1,413,645.66 $67,064.00 $84,818.74 $1,565,528.40


“So, just by renting instead of buying, and not changing your lifestyle. You could quit your job in 10 years instead of 30! How awesome is that?”

For the first time ever, Selena is speechless. She’s staring at me like I’m a brand new Hermes Birkin.

And Rick’s beaming—like I just SOLD all of Selena’s Hermes Birkins.

“Okay, so where did you see the $1990/month rental again?” They both ask me at the same time.





photo credit and license: photo by Ching Ching Tsui @Flickr (

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24 thoughts on “How to Retire in just 10 Years? Rent, apparently.”

        1. Essentially, yes. “Normal” levels of inflation (1-3%) means goods cost more. But that also means those companies who are selling those goods make more, so their profits increase. Eventually, employees demand more money because goods cost more, and the cycle continues. Dividends also get increased at the same rate for the same reason: the company makes more money so in order to keep their investors happy they increase their dividends.

          1. Thanks wanderer

            BMO up dividends despite bad loans from Alberta. Although they laid off 1800 people. Which is quite a lot, so let’s see what impact this layoff will have on the market

  1. While I agree renting can be better then owning in some scenarios, I don’t think you are factoring in everything. You didn’t offset the gains from the house. At 3% (pretty pessimistic by most standards), the property will double in 20 years and be paid off. There’s your 1 million right there. Thats not factoring any extra investment contributions, pensions, etc. And they get to continue to live the life they want.

    1. the property will double in 20 years and be paid off

      Right there’s the dangerous tricky part that most people don’t understand. When you make projections like “this will get paid off in 20 years,” you’re implicitly saying that you’re going to stay in that place/city/job for 20 years. I don’t know what I’m going to be doing in 20 years. 5 maybe, but not 20.

      So yes, I agree that sometimes owning makes sense, and that I think is defined as the house being cheap enough that you can pay off the mortgage at your current job in 5 years. Haven’t seen that one of those lately, have you?

  2. Wonderful, inspirational blog Millenials with a Million,
    You two have purpose and drive, I am afraid your friend Selena may have too much passion for luxury stuff I life, and will not have the chutzpah and the self discipline you two have. I would love her to prove me wrong.

    An aside (I’m just catching up on your blog and video), but wanted to share, a couple of years ago, CBC had a program “who is using the Food Bank”. I could not believe the number of people who phoned in, regular users of FB who said they HAD A JOB but thought they would go back to school for their Masters, in order to make more money. Today they know poverty too well…with no opportunities for employment in sight.

    You two are refreshing, I wish you all the best! Plus you need to blog about your travel destinations!

    1. Thanks! It’s sad to hear about the Master students. As I said before, degrees don’t guarantee jobs. And with the lack of jobs or job instability these days (my company was doing massive layoffs when I left), sometimes it’s better to start your own business or invest to generate a passive income. That way you are in control, not employers. Hopefully they’ll find a way out.

      I shall queue up some travel posts for your amusement! 🙂

  3. I agree with this thesis if you want to retire early and have as much liquid capital as possible. The question lies in what will happen in the later part of your life. I’m sure things will be fine if one can retire in 10 years. It’s just that inflation, at even 4-5% compounded can really hurt a renter, or a renter who eventually wants to find home base.

    The RE market in Canada seems NUTS though. Why is Vancouver and Toronto so hot? What are the big industries driving such price appreciation? Is it mostly hot international money? If so… what will stop it?


  4. Thank you for putting numbers to this movement. I am often searching for formulas on how to better understand what my intuition is telling me especially living in the land of millionaires (Vancouver). Both my partner and I are committed renter’s (in this city) and refuse to buy into the Debt system. I am just curious how you calculate how long you will be “in retirement/alive”? Of course the earlier you retire the more money you need before retiring? How does income in retirement get calculated with investments, withdrawals, taxes, etc.? Thank you and please keep writing!

  5. Congratulations, FC and W, on your success and thank you for your blog.

    Selena and Rick — may they be well and healthy — would have been great candidates for one of Gail Vaz-Oxlade’s shows.

    1. Thanks! I know a lot of people like S&R who earn a lot but don’t save anything. Part of the problem is the whole concept of “keeping up with the Jones”. Very destructive but very difficult to let go of. As humans, we like to feel accepted and included amongst our peers. But as we get older, people will start to realize that time is more precious than money. You can have all the fancy things in the world, but you can’t take them with you when you die. The focus should be on relationships and experiences, and it’s difficult to focus on those things if you’re so busy stressing out over work to pay for fancy things and a giant mortgage. That’s the message I’m trying to get across to my friends. We’ll see if it catches on.

  6. In this kind of volatile market where you will get consistent 6% return, year after year for 20 year. I am trying my best, but for 8 years it is never been more than 2 %

  7. I’m on board with this, but the general population won’t. What about the argument about equity in the home vs giving rent away to a landlord?

  8. I think overall this is a good lesson for those in very expensive cities, but ultimately you have to take the time to do the proper due diligence for your own situation to determine what would be best.

    There are certain markets like Toronto or LA where in fact renting would be a mere fraction of the cost of the mortgage and every other cost, but you should also factor in how much of your mortgage payment is going toward equity in the home and how much is wasted on interest, even then there are tax deductibles to factor in when paying a mortgage. Conversely there may be other cities where buying a home is FAR cheaper than renting – i know in the current market I live in, rent on the beach for a 2br place can easily run you over $4k a month, whereas the mortgage would be $2.5k per month with 20% down. Even with HOA fees, etc. buying would be a much better deal.

    1. “then there are tax deductibles to factor in when paying a mortgage.”
      This is true for Americans but not for Canadians. Our mortgages is not tax deductible.

      Agree that you have to do the math. Most people don’t. They just punch the number into a mortgage calculator and ignore ownership costs.

      The rent in your is very expensive! The rent in Toronto is nowhere near $4k/month for a 2 br place. You can rent an entire 3 bedroom house for $2000-$2500 (utilities included).

      Are you in SF?

  9. Hi, my question is whether or not you considered that rents typically and continually increase in hot markets especially. How will this scenario be accurate without putting rental increases into the equation. I have been a life long renter. In the past 15 years I have had to move four times as properties sold etc. Each time these moves cost money which also needed to be added in to my chart. I’m thinking now that I might have been just as far ahead or more so finacially and a lot more “at home” if I had purchased. Your thoughts?

    1. 4 times in the past 15 years doesn’t seem that bad.

      We rented in Toronto for 9 years and not once did we have to move. My strategy going forward is to rent apartments rather than houses. Unlikely that the owner will kick out the entire building to cash out. I also think as renters we have the ability to move to “renters’ market” areas (like edmonton, for example). Apartments also require a lot less time for maintenance, which frees up time to do things I love.

      And when you say “rent increases”, keep in mind that when you own, you have “ownership increases” as well. When your property values go up, so do your property taxes. Cost of maintenance/condo fees, insurance, real-estate agent fees, these all rise to the rate of inflation.

      In terms of owning, you’d have to do the math to see if it makes sense. The cost of moving 4 times in 15 years is NOTHING compared to the cost of ownership (property taxes, real-estate agent fees, land transfer tax, home inspection, insurance…none of these costs add to the equity of your home yet you have NO CHOICE but to pay them).

  10. Yes Renting can be less costly than owning.. it just depends on the market and your location. However, I don’t know anyone who can consistently save $67,000/year for 15 – 20 years. That’s completely unrealistic unless you live on the gravy train.

  11. Interesting analysis. If you account for the lost investment returns of the down payment and also equity build up to eventually having the house paid off, it would be even more useful.

    I live in South Carolina in the USA. My house was

    price = 139,500 USD
    mortgage+insurance+taxes =$967/mo
    zillow says the rent would be $1250/month
    down payment = 20%*price = $27,900
    appreciation = SLOW AND LOW. But at least its stable. Maybe 1%/yr.

    I’ve done the math a few different ways, and I think buying was right for us. We have 3 kids. I have a giant spreadsheet that progresses with age, and spending drops significantly when the house is paid off. Maybe we’ll move before then, and we will take some equity with us but lose 6% to sales cost unless we sell it ourselves (which is doubtful).

    But I’ll keep this in mind for future situations. When the kids are gone or we more to a different market, renting might make plenty of sense.

    1. While reading the afford anything post I realized a little more info would be helpful:

      interest rate = 3.125%
      15 yr mortgage
      principle + interest payment = $777/mo
      Current principle/mo payoff ~$580/mo (building $580/mo out of $967/mo payment)
      So the “throw away” part is $967-$580 ~$393/mo currently. Clearly, this changes with time.

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