Re: You buy the house and then Invest,
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I read a few of the replies and realized you are getting terrible advice.
It appears you are from Canada, so you need some Canadian specific answers.
Buy your $400,000 property with cash. Take out a Line of Credit (LOC) for 80% of the value of your property(banks will do this with no or small fees and prime rates of 6.25% i think). Use the $320,000 LOC to Invest in great income (dividend) stocks. The interest on this LOC is tax deductable essentially making the interest rate approx 4.25% (depending on your tax bracket). The dividend income from your stock pays this 4.25% interest and any stock and home appreciation is yours to keep. This way you have a house, paid for in cash (no mortgage) and an investment portfolio of $320,000 and growing. Simple.
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Not so simple. You said nothing that addresses the opportunity cost of having the money tied up with the house. Also I assume there is real estate tax (although I certainly don't know) and then there's any repairs on the property. I think you raise a good point (assuming what you say is true) but there are still many other things you did not factor in.
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