Renting vs Owning - Page 4

MatthewRyan · #31 10-29-2007, 08:33 PM

well, putting down 70%+ is not wise. One of the best benifits of RE is being able to leverage your money 5x or 10x. So if you put down 10%, and the property appreciates 5%, u just made a 50% return on your invested capital.

john voight · #32 10-29-2007, 08:33 PM

well it could be earning if you lived in it for 2 years till the loan was paid off, and then buy a new house using the rental income from the first house.

I think.

stephenNUTS · #33 10-29-2007, 08:44 PM

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The mortgage would be minimal and pretty short. I'd be borrowing less then 30% and only for 2 years. My concern is having all that capital tied up earning nothing.

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Hey Henry,

My FIRST real estate buy was a condo,back in the early/mid eighties.
When things went belly up in the real estate downturn after the 1987 stock market crash around 1990-92....the toughest sell was a condo or co-op.

With the R/E market in the shape it is now.... I would be VERY leary spending the bucks you are talking about, buying a condo in that price range

I am sure you know the common charges,higher taxes per sq. ft,and the lack of any true LAND ownership(again in sq. footage terms) ,make them on the bottom of the buy list IMO.

But when I was younger at that time it not only was in vogue,a great bachelor pad,but "maintainance free" as I was led to believe.....NOT when selling though!

Obviously if you are doing your home work,and a steal comes along then thats a diff story

But my ONLY loss selling a piece of property ...was selling that condo at that time around 1993-94(it obviously rose in price afterwards,but in a shorter time frame as you are reffering to,I would be very careful)

Just a heads up

Stephen [img]/images/graemlins/cool.gif[/img]

BTW I have NO idea if the markets in Canada(i assume that is where you are thinking of buying)are the same as the US

Tornado69 · #34 10-29-2007, 10:51 PM

I live in Canada to .. in Vancouver to be specific. Bought a house for 351k in February and it's now worth 400k. Sick thing is 2 1/2 yrs ago when I had the $ to buy my house I could have bought it for 230-240k. Instead I bought a quad ... makes me sick :@

Shoe · #35 10-29-2007, 11:01 PM

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well, putting down 70%+ is not wise. One of the best benifits of RE is being able to leverage your money 5x or 10x. So if you put down 10%, and the property appreciates 5%, u just made a 50% return on your invested capital.

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Not really, you are still paying more than 5% interest on the 90% you borrow. If the property only appreciates by 5%, you would definitely be better off putting the money in the stock market instead. The real estate boom is over, and the gains of the last few years are far gone. Real estate is going to remain relatively flat for the next several years (In most U.S. markets -- I can't speak for Canada or other countries).

Also, it does not sound like OP can deduct the mortgage interest from his taxes in Canada. Correct me if I am wrong.

For a good article on renting vs. owning, please read: Smartmoney.com article - Why I rent

Henry17 · #36 10-30-2007, 06:19 AM

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well, putting down 70%+ is not wise. One of the best benifits of RE is being able to leverage your money 5x or 10x. So if you put down 10%, and the property appreciates 5%, u just made a 50% return on your invested capital.

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Except my concern is that the property has very little potential to appreciate.

Henry17 · #37 10-30-2007, 06:43 AM

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But when I was younger at that time it not only was in vogue,a great bachelor pad,but "maintainance free" as I was led to believe.....NOT when selling though!

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That is basically where I am. I have to live downtown and the place has to be impressive. I've basically limited myself to an 8 block by 14 block area.

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Obviously if you are doing your home work,and a steal comes along then thats a diff story

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The research was pretty easy it is just the result that seems counterintuitive. The one thing I don't know is how to estimate appreciation but I think that is more of an art then anything else.

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BTW I have NO idea if the markets in Canada(i assume that is where you are thinking of buying)are the same as the US

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We really don't have much of a sub-prime market so none of that has entered here. The RE market though is regional. If I was in Vancouver or Toronto I'd have no concern but Ottawa is basically full of public servants and what is left of tech. All these high end projects were started when tech was making everyone rich. After the bubble burst these type of condos became orphans.

Henry17 · #38 10-30-2007, 06:46 AM

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Also, it does not sound like OP can deduct the mortgage interest from his taxes in Canada. Correct me if I am wrong.

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You are correct. It is not deductible in Canada. But we also don't pay any capital gains on the appreciation of the primary residence.

ahnuld · #39 10-30-2007, 08:18 AM

Henry, is that true in all of canada (read: quebec) or just ontario? I wonder what works out better: No cap gains, or mortgage payements are tax deduc. Of course, our rules are probably the reason why we dont seem to have the saem speculative bubble as the states.

Henry17 · #40 10-30-2007, 08:33 AM

ITA is federal legislation so I would assume it is all of Canada. I can say with certainty that it is true for everywhere except Quebec. I'd say it is probably true for QC but I never feel comfortable giving legal opinions for QC. Quebec is civil law while the rest of Canada is common law and on top of that QC is just odd. It should be true but I'd double check.