Renting vs Owning

[SlowHabit]

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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.

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I wrote a long response but decided it was just wordy and didn't explain anything. I think mortgage payments [or specifically, interest on the mortgage payments] are tax deductible is a better choice.

[TheMetetron]

I'm impressed than Henry has a more realistic and knowledgeable view of real estate than 99% of the general population and 95% of the people in BF&I. Especially for someone who claims to know nothing about real estate... something I wish more people would realize about themselves.

[spider]

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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.

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In some sense, this is irrelevant as far as how much you decide to borrow (though extremely relevant to the buy vs rent decision). Conditional on buying a house, the decision to borrow becomes more about your feelings on leverage. If you are optimistic on the long term prospects of stocks and not too risk averse, borrowing as much as possible on the house purchase (while keeping the interest rate low) leaves you a lot more to buy stocks with.

Besides just looking at buy vs rent, you might want to do separate calcs for a 20% down vs 70% down purchase. If you think housing prices will be flat but stocks will appreciate at, say, 10%, then you'll see quite a difference in the two housing purchase options (hint: 20% down is going to look a lot better, but keep in mind this is involving more risk).

[maxtower]

Henry, since you said there are vacant condos for some time, you could just use the equation to figure out what you should pay for a condo, and then just start making lowball offers for that amount. Maybe you'll get a taker, and then you'll own the place.

[Henry17]

I've already factored in getting them to come in for $65k less then they are asking.

One of the smaller units just sold for $40k less then the original asking price so I figure that is realistic.

I just found out today that one of the penthouses is now on the market. It is an awful investment but I feel like I can't just buy the medium sized unit now that a penthouse is available. God my ego makes me make stupid decisions.

[pokerplease]

wow, it's neat what you stumble upon when you're awake far too early on a saturday morning..

henry, i've spoken to you on that awful blue website about the building.. there's now two penthouses for sale. as someone who monitors this building closely, i would recommend against buying. some units sell quickly (406 in about a month, but now it's for rent) but many linger..

one of the penthouses has been on the market for about over a year (unlived in) and the other one just came on the market last month. i know (or know of) the owners of all the penthouses and they're basically 8 to 9 figure millionaires (or they built the place). the cost of their penthouses probably was not a very big deal to them. i'm not sure of your own financial situation but i don't see it wise to get tied to a 1.5m+ asset that will be next to impossible to unload.

there will always be units for rent in here at varying prices, you can switch units with ease. (i'm on my 2nd unit in 3 years). i think your mind was made up anyways. [img]/images/graemlins/smile.gif[/img]

[Henry17]

Hey. God the internet is a small place. Welcome to 2+2. This is much better then the awful blue site.

I am really determined to own but with respect to Ottawa my mind is made up that I'll keep renting. I hate Ottawa and the only reason I'm here is because of the GF.

[pokerplease]

we just bought a little place in rockcliffe but it's going through a few months of renovations so we'll probably be moving in late january. i'm not big on owning real estate but we wanted a nice house w/ a back yard and it's hard to rent those.

one nice part is that we get to do a lot of things exactly how we want it. custom kitchen and ensuite are among the major renos.

i don't consider my primary residence an investment anyways - it's just a place to live. if it happens to appreciate - great, but i'm not going to see any of that money unless i downsize, go back to renting or take it out as a HELOC (and pay interest on my own equity)..

[Henry17]

Congrats on the purchase. So you'll be gone by the time I move in (assuming plans don't change for the 50th time). That is unfortunate. I think you might be one of the only younger residents. I've cut back a lot on parting in the last two years but one of the things I like about my current location is no one ever complains to security about the occasional noise. What has you experience been like there?

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one nice part is that we get to do a lot of things exactly how we want it. custom kitchen and ensuite are among the major renos.

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That is the primary reason I'd like to own. Despite living here since 2000 I haven't really even bothered to decorate let alone customize.

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i don't consider my primary residence an investment anyways - it's just a place to live. if it happens to appreciate - great, but i'm not going to see any of that money unless i downsize, go back to renting or take it out as a HELOC (and pay interest on my own equity)..

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I feel the same way. I have a passive investment that pays almost what my current rent is, so paying rent seems pretty painless. Some control issues I'm having with my current landlord have really started to annoy me thus the desire to own. Every time Minto does something to piss me off I start looking to buy.

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How does food delivery work? From what I understand the elevators are biometric so is it a major hassle for delivery people to bring stuff?

[pokerplease]

from what i've seen, the units are pretty much sound proof. i wouldn't consider myself a noisy person but based on the relative age of residents, i'm sure i'm one of the noisest people in here. i've had a few parties and football on sunday's gets pretty loud of some buddies are over and never a word from my neighbours. one of my neighbours actually mentioned to me a few months back that when we had moved in, she was concerned there might be noise since we were so young but we turned out to be "perfect neighbours". i found that kind of amusing.

when we brought our puppy home she did not take well to crate training. there was pretty much barking all the time, often at stupid hours of the night. we slept in the second bedroom for almost a week until we gave up. during that whole phase my neighbour on the other said he couldn't hear a thing. (on a side note, she now occupies the solarium and has one of the best views in ottawa).

my gf and i are def. some of the youngest residents. the only people younger i can think of off the top of my head is one uottawa student and a hockey player who spends his summers here. for the most part everyone keeps very much to themselves, but since the arrival of our dog (who's insanely cute) we've gotten to know most of the building.

the customization is pretty awesome and tiresome at the same time. i get to do cool stuff like put a tv in the ensuite and have an unspecified number of tvs in my living room (i just went from 3 to 2 and i want 5 but my gf disagrees). on the other hand, picking your ceramic tile, faucets, sinks, etc can get painful. we have designers but you still have to pick from the options they present (and we're super picky)

the biometric aspect of the building is a two step process. each person has a keyfob which only works for their finger print. you swipe the fob on the scanner which activates, then you scan your finger. the elevators arn't as secure, any active fob will unlock the elevator, no fingerprint required. concerige/security can also remotely unlock the elevator from their desk. usually delivery guys and visitors are allowed in after they call up to you from security, sometimes they're escorted up. it's a pretty easy process.

i found living here has caused us to eat out alot, especially metro. it's just too handy. we're often guilty of underdressing since we just go there for a quick bite and not a formal meal. we were probably on the patio at least twice a week for "hill hour" during the summer..