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#21
10-31-2007, 10:33 AM
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Re: You have $400k in cash, buy House with it or rent & invest
[ QUOTE ]
That seems high. I live in a $600k condo and only pay $2700. [/ QUOTE ] henry, that sounds like a very good deal. since i pay about $2000 for what i think is about a $350-$365k unit, and i thought i had a good deal, yours sounds that much better. Keep renting bud!! Just for comparison what condo fees does your unit cost if you would own? mine are just above 900...if i were to own, so real rent only $1100. 
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#22
10-31-2007, 10:54 AM
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Re: You have $400k in cash, buy House with it or rent & invest
slightly off topic...
Would it not seem that buying once the bottom is reached is not the optimal time to buy b/c everyone is going to be buying and then you find yourself in a seller's market?
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#23
10-31-2007, 10:57 AM
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Re: You have $400k in cash, buy House with it or rent & invest
I live in one of those executive suite places so all the units are rented. I'm using a comparable building a block over to estimate the $600k.
The place I'm looking to move to in the spring is $3300/month vs buy an identical condo just on the opposite side of the building for $790k with condo fees of $850. I think you might be under valuing the unit you live in. I find $900/month condo fees high for a $350k unit. I was considering moving to Toronto and the rental to cost of property ratio was comparable to Ottawa. If you check mls you'll often find rental units and units for sale in the same building so you can compare. Toronto has some great properties under construction. If it wasn't because of the GF I'd move there in a second. As it is I spend so much time in Toronto hotels that I should really sit down one day and do the math.
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#24
10-31-2007, 01:12 PM
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Re: You have $400k in cash, buy House with it or rent & invest
dont pay cash.
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#25
10-31-2007, 02:03 PM
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Re: You have $400k in cash, buy House with it or rent & invest
[ QUOTE ]
And they also forget the value of having you own (much larger) living space, a garage/yard/no one complaing about loud music, etc etc etc [/ QUOTE ] What does this have to do with rent/buy? Not all rentals are apartments, not all owned properties are houses. I rented a $400k house with three friends for $2000/month ($500 ea.) Other people own a condo where they still have the problems you listed.
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#26
10-31-2007, 02:08 PM
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Re: You have $400k in cash, buy House with it or rent & invest
[ QUOTE ]
slightly off topic... Would it not seem that buying once the bottom is reached is not the optimal time to buy b/c everyone is going to be buying and then you find yourself in a seller's market? [/ QUOTE ] I'm not sure I understand what you are saying, would you rather be trying to sell in a buyer's market? Ideally you want to buy in a buyer's market and then sell in a seller's market, which would be easiest to do right when the market is turning. However, another ideal situation (and possibly better situation depending how fast the market turns) is buying when a seller's market is heating up. You buy in a seller's market and sell in a much stronger seller's market. Whatever the case you just want houses to be in higher demand when you sell compared to when you bought.
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#27
10-31-2007, 03:16 PM
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Re: You have $400k in cash, buy House with it or rent & invest
[ QUOTE ]
Not many have that kind of 'problem', but if someone had that, would just buying the house for 400k, with no mortgage and interest payments, sway one to buy vs renting, or does it have no effect on the regular rent vs buy debate? [/ QUOTE ] I'm looking through the responses and, really, this thread could have ended after the first reply. No, the ability to pay cash for a house should not impact your decision to rent vs. buy, because you'd be crazy to do it. Assuming you have good credit, the after-tax cost of a typical mortgage these days is somewhere around 4%. Anyone who has enough financial savvy to accumulate many hundreds of thousands of dollars in cash probably has enough savvy to invest it (or to trust someone else to invest it) in a way that would return in excess of 4% after taxes, with minimal risk, and with far more liquidity than a single residential property would provide you. Mook
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#29
10-31-2007, 10:09 PM
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You buy the house and then Invest,
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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