41–50 of 63 posts
The assumptions made by the author are ridiculous, namely: - In the 10-year comparison, rents paid are not factored in at all. - In the forward-looking comparison, condo prices are assumed to be flat, mortgage rates go up (why? can't they be locked in now?), while equity prices go up 6-8% per year - Taxes are not factored in at all - capital gains on a primary residence are tax-free, while investment gains will be ta…
The assumptions made by the author are ridiculous, namely: - In the 10-year comparison, rents paid are not factored in at all. - In the forward-looking comparison, condo prices are assumed to be flat, mortgage rates go up (why? can't they be locked in now?), while equity prices go up 6-8% per year - Taxes are not factored in at all - capital gains on a primary residence are tax-free, while investment gains will be ta…
Just a small nit, for the most point I agree with your comment that this is a pretty biased view
But you can't live in an investment portfolio.
I get the point that the author is trying to make. The TSX has outperformed the Toronto condo market. But I would still invest in a home before I invested in the stock market for the same reason I invested in GPUs to mine Bitcoin instead of Bitcoin a few years ago.
GPUs (as well as condos) are tangible. If Bitcoin (or the TSX) was worthless tomorrow, my GPUs and condos would still hold value.
If the stock market was wiped out tomorrow, I would still have a place to live if I owned the property.
I would hate to be in the situation of relying on my next monopoly money dividend to pay for the rent on a home which I do not own.
> Myth 4: Renters throw cash away, at least owners build equity It's no myth, because you have to live somewhere. (Well, you could put your money elsewhere, and go live in a cardboard box under a bridge, but let's be realistic.) Owners are building equity with the money they would otherwise be completely throwing away on rent, and they got into that situation with just a little money down. (Depending on area), curren…
Interest + Condo Fees + Home Repairs + Property Taxes + Property Transfer Taxes + Realtor Commissions are throwing cash away every bit as much as Rent. Mortgage payments are likely to go up the same way that rent does, or even more so. Interest reflects inflationary costs, so the same upwards pressures on rents would result in higher interest rates. Except with interest rates at record lows, just a small increase in…
> Myth 4: Renters throw cash away, at least owners build equity It's no myth, because you have to live somewhere. (Well, you could put your money elsewhere, and go live in a cardboard box under a bridge, but let's be realistic.) Owners are building equity with the money they would otherwise be completely throwing away on rent, and they got into that situation with just a little money down. (Depending on area), curren…
Not always. Sometimes renting might be a better deal than buying. There are several factors which need to be taken into account, such as mortgage interest payments, opportunity cost of downpayment, property tax, tax deductions, property appreciation, etc. Khan Academy has an interesting video on this topic: https://www.khanacademy.org/economics-finance-domain/core-fi... PS: Sure, if your property appreciates by a lot…
As a life-long strategy, or short-term only?
Buying isn't "sometimes". There is usually a commitment there. You'd never say, "renting isn't looking so good right now; I think I will buy for six or seven months and see how renting is looking then".
> Myth 4: Renters throw cash away, at least owners build equity It's no myth, because you have to live somewhere. (Well, you could put your money elsewhere, and go live in a cardboard box under a bridge, but let's be realistic.) Owners are building equity with the money they would otherwise be completely throwing away on rent, and they got into that situation with just a little money down. (Depending on area), curren…
But that's the myth. The delta between the total costs of renting and the total cost of ownership is wide enough that you can invest it in something that has much better returns than a condo. Even owning 50% of your mortgage payment gets thrown away at interest, plus your maintenance fees, taxes and the whole bit are also lost to the sands of time.
> Myth 4: Renters throw cash away, at least owners build equity It's no myth, because you have to live somewhere. (Well, you could put your money elsewhere, and go live in a cardboard box under a bridge, but let's be realistic.) Owners are building equity with the money they would otherwise be completely throwing away on rent, and they got into that situation with just a little money down. (Depending on area), curren…
> (Depending on area), current rents are in about the same ballpark as payments on a new mortgate, Not in Toronto, which is like the whole point > 1) mortgage payments stay approximately the same over the life of the mortgage, whereas rents just go up and up Condo fees go up and up
I live in Toronto, I own real estate but not in the city (largely because I cannot afford to buy). I've invested in income property a few hours out of Toronto in a small town that produces positive cash flow that I reinvest in the stock market. I rent a small, shitty apartment in the city. This has ended up giving me returns of excess of 60% per year on the money that I've invested. I'm always amazed at how overlooke…
Earlier quoted context omitted.
One time maintenance fees versus monthly HOA fees that you are required to pay.
That's true, but only in the most naïve sense. A house starts falling apart as soon as it's put together... and it keeps falling it apart, and you have to keep putting it back together. The distribution of expenses is lumpier with a house than with a condo, but it's certanly an ongoing cash outflow.
My last house I did, essentially, zero maintenance over a 10-year span except for a drain replacement ($2K). Every other expense was month to month expenses like heating and electrical.
When I finally decided to sell, I replaced the crappy carpet, painted the walls beige and made a 5x profit.