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Old 01-26-2016, 11:18 AM   #4626
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I think the big problem of whenever you are doing a comparison of investment vs. home-owning is that one's assuming people who invest don't leverage while home would increase indefinitely into the future.

Based on lowside's estimate, home price would have to increase ~30% (1.05^5) in the 5yr period for his argument to hold true, which brings back the argument of what direction would RE be heading?

For the sake of not diving into that endless discussion, I will simply say that people would have to stop seeing the personal home as an investment. It's a horrible medium (low liquidity, high transaction cost) and it's really a basic human necessity (shelter) rather than anything else.

If you are buying... think it as your home and nothing else. Be happy that you have a home to call your own and stop thinking about it in $ term. Because if you do, what would happen when it starts falling? Can you stand the idea that for every month that you are staying, you are spending thousands (in lost value) to have this "home"? I have personally witnessed what happens to one couple breaking apart during downturn and it's not pretty.
that's nothing compared to getting a eviction notice or not having your lease renewed because landlord wants to jack up the rent when you are renting. no one wants to move all their possessions in the middle of winter but when you a tenant you have no other option.
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Old 01-26-2016, 12:34 PM   #4627
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Are we still arguing over which is better, renting or buying?

Why can't we all simply agree that it all depends on one's priorities and/or where you are in life?
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Old 01-26-2016, 12:40 PM   #4628
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Are we still arguing over which is better, renting or buying?

Why can't we all simply agree that it all depends on one's priorities and/or where you are in life?
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Old 01-26-2016, 12:54 PM   #4629
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Are we still arguing over which is better, renting or buying?

Why can't we all simply agree that it all depends on one's priorities and/or where you are in life?
havent seen that much arguing in the last few pages... mostly discussion
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Old 01-26-2016, 01:41 PM   #4630
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that's nothing compared to getting a eviction notice or not having your lease renewed because landlord wants to jack up the rent when you are renting. no one wants to move all their possessions in the middle of winter but when you a tenant you have no other option.
I've only had excellent landlords so far. Maybe the price point matters?
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Old 01-27-2016, 12:34 AM   #4631
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that's nothing compared to getting a eviction notice or not having your lease renewed because landlord wants to jack up the rent when you are renting. no one wants to move all their possessions in the middle of winter but when you a tenant you have no other option.
i wonder what percentage of people actually see this, though

i've never been asked to leave, had rents raised, or ever had a bad experience.

Like Mr. C says, maybe it's a price point thing (though I wasn't paying all that much in Vancouver), maybe its luck, maybe it's being smart in picking a place with a good landlord (tough to do, but it's just like a job interview, they're interviewing you, as you should be of them).
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Old 01-27-2016, 12:39 AM   #4632
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if you're passive investing, I'm not sure if an advisor would be able to provide much value. However, many advisors also work as financial planners which can be helpful.
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the question was more for people who know absolutely nothing about investing, even buying a couple of etfs and rebalancing may be too worrisome for them, in that case a financial advisor would be good.

also, it comes down to having a good one.

the poster about one that works in the bank supports the position that bank financial advisors are all commission based and are not client focused, helps if you know one through someone that is independent (not related to a bank), and you can trust them personally (very tough to do).
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Old 01-27-2016, 12:46 AM   #4633
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try selling a business. sell it for 1m and you'll get half that after tax. something you work much harder for than flipping a house.
this is crap.

capital gains are taxed at 1/2 your marginal rate, lets say you're near top rate, approx. 40%.

say you have $0 tax basis in your company, sell for $1M

$1M capital gain, taxed at 1/2 of 40% = 200K, you net $800K


there is so much misinformation in this thread:

that investing gains are taxed heavily - TFSA is your first area of gold, RRSPs are ok, capital gains are only taxed at max about 20% or so, eligible dividends have really favourable tax rates - you just need to know what you're doing and have the right asset classes in the right vehicles.

also to the comment about how buying real estate is great because it's forced savings and forced leverage - the first point is incredibly valid, but leverage is such a dangerous double edged sword, as much as it can go up and make you higher returns on investment (down payment), it can wipe out your investment in days.

there is balance to everything - wealthy people know this, that's why they own a little bit (or a lot) of everything, buying low, selling high (re-balancing)
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Old 01-27-2016, 07:09 AM   #4634
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hmm interesting... i didnt know there was a lifetime cap gains exemption which im assuming that you're talking about... just looked it up, thanks.
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Old 01-27-2016, 07:14 AM   #4635
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hmm interesting... i didnt know there was a lifetime cap gains exemption which im assuming that you're talking about... just looked it up, thanks.
i didn't even bring that into consideration, as you're only eligible for it once in life.

utilizing that (is it $750K nowadays?), you'd have $250K taxable at 20$, or $50K, so you'd net $950K out of $1M gain.

big difference!
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Old 01-27-2016, 07:37 AM   #4636
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this is crap.

capital gains are taxed at 1/2 your marginal rate, lets say you're near top rate, approx. 40%.

say you have $0 tax basis in your company, sell for $1M

$1M capital gain, taxed at 1/2 of 40% = 200K, you net $800K


there is so much misinformation in this thread:

that investing gains are taxed heavily - TFSA is your first area of gold, RRSPs are ok, capital gains are only taxed at max about 20% or so, eligible dividends have really favourable tax rates - you just need to know what you're doing and have the right asset classes in the right vehicles.

also to the comment about how buying real estate is great because it's forced savings and forced leverage - the first point is incredibly valid, but leverage is such a dangerous double edged sword, as much as it can go up and make you higher returns on investment (down payment), it can wipe out your investment in days.

there is balance to everything - wealthy people know this, that's why they own a little bit (or a lot) of everything, buying low, selling high (re-balancing)
Actually, you pay much less, if any tax at all if you sell your business. Small business sales has a capital gain exemption of $750,000. $1M gain only gets you $50K in taxes at the most.
And most people won't "gain" more than 750K when they sell their business even for 1Mil+, since you have your cost base to consider....so selling a business is typically tax free for most people.

TFSA limit is back to $5500/year (and it may be going down to $4500 next year...thanks liberal )
while it is a decent amount for an average person for future saving.
the $46000 gross limit is hardly a significant amount for people with existing investment.
RRSP is useless and stupid so I never use it.

I agree about the leverage, I think most people did really well in housing because of the leverage. Percentage wise, my investment went up higher than my house price did. But with the house 4x leveraged, I made a lot more on the housing price increase. (and yes, it will go both way. 4x up = 4x down)

Buy low sell high is a stupid idea. You never know what's low and what's high.
I bet most of us thought housing price in Vancouver was pretty darn high in 2013 already. Look at how our perception changed over the years. Now we think 2013 price was a bargain.
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Old 01-27-2016, 08:23 AM   #4637
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also to the comment about how buying real estate is great because it's forced savings and forced leverage - the first point is incredibly valid, but leverage is such a dangerous double edged sword, as much as it can go up and make you higher returns on investment (down payment), it can wipe out your investment in days.
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I agree about the leverage, I think most people did really well in housing because of the leverage. Percentage wise, my investment went up higher than my house price did. But with the house 4x leveraged, I made a lot more on the housing price increase. (and yes, it will go both way. 4x up = 4x down)
Just want to clarify that this is what I meant; forced leverage can be good or bad, but either way it amplifies gains/losses which is why these calculators can suggest that renting is rarely a better option if you assume perpetual gains in RE.
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Old 01-27-2016, 08:33 AM   #4638
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since this thread has started i have made $200k off real estate. Had i purchased a detached home i would be up 400k
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Old 01-27-2016, 09:11 AM   #4639
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i wonder what percentage of people actually see this, though

i've never been asked to leave, had rents raised, or ever had a bad experience.

Like Mr. C says, maybe it's a price point thing (though I wasn't paying all that much in Vancouver), maybe its luck, maybe it's being smart in picking a place with a good landlord (tough to do, but it's just like a job interview, they're interviewing you, as you should be of them).
all we got in this thread is a bunch of landlords and financial planners preaching their propaganda about keep renting and investing the savings meanwhile the rich and global elites are hoarding vancouver rental apartment buildings and detached houses.

to 4444, how obnoxious and indifferent do you have to be to insert your own renting experience? so just because you never had rent increase or eviction therefore it is not happening? i am sorry but you perfectly live up the the banker and financial type stereotype (which you are according to your website).

what's the percentage you ask? a simple google search would tell you how many cases RTA goes through on a daily basis: Search - Residential Tenancy Branch - Housing and Construction Standards

to the renters, i know the real estate agent can be cunning but at least real estate agent is cunning to the seller as well. an agent's goal is to facilitate a quick transaction. so their primary goal is not to get the highest price for the seller. pick your battle carefully and stay within your limit.
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Old 01-27-2016, 12:15 PM   #4640
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since this thread has started i have made $200k off real estate. Had i purchased a detached home i would be up 400k
Only $200k in 4 years in this market? You're not investing right in real estate if that's all you made over 4 years.
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Old 01-27-2016, 01:07 PM   #4641
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any dollar value "return" doesn't mean anything without disclosing your cost base. C'mon man give us a % at least.
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Old 01-27-2016, 02:17 PM   #4642
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Only $200k in 4 years in this market? You're not investing right in real estate if that's all you made over 4 years.
its not my investment
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Old 01-27-2016, 03:02 PM   #4643
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any dollar value "return" doesn't mean anything without disclosing your cost base. C'mon man give us a % at least.
Any dollar value return doesn't exist unless you sell it and leave the market.
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Old 01-27-2016, 03:10 PM   #4644
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Only $200k in 4 years in this market? You're not investing right in real estate if that's all you made over 4 years.
Not too many people have the balls/money to just invest in the market. Everyone who thinks they are "making" any money from their homes are only actually profiting if they move to another Province / Country or somewhere else like Mission.

Often times in this type of market you can sell your property, and not even be able to buy it back because it's either worth more, or all the costs associated with the transaction fuck you over. I'm sure you know all about this, but it's quite surprising how many clueless people there are.. (I'm in the industry)
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Old 01-27-2016, 03:24 PM   #4645
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Only $200k in 4 years in this market? You're not investing right in real estate if that's all you made over 4 years.
$200k is better than nothing
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Old 01-27-2016, 03:33 PM   #4646
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I'm sure that there are people in this thread who are leveraging their home equity, investing it in the market to pay down their mortgage faster or to maximize investments in registered accounts. This form of leverage is certainly easier than starting/running a business.
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Old 01-27-2016, 03:38 PM   #4647
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I will give my own case of an investing renter:

Back in 2014, I had money to buy my own place or invest it into something else.

I even had a realtor to help me find a place and all. Had my eyes on a house in Toronto for 1.1M CAD.

I ended up buying a commercial property in US for 800k. (cost me around 860k in CAD given the high CAD back then)

Fast forward to today, my property is valued at 1.2M, or at least that's the number my realtor asked me to put on market since the market is hot. And I collect 70k USD in rent/year from that property today.

A similar house (as in size and condition) in the same area in Toronto I was looking is now 1.5M CAD.

Looking from CAD term, if I bought the house, I'd have a paper gain of 400k, with no income, while having to pay a few thousands for maintenance and tax per year.

OTOH, my investment had a paper gain of 830k (looking in CAD, 1.69m vs. 860k paid), while paying me ~100k in income. That minus the 24k of rent I'm paying now, so I net 76k (before taxes) from my investment.

Of course this is all exaggerated by how much CAD had lost. But it gives you an idea that renting isn't always a bad option.
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Old 01-27-2016, 03:49 PM   #4648
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I'm sure that there are people in this thread who are leveraging their home equity, investing it in the market to pay down their mortgage faster or to maximize investments in registered accounts. This form of leverage is certainly easier than starting/running a business.
You bring up a good point, but its certainly not the average home "investor" who thinks he struck it rich every time his assessment goes higher even though they have a maxed line of credit and a car payment on his 2013 320i that cleans him out at the end of every month which is what is a lot more common in this city.
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Old 01-27-2016, 06:04 PM   #4649
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Not too many people have the balls/money to just invest in the market. Everyone who thinks they are "making" any money from their homes are only actually profiting if they move to another Province / Country or somewhere else like Mission.

Often times in this type of market you can sell your property, and not even be able to buy it back because it's either worth more, or all the costs associated with the transaction fuck you over. I'm sure you know all about this, but it's quite surprising how many clueless people there are.. (I'm in the industry)
but owning in the last 5 years is better than not owning. Those that bought houses were better off than those that didn't.

The market's gone up like 25-50% in the last few years that those who didn't buy and waited are screwed. Now the place they wanted is 300K + more expensive if it's a detached home.

Those that sold still gained that 300K+ and have it in the bank, even if they now have to rent or move to Mission because they can't buy anything anymore.

Imagine how long it takes to save $300,000 on an average salary.

Now imagine if you bought 10 years ago on the west side and your property is worth $2-5 million dollars more than you paid for it. These people literally won the lottery.


Condos havn't gone up much though.
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Old 01-27-2016, 06:06 PM   #4650
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$200k is better than nothing
for the average person, it may take over a decade to save that much money.

assuming you make $50K a year gross salary. how long would it take you to save $200K?
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