Personal Finance

Buying a house in cash

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  • Jan 18th, 2011 6:14 pm
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Member
Jun 29, 2004
217 posts
1 upvote

Buying a house in cash

If you could buy a house in cash at yonge/finch, would you?
11 replies
Deal Addict
Apr 4, 2006
3676 posts
403 upvotes
the question:

1. would i buy a house in cash?

yes

2. would i buy a house at yonge and finch?

no

therefore.

would i buy a house in cash at yonge and finch?

no
Member
Jun 29, 2004
217 posts
1 upvote
Electricute wrote: the question:

1. would i buy a house in cash?

yes

2. would i buy a house at yonge and finch?

no

therefore.

would i buy a house in cash at yonge and finch?

no

what about: would you buy a house in cash downtown as an investment property?
Deal Addict
Apr 4, 2006
3676 posts
403 upvotes
KriptiK wrote: what about: would you buy a house in cash downtown as an investment property?

if you have the cash, and want to buy property for investment, then find a area that u think will go up in value and buy property. because u wont have a mortgage, any amount that the property goes up, is just profit.
Sr. Member
Apr 11, 2003
701 posts
181 upvotes
Edmonton
I wouldn't, but that's me.

I'm from Alberta, so I can't say much about the *area*. But a quick search shows that lower priced 2 bedroom apartment style condos are sellign for 250K+, and renting for about 1600/month. I"m very sure that will vary widely based on local, features, etc. But if you look at that as true, you're making $1600 - (condo fees, property taxes, vacancy allowance, insurance, potential property management, etc - lets say $400/month) = $1200/month * 12 = $14,400/year. On $250,000, that's what 5.76% plus potential appreciation? With all the potential issues with Ontario's tenant laws, the potential that my numbers are very low, etc, its hard for anyone to say "yes or no". You'd really have to do math similar to the above to see if the return on investment makes sense. There are many dividend based stocks that pay as well as 5.76%, and are a lot easier to move in and out of if needed, etc.

That's just one internet weirdo's view on it though.
Member
Dec 12, 2007
395 posts
8 upvotes
Toronto
netwise wrote: I wouldn't, but that's me.

I'm from Alberta, so I can't say much about the *area*. But a quick search shows that lower priced 2 bedroom apartment style condos are sellign for 250K+, and renting for about 1600/month. I"m very sure that will vary widely based on local, features, etc. But if you look at that as true, you're making $1600 - (condo fees, property taxes, vacancy allowance, insurance, potential property management, etc - lets say $400/month) = $1200/month * 12 = $14,400/year. On $250,000, that's what 5.76% plus potential appreciation? With all the potential issues with Ontario's tenant laws, the potential that my numbers are very low, etc, its hard for anyone to say "yes or no". You'd really have to do math similar to the above to see if the return on investment makes sense. There are many dividend based stocks that pay as well as 5.76%, and are a lot easier to move in and out of if needed, etc.

That's just one internet weirdo's view on it though.
I side with your statement regarding equities > real estate. Like you, I like the liquidity they offer so that you can move in and out with the snap of a finger.
Deal Fanatic
Mar 21, 2010
6737 posts
3998 upvotes
Toronto
How about if you were going to live in it? Would you buy a house with cash as a home, or invest the money and rent?
Sr. Member
Apr 11, 2003
701 posts
181 upvotes
Edmonton
Manatus wrote: How about if you were going to live in it? Would you buy a house with cash as a home, or invest the money and rent?
Combine the two. Pay cash, take out a HELOC, invest as per the Smith Maneuvre, write off the borrowing costs, use the money twice effectively. HELOC costs (baring whatever changes the announcement today brings) are month to month generally about 2/3 the cost of a mortgage payment, meaning you can 'own/borrow' for less than the cost of rent, and write off the interest portion as an expense. Many wins, all around.
Deal Addict
User avatar
Apr 29, 2002
3855 posts
47 upvotes
Mississauga
netwise wrote: Combine the two. Pay cash, take out a HELOC, invest as per the Smith Maneuvre, write off the borrowing costs, use the money twice effectively. HELOC costs (baring whatever changes the announcement today brings) are month to month generally about 2/3 the cost of a mortgage payment, meaning you can 'own/borrow' for less than the cost of rent, and write off the interest portion as an expense. Many wins, all around.

Generally a good idea. However, if you don't know what your situation will be like in 5 years though, you're probably better off renting and investing the difference for the short term.
Member
Jun 7, 2007
489 posts
282 upvotes
Toronto
Heres my 2 cents..

1. Read rich dad poor dad
2. your mortgage (if you take one) would be the cheapest money you could ever borrow.. i'd take that and maybe buy another house/condo to rent out.. let someone else pay off the balance of that mortgage
Member
User avatar
Nov 30, 2009
458 posts
17 upvotes
When Daryl Katz (a billionaire) bought the Oilers for $200M, he spent $100M and took out a loan for the other $100M.

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