Real Estate

"Buy" or "Rent and invest the savings" - A 15 year long retrospective

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  • Aug 6th, 2021 7:38 pm
[OP]
Deal Guru
May 1, 2012
10084 posts
9914 upvotes
Markham

"Buy" or "Rent and invest the savings" - A 15 year long retrospective

For over a decade and a half now, various RFDers have incessantly pitched the following facts:

1. RE was gonna crash any-moment now and lose 30-70% of its value
2. Renting and investing the savings is for the super smart
3. RE buyers will be underwater and renters will swoop in and pay pennies on the dollar for prime RE

Well, all that has happened in the last decade and a half has been the following:

1. RE is super expensive and unaffordable now. If you bought, bravo to you. You made it.
2. Renting is so expensive now, you are easily paying more for rent alone than if you had just bought anytime prior.
3. Bidding wars on rental suites... everywhere... even in the boonies.

If you had just bought RE, you would be significantly ahead of any renter right now. Not only would you have your own place, you would have paid off a significant amount of your mortgage.

There are approximately 400k immigrants being welcomed into Canada, every year, for the next three years. If you think it's bad now, it would probably get a lot worse.

RE Bears, where are they now?
34 replies
Deal Expert
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Apr 21, 2004
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investing the savings is for the super smart --> at least with meme stocks, some of the smart renters probably made tons of good money beginning last year with Hertz.

:)
Deal Addict
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Nov 2, 2020
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I think some people may just not have a desire to buy or perhaps move around a lot in their career so it may not make sense. People who want to make money will make money, it does not necessarily have to be in RE. Personally I don't know much about investing in stocks so for me I find RE something I am inclined to. If people did not buy because they were waiting for a crash, too bad for them they may be priced out now, but if people did not buy because they wanted to invest in other areas that is fine as long as they are happy with it. Some people are scared off by mortgages and other things. I don't mind either approach, what I do mind is people who sit and complain about affordability yet sat and waited on the sidelines waiting for a crash when they legitimately had the means to buy.
Sr. Member
Mar 10, 2014
633 posts
511 upvotes
Hopefully, those 400K+ immigrants bring their bank vault with full of cash ($1M+) otherwise, the gov't will eat their immigration policy and we will all be paying more taxes (including carbon taxes) to support them.
Member
Sep 23, 2011
234 posts
156 upvotes
Vaughan
So where is the retrospective? Analysis? Yes RE did well but so did the financial markets - are you sure that you're ahead of someone who invested elsewhere?
Deal Addict
Mar 3, 2018
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GTA
Saniokca wrote: So where is the retrospective? Analysis? Yes RE did well but so did the financial markets - are you sure that you're ahead of someone who invested elsewhere?
Probably due to the leverage on having a mortgage. If you bought a $500K property 10 years ago with $100K down and it doubled it should be worth $1M today tax free if a principal residence. If you had invested that $100K instead and it doubled you are only up $100K and may have capital gains tax payable as well. Most people would never have borrowed another $400K to invest in stocks being the difference.
Member
Sep 23, 2011
234 posts
156 upvotes
Vaughan
DaveTheDude wrote: Probably due to the leverage on having a mortgage. If you bought a $500K property 10 years ago with $100K down and it doubled it should be worth $1M today tax free if a principal residence. If you had invested that $100K instead and it doubled you are only up $100K and may have capital gains tax payable as well. Most people would never have borrowed another $400K to invest in stocks being the difference.
I understand the math/leveraging but if you compare someone who bought real estate vs someone who rented and truly invested the difference (even without leverage) I would expect that the two would be somewhat on par. I would also suggest that looking at a specific 15 year period is not the right analysis (what if the investor put most of their money in tech, or what if you bought your place in Alberta?).
Sr. Member
Mar 10, 2014
633 posts
511 upvotes
Saniokca wrote: I understand the math/leveraging but if you compare someone who bought real estate vs someone who rented and truly invested the difference (even without leverage) I would expect that the two would be somewhat on par. I would also suggest that looking at a specific 15 year period is not the right analysis (what if the investor put most of their money in tech, or what if you bought your place in Alberta?).
All depends on what you invest in? Hindsight, here are some of the stocks I had from the dotcom days. I wish I kept them, but I had to sell a number of them to purchase my first property.

AAPL, AC, ORCL, MSFT, INTC, BVSN, BRCD, CSCO, CMGI, LYCOS, NT, JDSU
[OP]
Deal Guru
May 1, 2012
10084 posts
9914 upvotes
Markham
People here keep talking about investing the difference… what difference are you talking about? Have you seen the price to rent?

If anything, renting costs more than buying and owning… if you bought a few years ago.
Member
Sep 23, 2011
234 posts
156 upvotes
Vaughan
jmc111 wrote: All depends on what you invest in? Hindsight, here are some of the stocks I had from the dotcom days. I wish I kept them, but I had to sell a number of them to purchase my first property.

AAPL, AC, ORCL, MSFT, INTC, BVSN, BRCD, CSCO, CMGI, LYCOS, NT, JDSU
Yeah and that's my point - it's easy to come out now and say "oh you see losers, you were wrong to not invest in this". Look at some portfolios: 60/40, 80/20, etc. and how it's done in multiple 10-15 year periods for the last 30-40 years and then compare.
Anikiri wrote: People here keep talking about investing the difference… what difference are you talking about? Have you seen the price to rent?

If anything, renting costs more than buying and owning… if you bought a few years ago.
You're the OP - if you're claiming something you should at least try to back it up somehow but I'm yet to see numbers, only boasting.
[OP]
Deal Guru
May 1, 2012
10084 posts
9914 upvotes
Markham
Saniokca wrote: Yeah and that's my point - it's easy to come out now and say "oh you see losers, you were wrong to not invest in this". Look at some portfolios: 60/40, 80/20, etc. and how it's done in multiple 10-15 year periods for the last 30-40 years and then compare.



You're the OP - if you're claiming something you should at least try to back it up somehow but I'm yet to see numbers, only boasting.
Lol I am sorry is it not general knowledge that rent is sky high? Do you live under a rock?
Sr. Member
Mar 28, 2011
982 posts
753 upvotes
Toronto
Why stoke the fire at all to those that waited and now is priced out or unwilling to pay the higher price even if they can still afford

Somethings don’t need to be said and hindsight is always 20/20

No risk no reward, so if you bought back then, great, if you didn’t, then that’s on you if you had ability to but decided to wait for a drop in price

I feel bad for next gen (anyone under 25 and to toddlers) as they likely will have to rent or move out of large Canadian city hubs
Deal Addict
User avatar
Jan 14, 2009
2726 posts
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Vancouver, BC
BoredAtWork wrote: Why stoke the fire at all to those that waited and now is priced out or unwilling to pay the higher price even if they can still afford

Somethings don’t need to be said and hindsight is always 20/20

No risk no reward, so if you bought back then, great, if you didn’t, then that’s on you if you had ability to but decided to wait for a drop in price

I feel bad for next gen (anyone under 25 and to toddlers) as they likely will have to rent or move out of large Canadian city hubs
Just some friendly banter. Both sides can let loose and have some fun. House BuildingRocketNew Moon Symbol
Deal Addict
Jul 21, 2009
1209 posts
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Toronto
Anikiri wrote: Lol I am sorry is it not general knowledge that rent is sky high? Do you live under a rock?
Rent is up because RE is up. Isn't this common sense?
Anikiri wrote: If anything, renting costs more than buying and owning… if you bought a few years ago.
You keep on comparing current rent prices to old housing prices which is hardly fair. Everything inflates over time.
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Feb 8, 2014
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Socially Distanced
Is this thread just cover to bash immigrants?
In fact in Rand McNally they wear hats on their feet and hamburgers eat people
[OP]
Deal Guru
May 1, 2012
10084 posts
9914 upvotes
Markham
submarine wrote: Rent is up because RE is up. Isn't this common sense?



You keep on comparing current rent prices to old housing prices which is hardly fair. Everything inflates over time.
It is absolutely fair. I am comparing current rental rates to RE bears who kept telling people over a 15 year span to "rent and invest the difference," because housing is overpriced and it'll all come crashing down. Well guess what...
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Apr 21, 2004
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Quentin5 wrote: Is this thread just cover to bash immigrants?
That's what the September 30 Federal Holiday is for. :)

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