Real Estate

Renting, a waste of money?

  • Last Updated:
  • Jun 21st, 2016 6:08 pm
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Deal Guru
Jun 7, 2005
10358 posts
1482 upvotes
Toronto
traderjay wrote: Thanks again for your warning and concern and you crack me up. I don't get it why you are overly obsessed with my 8X leverage and believes so strongly that I am still levered up 8X since it has been over a year since I moved. Do you know that as you keep paying down your mortgage, the leverage goes down significantly? Maybe basic financial math is outside of your realm and it is something you need to brush up.

Oh the best part is, in order for my mortgage to be under water, there needs to be a 70%+ drop in RE price and if that happens, you and I have much bigger things to worry about. The difference is, I will have plenty of ways and instruments and hedges to minimize my downside and still have a very nice roof on top of my head while you can keep engage in your keyboard war :D
Whether it is worth the price with today crazy RE market, it is hard to say. But lot of people have been holding on not to buy in the last 10 years and hoping for the market correction. To them, they sure want to find the justification for themselves why they didn't buy ;)

With 100k+ immigrants coming to Toronto EVERY YEAR, significant price drop is very unlikely to happen.
Member
Jun 4, 2016
231 posts
30 upvotes
rdx wrote: Whether it is worth the price with today crazy RE market, it is hard to say. But lot of people have been holding on not to buy in the last 10 years and hoping for the market correction. To them, they sure want to find the justification for themselves why they didn't buy ;)

With 100k+ immigrants coming to Toronto EVERY YEAR, significant price drop is very unlikely to happen.
When you are talking about "Toronto", do you strictly mean "The City of Toronto", or do you mean places like York Region? While there may not be much of a crash in detached homes in Toronto proper, the same may not be said for the suburbs, even less so for townhouses and condos in the said suburbs/exurbs.
Deal Addict
User avatar
Sep 23, 2014
1962 posts
677 upvotes
Toronto, ON
tempre2016 wrote: When you are talking about "Toronto", do you strictly mean "The City of Toronto", or do you mean places like York Region? While there may not be much of a crash in detached homes in Toronto proper, the same may not be said for the suburbs, even less so for townhouses and condos in the said suburbs/exurbs.
Why do you have the embarrass yourself with every post? I mean seriously or you are just doing it for the kicks? York Region experienced higher price appreciation than GTA and you think it is a fluke?
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Member
Jun 4, 2016
231 posts
30 upvotes
traderjay wrote: Why do you have the embarrass yourself with every post? I mean seriously or you are just doing it for the kicks? York Region experienced higher price appreciation than GTA and you think it is a fluke?
Of course it is a fluke. It is only because people are literally speculating. Hell, why do you think rents are not going up anywhere near as much as prices? When stocks truly go up in price because of corporate earnings, corporations raise their dividends, this is not happening to nearly that degree in real estate.
Deal Guru
Jun 7, 2005
10358 posts
1482 upvotes
Toronto
All those people I have met who are renting and does not own a place is simply because they can't afford to own one, not that they don't want to. Those who keep saying there is better investment options but not even own one property is just trying to give themselves an excuse why they didn't buy in time, when they still could ;)

Same like those who are living in condo/townhouses, I bet most of them would not say no if they can afford to upgrade to a detached. Anyway, owning just a place to start with is still better to pay rent forever. The later you start, it will just be harder to do so.
Member
Jun 4, 2016
231 posts
30 upvotes
rdx wrote: All those people I have met who are renting and does not own a place is simply because they can't afford to own one, not that they don't want to. Those who keep saying there is better investment options but not even own one property is just trying to give themselves an excuse why they didn't buy in time, when they still could ;)

Same like those who are living in condo/townhouses, I bet most of them would not say no if they can afford to upgrade to a detached. Anyway, owning just a place to start with is still better to pay rent forever. The later you start, it will just be harder to do so.
Tell that to the boomers in 1996 and you would have been very wrong. The same can be said about the US in 2008.

If you think this can't happen, just watch and wait for it.

Again, you have to understand just how much the C$ depreciated as the result of the oil price collapse, and so things are not too expensive (to me) as they seem to most other Canadians. I will just do things with other investments, and happily pay rent forever if prices are so damn high.
Deal Guru
Jun 7, 2005
10358 posts
1482 upvotes
Toronto
tempre2016 wrote: Tell that to the boomers in 1996 and you would have been very wrong. The same can be said about the US in 2008.

If you think this can't happen, just watch and wait for it.

Again, you have to understand just how much the C$ depreciated as the result of the oil price collapse, and so things are not too expensive (to me) as they seem to most other Canadians. I will just do things with other investments, and happily pay rent forever if prices are so damn high.
Just keep renting, I have nothing further to comment. Good luck.
Member
Sep 1, 2013
403 posts
97 upvotes
A couple of the renters on this forum just quoted me a $200K transaction cost to buy and sell a $1.5mm home. The more they post the more I realize how lacking an understanding of the basic financial math is among large swaths of population. Those foreign buyers deserve those houses - if only for knowing how buy, selling, and levering up actually work.
Deal Addict
Jun 11, 2005
2823 posts
460 upvotes
rdx wrote: Just keep renting, I have nothing further to comment. Good luck.
I think he is living with his parents and the $1.5M he keeps mentioning is probably his parents' too.
Sr. Member
Jan 30, 2006
870 posts
303 upvotes
Ironcat wrote: A couple of the renters on this forum just quoted me a $200K transaction cost to buy and sell a $1.5mm home. The more they post the more I realize how lacking an understanding of the basic financial math is among large swaths of population. Those foreign buyers deserve those houses - if only for knowing how buy, selling, and levering up actually work.
I bet you' will be renter yourself very soon with your analytical skills

just can't wait to see all those 'vultures' to go into foreclosure on first down tick in prices
Temp. Banned
Aug 7, 2011
6623 posts
998 upvotes
Vaughan
This thread is still going?

Wow wee, let it die.
Deal Addict
Jan 27, 2015
1037 posts
465 upvotes
Edmonton, AB
FirstGear wrote: Like index funds the overall RE picture has all the bad eggs in it too. In the higher demand areas it is often >4%. But properties in those areas are somewhat like growth stock. Not great for cashflow; "expensive" investment.

Personally what annoys me the most about RE is the illiquidity, extensive capital requirement upfront, and the extensive formalities to obtain the leverage. Id use it as a hedge as part of a riskier portfolio, not the primary component of a portfolio.
Not to mention the ongoing expenses such as property taxes, maintenance, repair, insurance, and condo fees (if applicable).

Most ETFs have less than 0.40% in annual fees. Home can easily have 2.0%+ in annual cost. A lot of people have used leveraged and become wealthy from real-estate. Similarly, a lot of people have been burned by investments using leverage.

YMMV.

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