Home foreclosures skyrocket in Kelowna

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mountainman2222
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Re: Home foreclosures skyrocket in Kelowna

Post by mountainman2222 »

Pretty hard to leave a rented apartment to your kids when you pass away. :coffeecanuck:
CJT84
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Re: Home foreclosures skyrocket in Kelowna

Post by CJT84 »

Static wrote:
cutter7 wrote:
Static wrote:
Veovis wrote:As to the whole "renting is cheaper", well with very short term views it can be called that, but over a lifetime it's sillyness. Lets start at today.

A 20 year old is going to rent an apartment today and will live to be 80 years old. 60 years. Well he has an amazing landlord who sets a 60 year lease at $950 a month. His total costs to rent - $684,000.00. (keep in mind I ignored all inflation and the fact he may need a larger place someday...and 950 for 60 years wow, this is a great deal.)

The same person buys a house with no money down at 4% interest for 25 years. (hey thats higher than now and renters got the inflation break) Well with 450,000.00 purchase price, $0.00 down, 4% interest, and bi-weekly payments the effective monthly payment over 25 years will be around $2,090.00, or a total cost of $627,000.00.


If we assume his house is worthless after he turns 80, he still manages to save $57,000.00. However that isn't likely so lets assume his house is worth 25% less due to being in a "bubble" for 60 years. He's 80 years old, has spent $57,000 less in his life on housing, or even reinvested back into his home, but still has something he can sell for $337,500.00.

All in - he can rent and have nothing, or he can plan longer term and have $337,500.00. (though more likely 500-650,000 at that point)


In order to make your argument proper, you must factor in what the difference between renting and buying would be worth over the lifetime of the mortgage. In your case it would $13,000 invested annuallly. This invested properly would grow closer to $700,000 in 25 years. $700,000 will easily generate $50,000 annually in income. Meaning, renting is makes more financial sense than buying. But, as an investor in Banks at times, I would like to thank you for falling into the delusional home ownership camp.


Just curious where you would easily generate 50,000 income on 700,000? wouldn't you be risking your principle trying to make that money?


Today, the money would have to be invested in blue-chip dividend paying shares. I wouldnt consider it to be risky.


Which stocks pay out an average of a 7% dividend? Canada bonds are maybe 1.2% for a 5 year.Real return bonds (those which adjust the base amount for inflation) are at a measly 0.5% down from 1.5% last year.
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Re: Home foreclosures skyrocket in Kelowna

Post by CJT84 »

mountainman2222 wrote:Pretty hard to leave a rented apartment to your kids when you pass away. :coffeecanuck:


Assuming you have children and you aren't also a vampire.

Also who's to say a person wasn't incredibly bright and rents a house while mortgaging a commercial property?
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Captain Awesome
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Re: Home foreclosures skyrocket in Kelowna

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mountainman2222 wrote:Pretty hard to leave a rented apartment to your kids when you pass away. :coffeecanuck:


Very easy to leave an investment portfolio in a trust fund though.
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rekabis
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Re: Home foreclosures skyrocket in Kelowna

Post by rekabis »

No rich renters?

Try Facebook’s Mark Zuckerberg. The guy is worth BILLIONS now, yet still rents. Pretty savvy guy, if you ask me. He’s no idiot, and still rents.
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36Drew
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Re: Home foreclosures skyrocket in Kelowna

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Scadam wrote:You guys must know some seriously clever and disciplined renters. I don't know anyone who rents by choice, and the ones who do rent can't afford to buy, can't buy because their credit is shot, or aren't responsible enough to stick to a budget. Usually some combination of all three.


I rent purely by choice. Our family brings in better-than-average income. Both mine and my wife's credit are just fine. I also have a good enough relationship with the landlord to be able to make alterations (with approval) that suit our tastes and lifestyle. We have a fairly rigid budget, we stick to it, and put away some good coin every month. I'll buy a home when I'm ready - which will be when the market isn't so stupidly overpriced and when mortgage payments make better financial sense than rent payments.

Surely I can't be the only one.

It's a pity that you go through life with such low opinions of others who simply don't share your ideology.
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mountainman2222
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Re: Home foreclosures skyrocket in Kelowna

Post by mountainman2222 »

Yes it is, assuming you have an investment portfolio.Many people that rent do not have one.
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Re: Home foreclosures skyrocket in Kelowna

Post by 36Drew »

mountainman2222 wrote:Yes it is, assuming you have an investment portfolio.Many people that rent do not have one.


Most people in Canada don't have any real savings. Renters and Owners.
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Re: Home foreclosures skyrocket in Kelowna

Post by Veovis »

36Drew wrote:
Veovis wrote:How did the renter win here? I must still be missing it.


Static's investment math is only taken over the same 25 period in which the owner paid his mortgage. In other words, at the end of the 25 years, the owner has paid out in excess of $600,000 with simply the house to show for it. If he wants to collect his money, he has to sell the house. Remember, he paid $450k for the house. When he sells the house, it's hopefully worth at least what's he's put into it, plus fees. In that same time, he's paid property taxes, maintenance and upkeep, etc.

The renter has paid $285,000 in the same 25 years. The difference between his rent and the $2090/month mortgage he has wisely invested into something that will provide a 6% ROI.

After 25 years, savings plus returns will net him over $700,000. He doesn't have to pay any maintenance fees on that money, and if he wants to get at it it's not a 90 day process to list, show, offer, counter-offer, settle, wait, move out, have funds disbursed by a lawyer. He should be able to get at his saved and invested money within a 48-hour period.

After the 25 years, as static has said, that amount of money should be producing about $50k per year. Sure - the home owner doesn't need to pay rent... but the renter's invested money could be paying his rent for him. Inversely, should the owner start investing his $2090/month at age 45, and the renter not change anything at age 45 - the owner's savings and investment will not surpass what the renter's.

I bet math makes your head hurt. Go buy a house.



The problem was when you took a 60 year example and ignore 35 years to make your version work.

Now 1140 a month over 25 years at 6% would be closer to 790,000 at the end all things held constant. HOWEVER if the interest rate on that gets to ignore any negative % years so should the house gains and I'll even put then at 4% to keep it in renters favor.

Usuing that logic (because very very few people have pulled an average of 6% over the past 25 years.) the House ends up at a 1.9 million value under those argument terms over the same 25 years.

Now that won't happen and neither will a renter getting 6% and saving 1140 each month either.

As CJT84 posted, there are pro and cons for both ways of living but it also matters based on the individual. If one of the .05% of renters can use the hypothetical "money i save each month" to invest and get a return....awesome, but overall, that does not happen.
mountainman2222
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Re: Home foreclosures skyrocket in Kelowna

Post by mountainman2222 »

No alot don't, thats for sure.
Kelowna_Born
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Re: Home foreclosures skyrocket in Kelowna

Post by Kelowna_Born »

Buying my first home on Friday $295,000
I have $35,000 down payment. (saved from living with my parents, 23 years old)

Mortage is going to be $260,000 @ 2.99% Payments $1264.00 per month
$172.00 per month for Taxes, $55.00 Fire insurance.
Cable, Internet, phone $100
Gas $60
Elec and utilities $150.00

Total without food, vehicle, fuel $1801.00 Per Month wich I will split with my Wife $900.00 each

You can work at MacDonald's and still afford this.
The house is 1200SQ with a huge yard close to springfield/superstore area.
Kelowna_Born
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Re: Home foreclosures skyrocket in Kelowna

Post by Kelowna_Born »

Check out this mortgage calculator. It let you compare 3 different side by side.
http://lifeeventsplanner.cuis.com/lep/c ... Comparison


Prices may go down but interest rates will rise.

300,000 House, Zero Down, 25 years, 2.99% = $1418.20 Per Month
250,000 House, Zero Down, 25 years, 5.00% = $1454.01 Per Month
36Drew
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Re: Home foreclosures skyrocket in Kelowna

Post by 36Drew »

Veovis wrote:Usuing that logic (because very very few people have pulled an average of 6% over the past 25 years.) the House ends up at a 1.9 million value under those argument terms over the same 25 years.

Now that won't happen and neither will a renter getting 6% and saving 1140 each month either.

As CJT84 posted, there are pro and cons for both ways of living but it also matters based on the individual. If one of the .05% of renters can use the hypothetical "money i save each month" to invest and get a return....awesome, but overall, that does not happen.


It's a lot easier to earn an average of 6% on your money than it is to count on a 6% gain, year-over-year, on the housing market in the same 25 years. Of course, you want a balanced investment portfolio - but throwing some risk in there will net some rather huge rewards. RioCan has done incredibly well over the past few years, for example.

However, you're starting to come across as an owner that looks down his nose at renters....
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Captain Awesome
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Re: Home foreclosures skyrocket in Kelowna

Post by Captain Awesome »

Better yet own a home, and invest money at the same time.
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36Drew
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Re: Home foreclosures skyrocket in Kelowna

Post by 36Drew »

Captain Awesome wrote:Better yet own a home, and invest money at the same time.


I'm investing more money right now by not wasting it on a mortgage to service an overpriced house. Thank you.
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