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  1. #1981
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    Quote Originally Posted by Buster View Post
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    Nothing wrong with targeting high returns. But you have to risk adjust everything, all the time.

    And XGRO charges 0.18%
    The trick to being conservative is to already have the wealth in place... risk adjusting should also include age and future earning capacity... take on the risk young, transition to something more conservative as you succeed and age.

    Still hard to beat RE when it comes to potential and access to leverage as a youngster... shit, young enough to tolerate roommates still? BUY, BUY, BUY!

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    [QUOTE=jwslam;4833347]Probably already said somewhere in the last 50 pages but here is my stance and I don't understand why anyone would argue.

    For your primary residence, real estate is an EXPENSE. It is not an investment until you're 25 years out and mortgage free (rent equivalent).
    Whether you make 200% gains or it goes down to $0, the mortgage you pay needs to come out of your pocket anyways.
    Agree however the housing crash in 08 happened because people wanted it as an investment not as a living expense, difference with a home is property taxes and mental aspect of "FUCK I LOST XXX or FUCK YAH I EARNED XXX"

    The purpose of "timing the market" would net you a better or worse home for the same money, but at the end of the day you are shelling out money to have a roof over your head. Your benefit comes from 25yrs from now when you shell out $0 rent.
    Yes but if this is the case why doesn't everyone just buy the cheapest house possible just for a roof over their head? Invest any saved money into a different asset which can get us more money and have it increase quicker than inflation?


    If your property goes down to $0: so what, you would've spent that money on rent anyways and it would've been washed away.
    Agreed except for the fact that your property might go to $0 you lost money and would of renting but what if the home goes to $0 and you still owe money on a mortgage with interest on it?

    If you break even: Great! I've have not gained any money in terms of TVM for inflation, but it's more than nothing.
    Yes except if you rented you could of saved money not paying interest in a mortgage.


    You make 200% gains: So what? You still have to have a roof over your head. You gonna sell your $400k house that inflated to $1.2m, and now go live in $400k taking $800k gains and running? By that kind of inflation you'd be looking at a bachelor suite.

    People purchase homes for the reason of having money in assets that create value at the same rate or higher than inflation yearly. (I don't think people consider inflation when purchasing a home) if you were to buy a home for $100,000 and sold it for $110,000 20 years later which you actually lost money on the house because your 100k is now worth much less if for example inflation went up 50% over 20 years and your home sold for $150,000 you only broke even on the home for value of your money, if you sold it for $149,000 you technically lost money but I do agree if you were to rent for 20 years you would of lost a lot more money.

    Lets use an example you take out a $100,000 loan at 5% for a 10 year loan and 10 year amortization period. (Nobody does this)

    click for larger version
    » Click image for larger version

    We paid $26,977.92 in interest over 10 years.
    We took 120 months to pay.

    $26,977.92 / 120 = $224.98 / month in interest (Average)

    We need the home to go up 27% in value over 10 years to "break-even"

    Thats not bad however if you do it for a 20 year amortization.

    click for larger version
    » Click image for larger version

    We paid $74,481.50 in interest over 20 years.
    We took 240 months to pay.

    $74,481.50 / 240 = $310.33 a month in interest. (Average)

    We need the home to go up 74.5% in 10 years to break-even.


    Let's say we rent for 20 years and each month is $600/month

    240 X $600 = $144,000 in rent.

    We need the home to be $174,481 - $144,000 = $30,481 in 20 years for it to be better to purchase with a loan.

    This seems pretty but we get to a point where renting vs highest interest rates and devalued homes make it better to rent.

    We also do not get tied into a long-term mortgage and do not care about housing markets.

    Both however care about having a job to make the payments.

    For fun let's do a 14.5% interest rate (1990) - it was up to 21% (roughly) in the 1980s..

    click for larger version
    » Click image for larger version

    We paid $199,848.14 in interest over 20 years.
    We took 240 months to pay

    $199,848.18 / 240 = $832.70 / month in interest (Average)

    Now we need to the home to go up 200% over 20 years to "break even" we need to technically sell the home for

    $199,848.14 - $144,000 = $55,848

    $199,848 - $55,848 = $144,000 to be better than renting..

    I think my maths wrong but the importance (Not including property taxes)

    If someone was to buy a home to have a roof over their head and take a mortgage out they should rent, if they want to consider it an asset which will pay the interest over-time and benefit from it or it seems insane that anyone would ever buy a house to just have a roof over their head. (This isn't including inflation)

    When you rent you don't pay property taxes which will add around $30,000+ to money spent on the home, you aren't tied into an mortgage which you have to pay whatever happens, I do strongly disagree with the "it's just a roof over your head statment" or i can't see why anyone would ever buy a home.

    I'm tired as hell though my math and logic here might be 100% wrong.


    If only a roof over your head was the case everyone would just buy the cheapest home available on the market, people are buying homes as investments, we need to also look at job security do you have a 25 year contract and can't be fired with a 2% raise every year to cover inflation? or is it a 25 year contract with the same salary?

    There is so many factors the risk/reward has to be worth it for people to buy homes (With mortgages)
    Originally posted by beemerm3
    so if we only seen 5 % of the oceans why not drain them or somethin lol or can u even transfer water from one ocean to another??? think of all the stuff u'd find treasures n eerything.

  3. #1983
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    Quote Originally Posted by Kobe View Post
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    Kobe

    We paid our home off in 8 years.

    Home cost $700k to build.

    We were always on a variable rate, average was 2%

    Now all we have are maintenance costs.

    Beats renting
    Last edited by 89coupe; 12-03-2019 at 09:08 PM.

  4. #1984
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    Quote Originally Posted by 89coupe View Post
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    We paid our home off in 8 years.

    Home cost $700k to build.

    We were always on a variable rate, average was 2%

    Now all we have are maintenance costs.

    Beats renting
    99% of the population doesn't have that luxury though.

    And 700k / 8 years = 87.5k without interest per year on payments... (If all 700k was a loan)

    Average Salary is 55k/year in Canada and you paid more per year on just mortgage payments so clearly you are not in the majority IMO
    Originally posted by beemerm3
    so if we only seen 5 % of the oceans why not drain them or somethin lol or can u even transfer water from one ocean to another??? think of all the stuff u'd find treasures n eerything.

  5. #1985
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    Quote Originally Posted by 89coupe View Post
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    We paid our home off in 8 years.

    Home cost $700k to build.

    We were always on a variable rate, average was 2%

    Now all we have are maintenance costs.

    Beats renting
    Not necessarily. Home equity is an asset class that requires you to calculate based on opportunity costs.

    Having said that I agree with paying off mortgages quickly.

  6. #1986
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    Quote Originally Posted by ercchry View Post
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    The trick to being conservative is to already have the wealth in place... risk adjusting should also include age and future earning capacity... take on the risk young, transition to something more conservative as you succeed and age.

    Still hard to beat RE when it comes to potential and access to leverage as a youngster... shit, young enough to tolerate roommates still? BUY, BUY, BUY!
    The math is the math though. If you want to maximize future expected returns, then you're stuck with the probabilities. That doesn't really change with age. Taking on more risk also means that you could end up with less. People say taking on more "risk", but really the theory is that you can manage more volatility at a young age.

    The idea behind maximizing risk-adjusted returns (through say index funds), is simply a recognition of the fact that you are unlikely to fall into the bucket of investors that lucks out with the higher returns. Age doesn't change the probability of you being an exception.

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    Quote Originally Posted by Kobe View Post
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    blah blah blah

    Biggest issue I see with the math, is you aren't using realistic figures. Rent is virtually always more expensive per month than a mortgage and all of it's extra costs would be on the same property. Which should be a no brainer as the landlord has all those costs of the mortgage and they need to at a minimum break even on their costs through the rent they charge you.

    So barring some type of major housing crash, it is always going to be better to own a property than rent it if you need a place to live regardless. And then you factor in the possibility of renting a room or two, or building an income suite in your basement, and suddenly that mortgage is outpacing rent by an even bigger factor.

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    Quote Originally Posted by Misterman View Post
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    Biggest issue I see with the math, is you aren't using realistic figures. Rent is virtually always more expensive per month than a mortgage and all of it's extra costs would be on the same property. Which should be a no brainer as the landlord has all those costs of the mortgage and they need to at a minimum break even on their costs through the rent they charge you.

    So barring some type of major housing crash, it is always going to be better to own a property than rent it if you need a place to live regardless. And then you factor in the possibility of renting a room or two, or building an income suite in your basement, and suddenly that mortgage is outpacing rent by an even bigger factor.
    This isn't correct. You must calculate the opportunity cost of having capital tied up in your home equity. You must calculate the risk of leverage.

    the rent vs buy situation is strictly base don the PE of the market. That is the housing cost vs rental rates.

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    Quote Originally Posted by Kobe View Post
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    99% of the population doesn't have that luxury though.

    And 700k / 8 years = 87.5k without interest per year on payments... (If all 700k was a loan)

    Average Salary is 55k/year in Canada and you paid more per year on just mortgage payments so clearly you are not in the majority IMO
    The interest was on $600k

    Remember, each year we dumped a large amount on the principal, so the interest was much less each year as the loan amount got smaller and smaller.

    I recall it was under $40k in interest.

    Maybe I’m wrong, but I don’t think so.

  10. #1990
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    Quote Originally Posted by Buster View Post
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    This isn't correct. You must calculate the opportunity cost of having capital tied up in your home equity. You must calculate the risk of leverage.

    the rent vs buy situation is strictly base don the PE of the market. That is the housing cost vs rental rates.
    Even if you want to go that far with it, it's still a pretty simple calculation. How much is your 5% downpayment going to make in the market over the course of 10, 15, 25 years. Is it going to make more or less than the equity you would have paid into your mortgage in those years? Chances are you aren't turning 30k in the market, into 600k over the course of 25 years.
    Last edited by Misterman; 12-04-2019 at 03:39 AM.

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    Quote Originally Posted by 89coupe View Post
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    The interest was on $600k

    Remember, each year we dumped a large amount on the principal, so the interest was much less each year as the loan amount got smaller and smaller.

    I recall it was under $40k in interest.

    Maybe I’m wrong, but I don’t think so.
    haha, I can see this as an infomercial for people making $15 an hour, or Robert Kiyosaki's next book.

    "How to pay your house off in just 8 short years"

    you read all of it, and at the end,

    "that's right folks, all you have to do is put down $80,000 a year"
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    Alberta's credit rating was just lowered due to continued dependence on oil
    this is not great news for any of our markets.

    httpss://www.cbc.ca/news/canada/calgary/moody-s-alberta-credit-rating-1.5383294
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    Quote Originally Posted by Kobe View Post
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    We paid $74,481.50 in interest over 20 years.
    We took 240 months to pay.

    $74,481.50 / 240 = $310.33 a month in interest. (Average)

    We need the home to go up 74.5% in 10 years to break-even.


    Let's say we rent for 20 years and each month is $600/month

    240 X $600 = $144,000 in rent.

    We need the home to be $174,481 - $144,000 = $30,481 in 20 years for it to be better to purchase with a loan.

    This seems pretty but we get to a point where renting vs highest interest rates and devalued homes make it better to rent.
    I'm not understanding your point or your math, but one thing I noticed is that you're not taking into account the savings in monthly cash flow in the rental scenario. In your example, it's a $657 mortgage payment vs. $600 rent. That's $57.13/month that the person renting is saving per month over the mortgage scenario.

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    Quote Originally Posted by S-FLY View Post
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    I'm not understanding your point or your math, but one thing I noticed is that you're not taking into account the savings in monthly cash flow in the rental scenario. In your example, it's a $657 mortgage payment vs. $600 rent. That's $57.13/month that the person renting is saving per month over the mortgage scenario.
    It also ignores large maintenance costs. Over that 20 years there is a good chance you might need to replace a furnace or hot water heater or get hit with hail damage and have to pay insurance deductible, etc. I do think it's probably better to buy, but owning does have risk you need to put aside funds for.

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    Quote Originally Posted by 04Terminator View Post
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    Alberta's credit rating was just lowered due to continued dependence on oil
    this is not great news for any of our markets.

    httpss://www.cbc.ca/news/canada/calgary/moody-s-alberta-credit-rating-1.5383294

    The downgrade, the agency states, reflects Moody's "opinion of a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources … and remains pressured by a lack of sufficient pipeline capacity to transport oil efficiently with no near-term expectation of a significant rebound in oil-related investments."
    Originally posted by SJW
    Once again another useless post by JRSCOOLDUDE.
    Originally posted by snowcat
    Don't let the e-thugs and faggots get to you when they quote your posts and write stupid shit.
    Originally posted by JRSC00LUDE
    I say stupid shit all the time.
    ^^ Fact Checked

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    Quote Originally Posted by Misterman View Post
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    Biggest issue I see with the math, is you aren't using realistic figures. Rent is virtually always more expensive per month than a mortgage and all of it's extra costs would be on the same property. Which should be a no brainer as the landlord has all those costs of the mortgage and they need to at a minimum break even on their costs through the rent they charge you.
    Not really. Landlord could swallow up principle payment portion to reduce taxes and remain competitive.

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    Another thing often overlooked when it comes to cost of home ownership is realtor fees when you sell. Cost of selling a 600-700K house is roughly 30K. If you sell the house in 5 years to upgrade/downgrade/move to another city that 30K amortized over 5 years is $500/month. Not a small chunk of change. The impact of realtor fees lessens the longer you stay in the house but I've never stayed put in a single place longer than 3 or 4 years. Maybe we'll have more stability with kids in the picture but I feel we'll still want upgrade in 5 years time especially if housing becomes significantly cheaper.

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    Quote Originally Posted by Xtrema View Post
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    Not really. Landlord could swallow up principle payment portion to reduce taxes and remain competitive.
    Yup. The townhouse beside me was for sale a couple months ago. If I offered 5% under ask, once I add the mortgage, condo fees, plus property taxes I'd have to shell out almost 600 a month more than my rent. That being said 800 a month would go to the principal. So technically buying would be a net win but it's also extra money every month I'd be forced to put to equity and I'd just rather not at the moment until things stabilize more.

    Pretty sure the owner of mine bought the townhouse when new (2006) since Jordan pulled the buildings sales and its never changed hands so they have way lower costs than what its current market value is.

    Quote Originally Posted by Manhattan View Post
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    Another thing often overlooked when it comes to cost of home ownership is realtor fees when you sell. Cost of selling a 600-700K house is roughly 30K. If you sell the house in 5 years to upgrade/downgrade/move to another city that 30K amortized over 5 years is $500/month. Not a small chunk of change. The impact of realtor fees lessens the longer you stay in the house but I've never stayed put in a single place longer than 3 or 4 years. Maybe we'll have more stability with kids in the picture but I feel we'll still want upgrade in 5 years time especially if housing becomes significantly cheaper.
    Don't forget mortgage penalties that can be 10-20k as well depending on when you are in your term. Rarely do people actually sell right at the 5 year mark and most of the good rates are all stacked with penalties.

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    Quote Originally Posted by JRSC00LUDE View Post
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    The downgrade, the agency states, reflects Moody's "opinion of a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources … and remains pressured by a lack of sufficient pipeline capacity to transport oil efficiently with no near-term expectation of a significant rebound in oil-related investments."
    Brodude, if you think the downgrade is because we didn't get a pipeline you should probably go read Moody's full report again, not Minister Toews' news release.

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    Quote Originally Posted by pheoxs View Post
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    Yup. The townhouse beside me was for sale a couple months ago. If I offered 5% under ask, once I add the mortgage, condo fees, plus property taxes I'd have to shell out almost 600 a month more than my rent. That being said 800 a month would go to the principal. So technically buying would be a net win but it's also extra money every month I'd be forced to put to equity and I'd just rather not at the moment until things stabilize more.

    Pretty sure the owner of mine bought the townhouse when new (2006) since Jordan pulled the buildings sales and its never changed hands so they have way lower costs than what its current market value is.



    Don't forget mortgage penalties that can be 10-20k as well depending on when you are in your term. Rarely do people actually sell right at the 5 year mark and most of the good rates are all stacked with penalties.
    Why would anyone lock in for a fixed 5 year term in this day and age.

    Ludicrous

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