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Valour · 11-03-2013, 08:30 PM

Thanks for the analysis!!! I would adjust the vacancy a little higher than 75% and I think the 20% over ten years is conservative.
Also, the 2nd 5 yr amortization on the mortgage would include more gains (ie more principal repayment) because the mortgage amount would be lower and the payment lower, and if you plug all the surplus from the new lower payment against the principal, you'd also get more savings or equity gain in the house.

However what I would like to highlight just by reading your analysis is that ownership means the homeowner has 427K in proceeds as opposed to the renter who only has 264K in proceeds. So as an investment over a longer period of time, it certainly is a feasible argument.

This probably has to do with your use of the GIC risk free rate to calculate rental investment gains. Fair enough to use the conservative measure. One can argue that over ten years you can use an 8-10% rate to represent gains in the stock market etc.

And if you want to go bass mode you can calculate the tax status of principal residence cap gain vs investment income tax rate!

Again, thanks for your analysis.

11-03-2013, 08:30 PM	#1567
Valour RS.net, where our google ads make absolutely no sense! Join Date: Dec 2003 Location: vancouver Posts: 988 Thanked 428 Times in 95 Posts Failed 206 Times in 45 Posts	Thanks for the analysis!!! I would adjust the vacancy a little higher than 75% and I think the 20% over ten years is conservative. Also, the 2nd 5 yr amortization on the mortgage would include more gains (ie more principal repayment) because the mortgage amount would be lower and the payment lower, and if you plug all the surplus from the new lower payment against the principal, you'd also get more savings or equity gain in the house. However what I would like to highlight just by reading your analysis is that ownership means the homeowner has 427K in proceeds as opposed to the renter who only has 264K in proceeds. So as an investment over a longer period of time, it certainly is a feasible argument. This probably has to do with your use of the GIC risk free rate to calculate rental investment gains. Fair enough to use the conservative measure. One can argue that over ten years you can use an 8-10% rate to represent gains in the stock market etc. And if you want to go bass mode you can calculate the tax status of principal residence cap gain vs investment income tax rate! Again, thanks for your analysis. __________________ Give them nothing, but take from them... EVERYTHING!!! - King Leonides 7seven: I really can't stand all these idiots who hit the gym now just because they watched 300 and want to be like a spartan. Case in point, this skinny guy comes into the gym the other day, must have only weighed ~ 140lbs, loads on 2 plates on the bench rack, mutters to himself, for sparta, unracks the barbell and proceeds to drop it directly on his chest. Last edited by Valour; 11-03-2013 at 08:36 PM.