Quote:
Originally Posted by Tapioca
Let's be honest - 4444 is Caucasian, has an EU passport, and has a profession that has low barriers to entry (CA/Finance). I think most people who have these things would be seriously tempted to move to Europe.
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But I think it's irrelevant to the topic (RE) and more to do with 4444's personal choice. I think many people in their late 20s/early 30s who has a decent job/saving should avoid Canadian RE, especially Van and TO like plague. Your money can do so much more elsewhere.
It doesn't matter how awesome or lame Vancouver is. I'm seeing from an investment perspective only. Comparing what one could do by investing in Vancouver RE vs. elsewhere
My wife and I make some decent money but we basically invested every cent we could save in US instead. My investment in US is about 2M gross and making an average 8% cap. The income from the investment along with our monthly contribution is quickly paying the mortgage off.
Reasoning is easy (I simplified it by not taking mortgage into calculation):
Current situation w/2M commercial property in US:
120k (RE income after tax)-40k rent=80k cash/year
Hypothetical 2M property in Van I can get 10% growth YoY:
200k profit-8k property tax-(2.2M*0.10) rough transaction cost=-28k
So, for the first year, I'd have lost 108k by owning the house in Van instead. Even if I increase the rent allowance by 10k, it's still 98k difference.
By second year, assuming the growth in Van continue at 10% while US RE has 0 growth since not selling. I'd hardly break even. (160k vs 158k in profit).
Basically one'd need Van RE to continue to grow at 10%/year for 3 years before realizing any potential profit over investing elsewhere. That is a risk I'm not willing to take as in my assumption the costs are minimized generously