Quote:
Originally Posted by Mr.C
Not bad, but a few questions:
- What interest rate did you assume for that? Mortgages are very top heavy in interest, as you know, especially with a 10% down payment.
- There are no maintenance or repair costs factored in, either (which for me is zero, since I rent).
- If you sell the house at 1.9mm, you're taking a $133,000 hit in realtor fees. The 753 goes down to 620...
- While 10% is a reasonably conservative investment rate, 5% a year property value increases is not.
I understand your post, but I think the numbers are a lot closer than the spreadsheet shows.
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nowhere in his analysis was he forced to sell after 5 years so your argument about real estate agent fee is invalid. also a 10% ROI on a balanced portfolio is actually very high whereas the 5% return on Vancouver property is quite conservative given the recent trend.
one important factor lowside67 did not factor into his analysis is the potential rent increases a tenant will face in the 5-year period. a landlord can keep tenant on a yearly lease without going into monthly lease, so theoretically he can bump that $3000 lease to $3500 within 1 year without violating RTA.
however, let's hypothetically go with your argument that after 5 year a renter and a homeowner comes out the same. so why should I rent then? do people actually enjoy dealing with peevish landlord every month and face the consequence of not getting their leased renewed?