5833 replies to this topic

[sebberry]

Less your deductible...

 

Cheaper than the alternative.

[Mike K.]

We have a generation of investors who have only known low interest rates and appreciating asset prices. They feel you can multiply your wealth using leverage with little risk. 

 

The problem is that leverage is a double edged sword. You may be right Mike in that over the long haul real estate has only gone up in price, but even a short term decline in asset values can wipe out a highly leveraged investor. Many folks are going to experience that for the first time.

 

The BOC 5YR rate is now at a 12 year high and still heading up. Mortgage rates are soon going to follow. The politicians lied to you about inflation and they are lying to you about interest and mortgage rates. 

 

It's not so much that they feel there is little risk, it's that they understand risk is in everything.

 

That same generation also saw their parents get wiped out in 2008. And that's after their parents got wiped out in the late 90s. And after growing up hearing about mom and dad getting wiped out by the markets in the 80s.

 

And the same generation just spent the last decade saving money at below inflationary interest rates, while market analysts keep saying another market crash is just around the corner, and housing bears scared them into thinking housing values were in a bubble and they should think twice before buying a $650k SFD in Langford (oops!).

 

Eventually you have to start making decisions for yourself, and if that means a HELOC can help you invest your money, pitfalls included, so be it. 

[Nparker]

...The politicians lied to you about inflation and they are lying to you about interest and mortgage rates. 

Nothing to see here. 

[Matt R.]

It's all a factor of cash flow.
 
Does anyone here think, that a $500k pre-sale purchased today, will be worth less in 2027, just five years from now? I mean macro factors can upend the best investments but at the end of the day you still have a physical asset under your control.
 
Over that five year period, you also have tenants coming and going, and can raise rents. Interest rates for HELOCs are tangentially tied to your mortgage rate or are even lower, so they're relatively stable and you can plan well ahead for rate fluctuations. And over five years you're likely to be cash positive on that investment, or at least flat after all expenses are covered, if you play it right.

Too rich for my blood!

[dasmo]

I still kick myself for not buying that loft in the railyards for $70K. I can't see my future self kicking me for not buying the same thing for $500k. For one thing, I can't.... 

[Mike K.]

20 years ago $70k was a lot, otherwise you would have bought it.

 

20 years from now, you'll be saying the same thing about the $500k condo.

[spanky123]

If you had put your $70K into Amazon stock 20 years ago it would be worth $10.2M today!

[Mike K.]

Did you? 

[spanky123]

Did you? 

 

I wouldn't be trolling VV if I did, I would own it and it would be part of my sprawling BB empire!

Edited by spanky123, 05 May 2022 - 08:56 AM.

[Mike K.]

See!

 

Dasmo should have bought the studio, and I should have bought Tesla when it was $150 pre-split.

[sebberry]

I'm buying a tent.

[Mike K.]

You're moving out of your condo and into the park next door?

[sebberry]

I was thinking Picnic Point.

[dasmo]

Your tent will be worth $50k in 20 years so maybe it's a good idea!

[dasmo]

If you had put your $70K into Amazon stock 20 years ago it would be worth $10.2M today!

True but the loft would have meant I didn't have to pay office rent or I would get rental income so more of a sure bet. Amazon wouldn't have paid dividends... I did get to build my house because I invested in Apple though. However I was able to finish it because I had also bought a property in Fairfield.  So not cut and dry at all. But.... while $70k was a lot then it was certainly way more affordable. That would have been close to one years wages for me. I shouda woulda coulda borrowed it from somewhere even though I was recently self employed and had just bought a house in VicWest for $192K. The bank had only approved me for a 200k mortgage and I needed to put some money into that house too.  I contemplated but in the end invested in stocks and avoided debt. These numbers now have no allure to me whatsoever though.  The same product is now easily 3-5X one years wages. 

[Mike K.]

Now I remember the first phase of the Railyards quite well, living just up the street from it. Are we sure lofts were $70k, and not $170k? My buddy bought a 1BR back-facing condo at Parc adjacent to Save Ons around that time for $220k.

[dasmo]

Now I remember the first phase of the Railyards quite well, living just up the street from it. Are we sure lofts were $70k, and not $170k? My buddy bought a 1BR back-facing condo at Parc adjacent to Save Ons around that time for $220k.

It was one product. A no-bedroom "loft". $76K is what is in my memory banks. It was something that stood out to me. Possibly the least desirable product. I could be wrong though. Memories can lie. Do you have the power to see? I'm curious now. I am pretty sure it was the first phase. 

[dasmo]

I bought my house at the time, 2003. If memory serves me that was around the time the signs first went up? 

[Mike K.]

The earliest pricing info we have is from 2009, when a phase was hitting the market with inventory identified with introductory priced units "below $300,000."

 

$76k sounds very low to me. In the early 90s you could buy a condo in Vic West for about that, as a starting price. Houses were $250k-$300k at the time.

[Victoria Watcher]

$76 sounds too low for that date.