Quote:
Originally Posted by I-Hate-Hulse
Here's an interesting snippet from today's Globe on whether it was better to own a condo in Calgary or units in Boardwalk for the last few years:
Over the three-year period from 2005 through 2007, the Calgary condo would have appreciated from $171,135 to $304,719, for a capital gain of $133,584 or 78.1 per cent. The net rental income over the period – gross rent minus condo fees and property taxes – was $26,485, for a further gain of 15.5 per cent.
All told, the condo owner would have made a profit of $160,069, for a return of 93.5 per cent on his original investment.
Most investors would kill for a return like that. Now let's see how Boardwalk REIT made out.
From 2005 through 2007, the initial $171,135 investment would have grown to $413,246, for a capital gain of $242,111 or 141.5 per cent. The investor would have pulled in an additional $38,490 of distribution income, for a further gain of 22.5 per cent.
Total profit: $280,601 or 164 per cent, beating the condo's returns hands-down.
There's no guarantee Boardwalk will continue to deliver such superb results. Indeed, the units are down 11.3 per cent this year.
But if you buy an apartment REIT instead of a rental condo, there's one thing you can count on: You won't be getting any calls in the middle of the night to fix a leaky toilet.
|
In 2002, I bought a condo for $110,000, it cost me $10,000 for the deposit and closing costs - the rest of the downpayment and mortgage were financed. Over the years I have spent approximately another $10,000 on repairs, vacant months, and making up the difference between the rent collected and my monthly bills. I have invested $20,000 and since then the condo has increased to a value of approximately $260,000 and I owe $90,000 on it. So, my $20,000 which was paid gradually since 2002 has seen a return of $150,000. Investing that same $20,000 in Boardwalk would not give me close to the same return.