Quote:
Originally Posted by Realtor 1
It sounds like you would like a realtor to agree with you - my point and belief stands.
I have $10,000 saved up for a down payment today.
I buy a 200k property with 5% down
I pay CMHC fees of roughly 6k
My mortgage is 196k and I start paying today. Perhaps knocking an extra $200 off each payment as I bought something I can easily afford but saving up the DP was the tough part.
OR
I have 10k saved up today,
I rent for the next 3 years while I save up another 30k
My rent costs me 1500 a month - $54,000 over the 3 years I managed to save my remaining 20%
I buy into the market and save my 6k on cmhc fees.
After 3 years from day 1
5% option and I own a property, have paid very little interest and have knocked a good chunk off with my diciplined investing of adding 200 to my payments.
20% option, I just bought a house, owe $160,000 on it but also spent 54k over the last 3 years renting. We are also assuming that prices have not gone up over this 3 year span in which this same 200k property might have really cost me 220 when I was ready to buy.
You tell me who is ahead.
|
Are cap rates in Calgary that high that a $200K condo would rent for $1500? That seems insane these days.
You also have to consider the non-mortgage costs of ownership which provide zero return. Property tax, condo fees, and insurance are likely at least $15K on a $200k place over 3 years.
Though I do agree with the general principle if we're talking about a disciplined person. As long as you're in a place where you can easily afford an interest rate spike, you are willing and able to throw extra money at the mortgage, and you can handle potentially being underwater on it for a period of time if prices drop, then a low down payment is fine and likely advantageous over waiting.
But again, that really depends on the price to rent ratio. In a place like Vancouver you can rent some places for far, far less than the ownership costs. I'm not even sure why anyone owns a rental property there.