Quote:
Originally Posted by fundmark19
Not sure if I agree with you here. You could buy an investment property that has a suite and live in the basement and rent out the upstairs and pay for all of your housing costs while living rent free in the basement. You then are ahead since you don't have to pay rent which frees up 600-1500 (depending on your lifestyle) to help fund your retirement which is huge. Then if times are tough you still have an asset you can utilize to free up cash to fund your retirement. Worst case scenario you have to pay 600-1500 to live in your own house while still renting the other portion and maintaining your asset vs giving money away to a landlord.
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Those are good points for sure and I've done exactly that (live up/rent down) for lots of years. One major thing everybody forgets is the cost of maintenance over the long term. The vast majority of houses will need at least 100k every 20 years to accommodate basic repair and maintenance. That's the condo fee no one ever charges themselves.
The other thing is the market itself. Your home value is more than capable of going down in the coming decade making your monthly rental income totally pointless. It might go up, but the hot market now is not in here.
And finally, liquidity is always a concern. I have been renting the money I used to have invested in real estate, and it's far easier to generate profit in this market. There is also far less risk. Really really much less risk. And my terms are always one year so I can adjust every 12 months to market changes. That's a huge benefit. I still have on rental property and it sucks because I can not sell it right now...the market sucks, you can't just kick out the tenants. When I do sell, there will likely be three months of vacancy. That's something no one ever calculates either.
There are also the other costs of ownership, utilities, taxes. The other costs of selling including commissions, legal, title transfer. There is the cost of buying as well, usually cmhc fees, legal, etc. So you always need a 5-10% gain just to break even. I always found that the basement rent paid for utilities, taxes, and really not much more, maybe a couple hundred a month.
My rent payment for the last year has been a great pleasure.