Quote:
Originally Posted by SeeGeeWhy
That's exactly it. Interest rates will not stay at 5%, and you may or may not always have steady employment, good health, proper insurance, or all the other necessary requirements to service your debts.
This holds true for both the individual home owner and the investor.
The difference being that if you are stretching the boundaries on financing for your primary residence, there isn't much room for change in economic conditions before you can find yourself homeless.
As an investor, you can decide how much you wish to leverage what you have, and that is often a calculated risk based on what you can afford to lose.
So... market conditions change, and the individual homeowner is homeless, the investor has lost his assets, but still has a roof over his head.
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How do you suppose the investor will still have $$ to pay his own mortgage if all his investment properties are being foreclosed?
Sure, interest rates could rise to 8-10% overnight, you could lose your $80K job, your house may burn down, your ex-girlfriend could win the lottery tomorrow and rub it in, YOU could win the lottery tomorrow & do the same. But why waste your time worrying about things not likely to happen? (That's what insurance is for) The likelihood of a economic downturn in Calgary for the foreseeable future is slim to none, and slim just left town. The fundamentals for growth & more growth are all there. So why would anyone worry about not having a job tomorrow? next year? next 5 years?
My crystal ball is as clear as yours or anyone elses, who knows if another NEP will come? But we can make reasonable forecasts. People all try to do whats necessary to attain desirable living standards & quality of life, it's human nature. Right now the times say roll with the ball or get left behind. Our choice is thus get on the bandwagon or ride the bicycle out of town. None of us make the rules, but it doesn't mean we don't have to play by them if we NEED to play.