Re-Financing your $Property

[DementedReality]

Originally Posted by Agamemnon

If you can borrow at 4%, and invest at 9%, it is THAT EASY. If you can't, you can't. Since I can, it makes a lot of sense. This isn't in 'fantasy-land' or 'dream-land' or 'young'un-land', this is in the real world.

Explain to me why borrowing at 4% and investing at 9% is wrong.

well, there are a few scenarios to consider

1) you could create a cash flow crunch, which might make you incur debt at not so favourable rights, such as credit card debt

2) the investments are rarely guaranteed, so it might be 9% this year, but maybe 2% another year. if you arent skilled at the balancing act, it could bite you

3) overall though, if you know what you are doing, its a good ratio, but if you dont, it could be trouble

I think the most important factor is point 1 though, cash flow to service the debt. i suppose it comes down to how it is all structured, which comes to point 3, knowing how to do this to begin with!

[Agamemnon]

Originally Posted by DementedReality

well, there are a few scenarios to consider

1) you could create a cash flow crunch, which might make you incur debt at not so favourable rights, such as credit card debt

2) the investments are rarely guaranteed, so it might be 9% this year, but maybe 2% another year. if you arent skilled at the balancing act, it could bite you

3) overall though, if you know what you are doing, its a good ratio, but if you dont, it could be trouble

I think the most important factor is point 1 though, cash flow to service the debt. i suppose it comes down to how it is all structured, which comes to point 3, knowing how to do this to begin with!

For sure. I'm not advocating anyone go out, borrow their total available credit, and invest the entirety. That would be over-leveraging yourself.

[V]

Originally Posted by fotze

I don't think I ever said that.

Do I have to go find the thread?? Because I will...

Not that it matters.

[Red]

Originally Posted by Agamemnon

If you can borrow at 4%, and invest at 9%, it is THAT EASY. If you can't, you can't. Since I can, it makes a lot of sense. This isn't in 'fantasy-land' or 'dream-land' or 'young'un-land', this is in the real world.

Explain to me why borrowing at 4% and investing at 9% is wrong.

Sign me up then. Who's gonna lend you money at 4% and better yet, who'll guarantee you 9% returns longterm?

This is a perfect example why you should think really hard before doing something stupid. You are a victim of coffee shop chatter hype. You have not done your homework. You are likely to hurt your finances more than help them.

But again, it's your bank's money, not mine........

[photon]

There's quite a few investment companies that are guarenteeing 8+% return right now.. real estate or commercial deals where you invest your money, they pay whatever percent while they use it, then at the end you get a slice of whatever the project pulls in. I'm not sure what the risk is of those though.

As for if the market can sustain it's current pace and about people moving back...

I don't think anyone expects property values to go up 50% over the next year again, but 20% isn't out of the question for Calgary. And other places like Edmonton, Red Deer, and even Lethbridge could still show some impressive numbers yet. But overall the situation will not downturn any time soon. Affordability is very high compared to everywhere else, inmigration is huge, unemployment is super low, salaries are way up, consumer spending is high (people are confident in the economy), companies can't get people in fast enough to work..

In almost all indicators Alberta leads the country, and the Economist magazine rated Canada #2 in the world to put your money into for the next 5 years (Denmark was #1, but their economy isn't nearly as large and diverse). There's $1 Trillion of planned investment into Alberta in the next 10 years, that's a lot of economic growth.

Could there be small bumps as things adjust to keep the economy from overheating? Sure, Fort Mcmurray was talking about doing things to slow down economic growth there. But not enough to scare me (or others) out of the market.

And people moving back to Saskabush or whatever only give someone else who has a job a place to live, and it improves the economy of wherever those people move back to, so it has a positive ripple effect there too.

When the economic indicators here look like they do in Vancouver, then I'll be getting out.

The biggest issue right now is finding places in Calgary that cashflow without having to put down 35-40%. Not impossible, but not easy.