Options for Home Downpayment?

[Shazam]

Originally Posted by fundmark19

And Shazam I was not trying to gloat I was implying why I may be biased on the issue

Oh, just ribbin' ya

[Pastiche]

Originally Posted by Bouw N Arrow

Hold on.. a cost saving with renting?? Since when? Renters ALWAYS get raped.

Explain.

[Shazam]

Originally Posted by Pastiche

Explain.

Landlords suck.

Having to move because of whatever.

Large rent increases.

Renting sucks because there's so much out of your control.

[fundmark19]

Originally Posted by Pastiche

Explain.

well my cost is 1000 on my condo and I rent it for 1350. they lose 350

But I am also investing that is the thing. My RSP was maxed till last year and still do regular contributions to RSP and tax savings account. I just don't see how anyone is saving renting. For a comparable house I would be paying the same and coming out with nothing.

[Sylvanfan]

In terms of rent vs. buy your lifestyle where you live, and timing has an impact too. For a single guy or a couple with no children than renting likely can be done for less. When I bought my first house in 2002, it cost me $164,000 and my monthly principle + interest mortgage payment was $650 a month. Even with high property taxes I was still around $1000 with taxes and utilities, and was renting to a room mate for $500. To me it was worth the $100 a month increase from sharing a house with 4 other guys.

Two years later I sold that place for $195,00 which was more like 187, after paying realtor fees and lawyers. So on my 40,000 down payment I did make 23,000, plus the equity I built in the place over two years and it was tax free. For my next place by than I was married and had a dog, so to rent a house in Sylvan Lake at that time with a yard was $1100 a month. By putting 10% down on the place I bought I still had my original 40 left, plus another 7 in profits from the last house and the mortgage with property taxes was about $900 a month. Again a no brainer to me to buy.

But on the flip side when I left St.Albert 2 years ago and came to Osoyoos, I still need a house with a yard of some type. The place I currently rent is $1400 a month, but at the time to buy the same place would have been well over $525. Today the prices have adjusted downwards quite a bit, and not buying was a good move. I still have a tidy sum of money and I'm not stuck in a house having sunk 75 grand worth of lost equity into it. In fact if I invested the money I have left and could earn 9% on it less the taxes I'd pay on gains it's enough to cover my rent for 8 months. But the problem there is my originally money never grows, it stays worth it's current amount. Than again even with todays more deflated real estate prices, low interest rates the mortgage payment on a similar property is more than my rent let alone having to pay property tax. So I'm still better off to rent and build equity investing in other vehicles, plus I have the flexibility to move if I have to for work.

Still when you have a family like I now do...having a house is worth something to you because it does represent stability. So as peoples lives, where they live, the economy, and the various different real estate makets change, it impacts the whole rent vs. Buy arguement.

[Regorium]

Originally Posted by fundmark19

well my cost is 1000 on my condo and I rent it for 1350. they lose 350

But I am also investing that is the thing. My RSP was maxed till last year and still do regular contributions to RSP and tax savings account. I just don't see how anyone is saving renting. For a comparable house I would be paying the same and coming out with nothing.

There is no way the cost on your condo is 1000. Perhaps you're screwing them, and your $200,000 mortgage home that is only worth $1000 in rent and they're paying you $1350, that's good. However, even on a $200,000 mortgage, you'll probably have a monthly payment of ~$1000, then $100 on property tax, $200 on condo fees, $100 in utilities, and probably $50 a month on maintenance. You have a really good deal there if your mortgage cost is only $1000, so yes, in your case it'd be much better to buy.

However, let's say you rented your place out for market value and they're only paying you $1000 (in calgary, a $200000 home would probably only get you $800-$900 frankly). You'd be $450 in the hole right off the bat, and you're probably getting some $450 in equity for easy math. So every month you'll get $450 + the home appreciation as a return.

However, if you rent out this place for $1000, and spend the $450 on an investment, if you are a skilled investor that can get an 8 or 9% return on that $450, you will have saved money as a renter.

[Pastiche]

Than again even with todays more deflated real estate prices, low interest rates the mortgage payment on a similar property is more than my rent let alone having to pay property tax. So I'm still better off to rent and build equity investing in other vehicles, plus I have the flexibility to move if I have to for work.

Don't forget maintenace. In my rental unit I had the dishwasher, plumbing, and ventilation system worked on for over $3000 in one year.

[Pastiche]

well my cost is 1000 on my condo and I rent it for 1350. they lose 350

Your costs of financing and buying the condo are $1000 and you're renting it out for $1350? Either you're a slumlord or very wealthy and paid a huge down payment.

[fundmark19]

Originally Posted by Pastiche

Your costs of financing and buying the condo are $1000 and you're renting it out for $1350? Either you're a slumlord or very wealthy and paid a huge down payment.

Sorry guys I forgot about the condo fees
Payment Amount Principal & Interest $757
Tax Payment $ 100
Total $ 857
So I am around 1150 so 200 a month pure profit. Plus I still get to write off all condo fees anyways plus interest.

[hmmhmmcamo]

Originally Posted by Bouw N Arrow

Hold on.. a cost saving with renting?? Since when? Renters ALWAYS get raped.

wow...this statement is so totally wrong I don't even know where to start!

Please elaborate...

[hmmhmmcamo]

Originally Posted by Shazam

Landlords suck.

not all of them. I agree you can run in to some real idiots, but if you are good people with good references and are willing to do some work, a good landlord can be found pretty easily.

Having to move because of whatever.

I agree this is a negative - but it can be a positive. What happens when you have an annoying neighbour? or your strata sucks? It's a lot easier/cheaper to move when you're only renting.

Large rent increases.

rents will go up...but so will the cost of borrowing money. We are at historically low interest rates right now so there is only one way for them to go - meaning there will be some pretty large "rent" increases for some home owners too.

[SeeGeeWhy]

Originally Posted by Bring_Back_Shantz

That last point in your post is completely irrelvant, and ignores all of the other factors that go into the decison to rent vs buy.

Saying buying isn't a good option because you pay for your house twice, is just as valid as saying renting is a bad idea because you don't have anything at the end. Sure both statements are technically true, but they completely ignore the underlying (and most important) factors that go into the rent vs buy decision.

Buying isn't always a better option, but dismissing it because you "Pay for your house twice" is really short sighted.

Well, I am frequetnly irrelevant with what I write.

For the record, I didn't say that paying copious amounts of interest was enough to make the buy decision a poor one, and I should say that I do "own" myself. I merely said that I hate paying for my house twice while building equity. Tough titties, that's the way it goes, right?

The classic debate while you're paying down a mortgage is whether you take your investment savings and accelerate the mortgage payments or put it in another investment vehicle. Looking at a guaranteed net-of-tax return vs a speculative "possible" return in the market has always appealed to my conservative faculties, but I know I'm probably leaving a bit on the table by doing this.

[Slava]

Originally Posted by SeeGeeWhy

Well, I am frequetnly irrelevant with what I write.

For the record, I didn't say that paying copious amounts of interest was enough to make the buy decision a poor one, and I should say that I do "own" myself. I merely said that I hate paying for my house twice while building equity. Tough titties, that's the way it goes, right?

The classic debate while you're paying down a mortgage is whether you take your investment savings and accelerate the mortgage payments or put it in another investment vehicle. Looking at a guaranteed net-of-tax return vs a speculative "possible" return in the market has always appealed to my conservative faculties, but I know I'm probably leaving a bit on the table by doing this.

I know one guy who would argue that you are leaving a lot on the table by doing this....but my bias shows through here!

[Shazam]

Originally Posted by hmmhmmcamo

not all of them. I agree you can run in to some real idiots, but if you are good people with good references and are willing to do some work, a good landlord can be found pretty easily.

What does my having good references have to do with landlords? If landlords won't fix stuff, what's my recourse?

I agree this is a negative - but it can be a positive. What happens when you have an annoying neighbour? or your strata sucks? It's a lot easier/cheaper to move when you're only renting.

Lease agreements notwithstanding, there's a cost to move.

rents will go up...but so will the cost of borrowing money. We are at historically low interest rates right now so there is only one way for them to go - meaning there will be some pretty large "rent" increases for some home owners too.

Rental properties are also mortgaged, so if you believe interest rates are going up, this will also affect rental rates. If you believe that the rental market is competitive, then this will also raise rental rates even for properties that aren't mortgaged anymore.

[Sylvanfan]

For every bad land lord there's a dead beat tenant who intentionally falls behind on rent knowing damn well they can more or less stay for three months until a land lord can get rid of them and not pay a dime if they tell a good enough sob story to a compassionate judge.

It comes down to how viscious are you as a person, because the same tenant who hedges on his rent, could probably be the same guy who turns around and screws over his tenants any chance he gets.

[Pastiche]

Rental properties are also mortgaged, so if you believe interest rates are going up, this will also affect rental rates. If you believe that the rental market is competitive, then this will also raise rental rates even for properties that aren't mortgaged anymore.

Supply and demand in the rental market determines rent prices.

[Shazam]

Originally Posted by Sylvanfan

For every bad land lord there's a dead beat tenant who intentionally falls behind on rent knowing damn well they can more or less stay for three months until a land lord can get rid of them and not pay a dime if they tell a good enough sob story to a compassionate judge.

It comes down to how viscious are you as a person, because the same tenant who hedges on his rent, could probably be the same guy who turns around and screws over his tenants any chance he gets.

Are you saying that it's okay to be an a$$ landlord?

[Sylvanfan]

Originally Posted by Shazam

Are you saying that it's okay to be an a$$ landlord?

Not at all. I don't have any idea how you could draw that conclusion. But you make it sound like it's a one way street. Just as many land lords or more get screwed over by tenants, but no one has any sympathy for the guy who supposedly has the money. Whereas some deadbeat guy who's hedging on his child support payments but can afford two packs of smokes a day, and has a healthy supply of empty beer and liquor cans/bottles in his house gets sympathy from a judge when it comes to not paying his rent. I mean my mom never had to deal with anything like that when it came to the last renter she had after my dad passed away and the guy no longer had any fear that the ever living you know what could be kicked out of him if he acted like a total ######.

[Shazam]

Originally Posted by Sylvanfan

Not at all. I don't have any idea how you could draw that conclusion. But you make it sound like it's a one way street. Just as many land lords or more get screwed over by tenants, but no one has any sympathy for the guy who supposedly has the money. Whereas some deadbeat guy who's hedging on his child support payments but can afford two packs of smokes a day, and has a healthy supply of empty beer and liquor cans/bottles in his house gets sympathy from a judge when it comes to not paying his rent. I mean my mom never had to deal with anything like that when it came to the last renter she had after my dad passed away and the guy no longer had any fear that the ever living you know what could be kicked out of him if he acted like a total ######.

Well of course it's not a one way street.

Let's just say that the existence of landlord ######s and tenant ######s probably have nothing to do with each other.

[hmmhmmcamo]

Originally Posted by Shazam

What does my having good references have to do with landlords? If landlords won't fix stuff, what's my recourse?

Good landlords (who fix things) look for good people with good references.

Lease agreements notwithstanding, there's a cost to move.

I didn't say there wasn't a cost to moving, but renting makes it a lot easier and cheaper to do it if the situation arises.

Rental properties are also mortgaged, so if you believe interest rates are going up, this will also affect rental rates. If you believe that the rental market is competitive, then this will also raise rental rates even for properties that aren't mortgaged anymore.

I'm going to get flamed for this but here goes...the amount of rent that can be charged has more to do with local income levels than current property values. If not, rental rates would have shot through the atmosphere too, but that hasn't happened.