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Investors buying 20 houses on 50 year loans
Investors buying 20 houses on 50 year loans
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COVID and the housing market
- Thread starter mimico_polak
- Start date
I would do the same if I had the option. 50 year mortgage? Sign me up!^
Investors buying 20 houses on 50 year loans
There's a word for that: "rent".
50 year fixed rent is not a bad program. The problem with conventional rent is you are always 61 days away from a kick in the nuts.
Nah. 50 years and the place is yours. Rent for 50 years and hope the landlord doesn’t toss you out, raise your rent, or screw around with your unit.
I’ll take a 50 year mortgage over 50 year rental.
And of course if you’re good with your money you can drop that 50 down to 30 quick enough.
Agree on the first few paragraphs. Not sure on the third paragraph. That depends on the interest rate. The first decade may only pay off a few percent of principal unless you really crank up the payments. My guess is if you are pulling a 50 year mortgage, most will be at the bleeding edge of affordability with mandatory payments.
I'm standing by my statement.
On such a long amortization schedule, you are renting money from the bank instead of renting a place from a landlord for a long, long while. Much more lucrative places to put that money for that investing timeline.
As for being 61 days from being kicked out, how often does that happen? Ask that question to someone who rents, not someone who owns and fears the worst after reading worst case stories on the news.
On such a long amortization schedule, you are renting money from the bank instead of renting a place from a landlord for a long, long while. Much more lucrative places to put that money for that investing timeline.
As for being 61 days from being kicked out, how often does that happen? Ask that question to someone who rents, not someone who owns and fears the worst after reading worst case stories on the news.
I personally always get the longest term and crank the payments as if I had a shorter term. Poop happens and if it does I like my cash flow obligations to be minimized.
Agreed. But you need to be disciplined to take advantage and invest the difference between the rent and buy scenarios.
Plenty would take the ‘savings’ and blow them on other fun things instead of invest.
There is no right answer. I just know if I had a 50 year mortgage option today….I’d be buying a very nice house compared to mine.
I agree with this as well.
But another benefit of not being locked into a mortgage interest payment schedule is that you can choose to rebalance the portfolio and re-allocate your assets periodically. And maybe if you want to include massively depreciating assets like motorcycles in your portfolio, then that's your prerogative.
Because you're not house rich, yet cash poor.
This is a good article: Should You Rent or Buy?
Real estate isn't the only thing that appreciates. A rising tide lifts all ships. Most asset classes rise in tandem in a booming economy. Including stocks.
A HELOC is an example of an asset-backed loan.
Another example of an asset-backed loan is buying equities on margin.
People seem think RE is a unique type of investment. It's just like any other asset class out there, governed by the same rules for appreciation and leverage.
Only big benefit is the non-taxable cap gains for a primary residence, which can be offset by the much larger growth potential of equities. And that benefit becomes a non-issue for buy-and-hold investors who only collect dividends. Then a whole new tax benefit plays into their hands - Dividend Tax Credit which lets you claim $50K tax-free dividend income per person per year. So a couple is allowed to claim the first $100K of dividend income tax free every year.
This message brought to you by a homeowner for 13 years, and then a renter for the next 10. I'm in a position to see the benefits and drawbacks of both owning and renting.
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I know people that is has happened to. As for how often, I suspect that is correlated to length of time a renter has been at a property. In ontario, the longer a renter has been somewhere, the further the rent they are paying has diverged from market rent and carrying costs for the property at current market value. If a renter moves every two years, I expect it happens rarely as their payments are closely tracking market rent. Now, if a renter wanted to trade money for stability, they could allow their rent to track market prices instead of initial price plus yearly escalation factor. I dont know of anyone that does that.
My brother has rented a place for about two years. Property value has roughly doubled. His landlord bought it as an investment and has no real desire to be a landlord. Landlord seems like a decent guy but if he decides to cash out his investment, I see very little chance of my brother surviving the ownership change without a big rent increase.
The longer terms like 50 years will drive up prices IMO as the monthly costs go down. That means the down payments also go up with price so I am not sure if it solves the problem or actually makes it worse....
For us here, maybe we need to take a good hard look at revitalizing depressed communities. Lots of places in Canada and even Ontario where 200K still gets you a decent detached home (some even under 100K), they are cheap because people are leaving....
For us here, maybe we need to take a good hard look at revitalizing depressed communities. Lots of places in Canada and even Ontario where 200K still gets you a decent detached home (some even under 100K), they are cheap because people are leaving....
If WFH is here to stay permanently, and the infrastructure gets built for a proper transit commute this may help out a lot of depressed communities.
But I’d say most people wouldn’t want to commute a long way that entails.
Chicken and the egg….bring jobs to the community so people come, or bring people to the community to build a local job market.
But I’d say most people wouldn’t want to commute a long way that entails.
Chicken and the egg….bring jobs to the community so people come, or bring people to the community to build a local job market.
If you get evicted, then you move.
There are hundreds of things that can also drive a homeowner out of their house, from fires, ground erosion, toxic chemicals, etc. Worrying about things that are not in your control has never stopped someone from buying, it shouldn't stop someone from renting either.
If we got evicted, we could use the opportunity to find a place with a (much) bigger garage. Also somewhere closer to the ski hill. This kind of mobility and freedom isn't as easy for someone who has bought a home.
Some of us aren't tied to a place, or heck, even a country.
It's not a big deal.
You're coming from a position of access to money. Most renters aren't. A lateral move for my brother would be 30 to 50% more rent. Realisitically, he would need to downsize to keep rent similar. For those that have rented for decades, the situation is much worse and they are often looking at changing cities to try to maintain housing. Even in Barrie, seniors are being driven out and to find affordable rent are west of Angus. No transit available there so everything becomes harder as a previous walk to a grocery store is now a taxi ride.
Friend of ours has three kids and the divorce agreement has location/distance limits. She had a good deal but the house got sold, two months to find a new home ~ $1200 more per month for rent.
If access to money is an issue, then the rent vs own debate isn't even on the table then, especially with today's prices.
If access to money is an issue, then this discussion is less of a "you should own instead of rent" and more of a "sorry, sucks to be you".
But if access to money *isn't* an issue, then there is a good case for renting vs owning.
Weve seen this discussion in multiple threads . And the reality is it’s different for everybody. I have two friends that rent , one lives in a nice condo downtown TO and does just fine , he banks enough that home equity is not a consideration, same with my friend in HongKong , his apt is worth about 20million , looks over the Jockey club from half way up a big hill ( the real money is at the top) , his rent is about 3 CDN monthly mortgages , but he doesn’t need to worry . Then we have my newly divorced gal pal that teaches school , makes about 80k and did not buy when they split 4 yrs ago. She could have but the Oakville market has eclipsed her. Not now , maybe never . Everyone gets a different opportunity.
Sent from my iPhone using GTAMotorcycle.com
Sent from my iPhone using GTAMotorcycle.com
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