What if your parents bought 1 more property 25 years ago?

[AndreiAngelkovski]

Hey Fellow REIN Investors,

I heard Russell Westcott mention this at a recent REIN workshop and it struck a cord within me.



How would have this impacted your life today?

In 1986 ` 25 years ago ` The average price in Toronto was $138,000. In 2011 ` The average price in Toronto was $460,000. That`s an increase of $322,000!!! Or 233% Increase in 25 years OR 4.95% per year approximately.

Someone had to pay that mortgage right? IF YOU RENTED IT OUT`the tenants would have paid for that mortgage. Today, your parents would have had a $460,000 property ` FREE AND CLEAR of any mortgage.


SO AGAIN I ASK YOU`what if your parents bought 1 more property 25 years ago? How would have this impacted your life today? If you see value in this`then I ask you one more question:


If you buy 1 more property today at $460,000`How will this impact your family in 25 years from now?



I did a video blog on this topic: Looking At Past House Values

 

[Rickson9]

I wish my parents would have bought $138k in Berkshire Hathaway stock 25 years ago instead of a house; then I would have a little over $10m today.



We can play this "what if" game 'til the cows come home. Just sayin...

 

[Thomas Beyer]

Let's assume the parents did not have 138,000 to invest then, but maybe 10% of it. So the comparison would be between $13,800 of Berkshire Hathaway shares and a house with 10% down. What if they had bought Nortel shares instead ?



I think a well located rental property is a time tested investment, 25 years ago, 10 years ago, today and also 10 or 30 years from now as there will always be a rental demand for well located, adequately maintained and appropriately priced properties, in any economy in any city of this crowded planet.

 

[Rickson9]

[quote user=ThomasBeyer]Let's assume the parents did not have 138,000 to invest then, but maybe 10% of it. So the comparison would be between $13,800 of Berkshire Hathaway shares and a house with 10% down. What if they had bought Nortel shares instead ?


What if, what if, what if we bought a home around the casinos in Niagara Falls using $13,800 down that turned into a shack to be used by local prostitutes and drug dealers?



Let's see, when I was born, Berkshire Hathaway was $40 per share so $13,800 would buy me 345 shares. Today, these shares would be worth $4.1m. That would buy me a nice home! Wow, that was educational.



We can play the "what if" game all day long can't we? Just sayin...



[quote user=ThomasBeyer]I think a well located rental property is a time tested investment, 25 years ago, 10 years ago, today and also 10 or 30 years from now as there will always be a rental demand for well located, adequately maintained and appropriately priced properties, in any economy in any city of this crowded planet.




I think a well run business is a time tested investment, 25 years ago, 10 years ago, today and also 10 or 30 years from now as there will always be consumer demand for well produced, adequately marketed and appropriately priced goods and services, in any economy in any city of this crowded planet.



See what I did there?



The OP is pointless and is simply unabashed salesmanship.

 

[ChrisDavies]

Speaking of the Oracle from Omaha, here's a video of him on CNBC talking about buying single family homes.



http://www.youtube.com/watch?v=KMvQPeBAesw

 

[RedlineBrett]

[quote user=ChrisDavies]Speaking of the Oracle from Omaha, here's a video of him on CNBC talking about buying single family homes.






Great link thanks for sharing Chris.

 

[kir]

So in the next 25 years, where is the better appreciation? US or Canada?





Kir.

 

[Rickson9]

I've put my money on the US. Literally. You can read my 2012 interviews in Moneysense magazine or on my website at www.ticonline.com (near the bottom)

 

[RealtorDave]

Rickson I don't know if its intentional, but you make me laugh. I like your advice too.

 

[Thomas Beyer]

[quote user=kir]So in the next 25 years, where is the better appreciation? US or Canada? Kir. US has more debt per capita or per GDP $ than Canada. It also has far more regulations and red tape and a 3 tier government. Lawsuits makes operating a business more costly, too. That gives Canada an edge.



Having said that the US is bigger, it controls the world currency, has far more military power, is more diversified than Canada, and as a major major issue, has a far higher birthrate per female than Canada, about 2.1 vs. Canada about 1.5 or so.



Population growth is relevant for real estate value growth. That's why markets like Japan or many European rel estate markets have flat-lined or declined for years !!




Both will do well, but I think Canada, especially W-Canada will do better than both central Canada or US. But then, you are not buying an average property in " the US " but a specific one in a specific neighborhood of a city with wide variety of growth rates, especially over 25 years.



To reiterate an earlier comment here in this thread, buying a moderately levered house with ample cash-flow in a decent location ( and that excludes the dumpy party of most cities or weak, no activity cities ) and renting it for 25 years is a great idea, and the odds are higher to make money than picking a single stock, but of course some stocks will outperform your house.



Some people prefer the stock market as it is far less work, and you can get in and out quickly, but you have far less control than a rental property.

 

[bizaro86]

If my parents had bought a second house ~25 years ago (late 1980s) it's highly likely they would have gone bankrupt in the subsequent recession. Rents and prices both declined precipitously in Calgary at that time, and they wouldn't have been able to make two sets of payments on their employment incomes.



Two sides to every coin.



Regards,



Michael

 

[housingrental]

Good post Michael!

 

[bizaro86]

[quote user=housingrental]Good post Michael!



Thanks! Hindsight is a tough one. The house (personal residence) they did buy around that time for $101k is now worth 550-600k, so owning 2 of them would be a big benefit. But you have to get through the bad times first. It's hard to know what would have happened if someone took a different path.



Regards,



Michael

 

[Rickson9]

I want to invest in Canadian RE. I can't wait to invest in Canadian RE. I will invest in Canadian RE. After Canadian RE melts down you'll see me shopping and writing about it. I'm not picky, I'll look at any stock or RE market after it melts down!




Great post Michael!

 

[Thomas Beyer]

[quote user=Rickson9]After Canadian RE melts down you'll see me shopping and writing about it.
Enlighten us all where AND WHY you see this to happen in Canada ?



US real estate melted down in many (but not all) markets due to

a) excessive lending due to greed by borrowers,

b) excessive lending due to legislation allowing interest deductability

c) excessive lending due to legislation forcing banks to lend to sub-par borrowers

d) excessive lending due to securitization of loans to 3rd parties with no risks to lenders,

e) high government debt on the county, state and federal level

f) high and fast growing unemployment rate



I see NONE of this in Canada, except f) and e) in select sub-markets



Yes, some markets are overvalued and will correct downwards somewhat, say GTA or some smaller communities with major job losses, maybe 15-20% in some asset types.



A "meltdown" to me is a 35 to 50% value correction, and I do not see that anywhere. Where do you see that .. AND WHY .. or under what scenario ?

 

[Rickson9]

[quote user=ThomasBeyer]Enlighten us all where AND WHY you see this to happen in Canada ?


I've never claimed to know where and why a market melts down.



I don't care to know where and why a market melts down.



Thinking about where and why a market melts down is a waste of my time.



All I know is that when a melt down happens I'll be shopping and writing about it.



I pray every day for a melt down in Canadian RE so that I can shop locally again.



I hope that makes my perspective more clear. If not, I wrote it again on my web site at http://www.ticonline.com under the heading "CREDIT DOWNGRADE? WHO CARES?"

 

[RedlineBrett]

[quote user=ThomasBeyer]Enlighten us all where AND WHY you see this to happen in Canada ?


Looks like it's easier to promote fear and uncertainty in an attempt to drive traffic to an external site rather than back up said assertions with any real evidence. Rickson is starting to look like Garth Turner 2.0.

 

[Rickson9]

There is no such thing as 'evidence' about the future. Just puttin it out there.

 

[RedlineBrett]

[quote user=Rickson9]There is no such thing as 'evidence' about the future. Just puttin it out there.




Well there's definitely evidence of you claiming your plans to invest in Canada when it 'melts down', and a lack thereof in terms of any explanation for why you think that's ever going to happen.



I'm planning on getting my lenders to forgive all of my mortgages, and then my tenants will agree to pay me twice as much. Just puttin that out there.

 

[RealtorDave]

[quote user=RedlineBrett][quote user=Rickson9]There is no such thing as 'evidence' about the future. Just puttin it out there.




Well there's definitely evidence of you claiming your plans to invest in Canada when it 'melts down', and a lack thereof in terms of any explanation for why you think that's ever going to happen.








He wants a meltdown because that's how you make money. I don't believe he's saying there's going to be a meltdown in Canada.