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July 7th, 2010 at 6:40 pm
@Gordon C.:
Does that mean the raging debate over yield is finished?
I was hoping you guys would apply it to blueberries when you had a moment.
July 7th, 2010 at 6:04 pm
Here’s the prognostication first hand;
http://www.youtube.com/watch?v=agFe6h2GvRU
July 7th, 2010 at 6:00 pm
Nice numbers paulb.
Since it can take a couple of weeks for sales to get recorded, it shouldn’t take long for the pre-approvals to run out….and sales to dry up.
July 7th, 2010 at 5:38 pm
@Gordon C.: “Why attack the person.” Bridgeman attacked your words, not your person. Go read it again.
In contrast, you attacked me and others personally.
Look in the mirror. In my experience, most people around here will respond respectfully when they are treated with respect. Often, your posts dripped with condescension. That typically doesn’t go down well.
July 7th, 2010 at 5:32 pm
There’s nothing complex about real estate at all.
You do not need a PHD to buy and sell real estate.
All you have to be is of legal age to sign a contract.
And of course, own a calculator that has i, r and v on it.
And a book of Buffet quotes.
It’s difficult to contradict the myths of real estate, that are so entrenched in so many people, that they will never accept a different view. I no longer wish to be the lone wolf.
Thanks to those who offered respectful contrary arguments to the many posts that I have made. I may not have agreed with them, but I respected them and they made me rethink and question the basic understanding of real estate.
I am now, and forever more DELETED.
July 7th, 2010 at 5:14 pm
New Listings 254
Price Changes 130
Sold Listings 125
Inventory resumes it climb
18,084
July 7th, 2010 at 5:11 pm
@realpaul:
It was both…if you think 30 year fixed mortgages at 4.75% had nothing to do with it, you are crazy!!
The Fed directed 1.25T of the QE program to buying mortgaged backed securities. The Treasury handed out $8,000 tax credits and the FHA issued the mortgages.
This is why many suggest the Fed has no independence anymore and requires an audit. I couldn’t agree more.
Chip, agreed. The homebuyer tax credit brought forward all sorts of buyers, many of whom would have bought anyway at prices supported by fundamentals.
July 7th, 2010 at 5:07 pm
Mr.Paul, have we got any fresh numbers today?
Thanks in advance
July 7th, 2010 at 5:00 pm
@Mike:
“Bank credit is contracting. You are right. Have you considered that part of this might be because businesses and individuals don’t want to borrow?”
Well, that’s exactly what I was considering. Despite a massive expansion of the US monetary base — which you argue will prevent a crash in Canada — in the US it did not lead to increased borrowing and home purchases.
I haven’t seen the correlation between the cash grant and home purchases, but I don’t think it would any different than cash for clunkers: ie, the govt going deeper into the red for the sole purpose of stealing some demand from the future.
July 7th, 2010 at 4:54 pm
‘Real Estate Math is more complex’ Bwahahahahahahahahahahaha ad perpetuum.
Here it is, the secret formula……drum roll please….. ‘I’ over ‘R’ equals ‘V’. Theres nothing complex about it.
July 7th, 2010 at 4:53 pm
@Anonymous:
BC Assessment 2010 value
TH7: $471,000
TH20: $480,000
Asking price
TH7: $649,000
TH20: $548,000
Purchase price
TH7: $500,000 in 2008
TH20: $261,800 in 2000
Sellers who bought at peak prices are competing with those who bought pre-bubble. The latter can easily lower their asking prices and still walk away with a nice profit.
July 7th, 2010 at 4:46 pm
Got off the phone w/ my dad who has his rental property for sale … some aggressive Korean lady low-balled him & wants to take possession of it no later than Aug 1st (it’s currently rented out) … she then made it no secret that she wants to convert the place (a 530 sqft 1BR) into a TWO BEDROOM to rent out to FOUR Korean students!
His realtor (who is actually a real nice guy, knows his stuff & has already made his fortune over his 25 years in the business) makes no bones about letting him know this market is tanking BAD!
My dad had also mentioned that this has happened about 3 times in Vancouver during his lifetime. In 1981, our house in North Delta was pretty much brand new & appraised at $250k … rates went up to 28% & people were walking away from their places … parents got divorced & wound up selling it for $87k …
Can it REALLY not happen again?!? There were rich asians back then too!
July 7th, 2010 at 4:46 pm
#81 Chip. It was the $8500 cash grant the US government handed out, not doubling the money supply that saw buyers coming back into the market. When the free cash giveaway program ended, the number of sales crashed within days of the door slamming shut and has continued to fall. The banks have the money to lend, they just don’t have as many people who qualify to recieve it under the new more stringent lending guidelines.
July 7th, 2010 at 4:38 pm
@Girlbear:
BC Assessment 2010 value
PH3: $455,000
PH2: $397,000
Asking price
PH3: $439,000
PH2: $494,900
Purchase price
PH3: $280,000 in 2003
PH2: $477,500 in 2007
Take away the realtor commission and the owners of PH2 are probably already looking at a loss.
July 7th, 2010 at 4:35 pm
Bridgeman, I don’t think that was a fair comment.
Why attack the person.
July 7th, 2010 at 4:33 pm
@chip:
Yes. Home prices continued to fall, because as I’ve said, the authorities did not imagine a crashing scenario. Policies have some lag time. It often takes more than 6 months for new policy to have an impact. Think about tax cuts. It takes a good year before the benefits cycle back into the economy.
I believe that Carney and Flaherty are monitoring the situation closely and will continue to do so.
Bank credit is contracting. You are right. Have you considered that part of this might be because businesses and individuals don’t want to borrow? US Corporates are awash in cash. They have all this money that they won’t invest. They won’t invest it because they don’t trust Obama, they fear tax hikes and misguided regulation.
More than anything, the smart money knows that the way the global economy is structured is unsustainable. Small businesses realize that the bailouts and resulting debt have done nothing to benefit communities, employers and employees.
All they’ve done is kicked the can down the road and prevented a much needed restructuring of the finance markets.
Banks will continue to hoard the excess reserves. The only other way to circulate the money is for the government to spend it.
We have a choice between a painful restructuring where educated creditors take a haircut or more and more socialism, taxes and government intrusion.
July 7th, 2010 at 4:21 pm
@Anonymous:
If a big crash happens in Canada and there are lots of foreclosures, who loses money on those mortgages? Banks, Government, Insurance companies???
…..
Your logic makes sense but your premise is faulty. There can me a massive price correction with very few foreclosures. My folks paid off their house 10 years ago. They’ll be pissed if there’s a huge drop in prices, but if there is, they’re not going out on the street. Neither will almost all other Canadian who will just go on paying their mortgage under the assumption that there will be a rebound (in fact, all the usual suspects – including the Government, will be telling them that there will be a rebound and that there’s nothing to worry about). Some will hurt – only those that have to sell but that will be a very small minority and won’t warrant any Gov bailout. Do you really think that the Gov is going to risk the ire of voters across Canada riding in to rescue a few underwater fools in Vancouver and Toronto? Not the current Gov! Give your head a shake!
July 7th, 2010 at 4:16 pm
@Anonymous: “These two listings look about the same with a 100k difference in price:
http://www.realtor.ca/property…..Id=9539158
http://www.realtor.ca/property…..Id=9539104”
Well, the $100k more expensive one is only $660/month in strata fees, whereas I’d pay an extra $13/month on the cheaper suite. I’d better get the more expensive one.
July 7th, 2010 at 4:16 pm
@specialfx3000: This sounds exactly like a letter send to and posted on the Greater Fool site recently. A female blog reader send a letter saying she dropped the price on her condo from $498K to $439K to match the lowest listed condo in her area after no one showed up for an open house.
July 7th, 2010 at 4:12 pm
@Mike:
Actually US prices continued to fall for another 6 months after the doubling of money supply, then recovered slightly and plateaued. And I don’t think you can attribute this solely to the money supply when there were other factors in play such as the home purchase rebate and perhaps a simple floor in terms of affordability.
And finally, while the government has the printing presses on overtime actual bank lending has been falling at the fastest pace in history.
July 7th, 2010 at 4:10 pm
“But this is evidence against Gordon’s claim that real estate is SO HARD relative to high finance.”
We park our cars in the same garage then. Gordon reminds me of those “doctors” that drop out of medical school but still illegally practice in some florida neighborhood that caters to immigrants.
“I know what I am doing, now hand me that spatula, stat!”
July 7th, 2010 at 4:07 pm
“If you did that, then you would grossly over or under value those assets.
Eventually, those asset might sell. Then the person who lent the money, wants some answers to why the hell they hired you and who is going to pay for their loss.”
That made absolutely no sense, and I award you no points. We are all dumber for having read that.
July 7th, 2010 at 4:04 pm
You brainiac bears should help me find a new rental condo! I’m taking your advice and selling our place. Now instead of spending $550K on a two bedroom, two bathroom condo in downtown Vancouver or in Kits we are looking to rent. Thinking $2200 would get us a great place but there doesn’t seem to be all of the desperate, by accident landlords I keep hearing about on this blog. At 2200 your looking at a cap rate in the high 3′s after expenses.
July 7th, 2010 at 4:03 pm
Gordon C:
Well, price is what you pay, value is what you get. Or in other words, you can pay a twenty pound price for a ten pound pig, but all you gonna get is a ten pound pig.
The intrinsic value of an asset as an investment is the sum total of all future cash flows (income) discounted to present value. At the end of the day, the total you receive in income divided by price plus any capital gains appreciation (realized at the time of sale) is your yield, or what you make.
If you are looking at Vancouver real estate in the aggregate from an investment perspective, at first blush, recent capital gains appreciation plus added to the small amount of rent you get (small relative to mortgage, tax, and maintenance costs) has in the last 5 years produced a nice yield, for those able to buy low and sell high.
To steal another Buffett phrase, we are currently Cinderella dancing in a room without a clock. We simply dont know when or if the clock has struck midnight. (midnight being when capital gains appreciation stops and people realize they are cash flow negative, and the whole thing crashes)
So you can use a lot of fancy words and a lot of fancy formulas to evaluate assets and projects, but unless the sum total of money going in exceeds the sum total of money going out (CAPEX, interest payments and principal payments, maintenance, labor, etc.) you are losing money. It is all talk until the check clears, and you have a positive balance in the account. Sometimes that takes years to develop, another downside to leverage- it clouds the picture of a things true financial health, as it does in Vancouver.
July 7th, 2010 at 4:02 pm
@chip:
Exactly. It took that hocket stick spike to put a floor in house prices (coupled with all sorts of other policies)…
The US barely saw any consumer price inflation despite that massive expansion in the money supply.
House prices in most countries, especially Canada, are fundamentally overvalued when measured against rents and incomes.
If the government tries to counter falling house prices with inflation, it may put a floor in home prices. They will fall significantly when measured against Gold and foreign currencies.
I also do think Canada has more limited monetary options versus the United States. The USD is the reserve currency. I doubt the bond markets will permit the same kind of response in Canada.
Interesting times!!
July 7th, 2010 at 4:02 pm
If you did that, then you would grossly over or under value those assets.
Eventually, those asset might sell. Then the person who lent the money, wants some answers to why the hell they hired you and who is going to pay for their loss.
July 7th, 2010 at 3:56 pm
Well bear ask yourself this question. If stimulus worked why so much worry by stimulus proponent about stimulus program ending? Goal of “stimulus” was for economy to recover and be self sustaining yes? Anyone stimulus fan have answer for this interesting paradox of problems?
July 7th, 2010 at 3:51 pm
@bridgeman: Yes. That’s why I wrote “I’ve heard the argument that finance is too complicated for its own good, but never that it is not complicated at all. ”
You are making the argument that finance is too complicated for its own good. I am quite sympathetic to that argument.
But this is evidence against Gordon’s claim that real estate is SO HARD relative to high finance.
July 7th, 2010 at 3:46 pm
“I’ve heard the argument that finance is too complicated for its own good, but never that it is not complicated at all. I guess Wall Street hires all those PhD physicists and statisticians not to design derivatives, but to wash the windows and get coffee?”
To be fair, it was the application, nay the misguided application of incorrect formulas to derivatives and the securitization of mortgages that served as the fuel production for the sub prime bomb that nearly brought down the entire world economy. It was actually a Chinese born, Canadian University trained PhD who developed the formula that was used to justify the faulty premise that created the whole house of cards- the idea that a securitized tranche of collateralized debt obligations consisting of almost all subprime mortgages could contain zero risk. This was based on the formula developed by the aforementioned genius. (yes, once again, blame canada)
Now I am such a bear that people have begun to use my name in the famous rhetorical question – “Does so-and-so sh*t in the woods?” but surely you cant think that the use of those finance morons was a net positive for the world economy?
As Warren Buffett always says: “when doing asset valuation, avoid formulas with greek letters in them”
Basically what I am saying is we would all be much better off if we hired those guys to JUST wash windows and get coffee.
July 7th, 2010 at 3:46 pm
@Gordon C.: I don’t know much about any of those assets. But to each of them I would take the same principle. What is the income the asset spits off? What is the price of the asset? Dividing one by the other gives me the yield. That’s a good place to start, I think.
July 7th, 2010 at 3:40 pm
I didn’t say that. You inferred it.
The world of real estate doesn’t start and stop with houses. Which is more complicated estimating a price for a stock offering and derivativer or valuing West Edmonton Mall leases. How about a Saskatchewan pot ash mine, one mile underground complete with machinery and equipment, How about a chain of hotels in Cambodia? How about a strip of highway, 8 miles long and two feet wide? How about the value of the natural gas line leases from Alberta to the USA. How about air rights and water lots in Vancouver? What about Vancouver Airport itself? How about Native land claims?
A little apple to apple
July 7th, 2010 at 3:39 pm
@specialfx3000:
That listing sounds an awful lot like blog dog Jane (greaterfool post June 4/5). So Garth’s advice has reduced all those condos by 60k. Thanks Garth!
July 7th, 2010 at 3:37 pm
@buff_butler: Doubling the monitary base is meaningless if the money does not circulate
If you put created money in a vault that doesn’t circulate then yes it doesn’t do much. But there are other ways to get money circulating. If the government really wanted to inflate, they would a la throwing piles of $20 bills from helicopters. It just so happens they don’t want to because rising interest rates that inevitably result would crush any chance of an economic recovery.
Bernanke gave his famous “helicopter” speech a few years’ back on how to inflate away a deflationary trap. He’s not doing it now because he finally figured out the cure is worse than the disease.
July 7th, 2010 at 3:27 pm
These two listings look about the same with a 100k difference in price:
http://www.realtor.ca/property.....Id=9539158
http://www.realtor.ca/property.....Id=9539104
July 7th, 2010 at 3:25 pm
“What it is, is a calculation of an annual rate of return, assuming no costs to maintain and no financing.”
Yes. We agree. Precisely. That’s why it’s a useful calculation. You then can subtract off your costs and compare to the price of financing and you’re good to go.
Gross yield = 8%. Non-financing costs (maintenance, prop taxes, etc) 3%. Net Yield = 5%. If cost of financing is 4%, you’re good. If cost of financing is 6%, stay away. Easy peasy.
July 7th, 2010 at 3:22 pm
@Gordon C.: “The problem with using math from the finance world, is that real estate is more complex.”
THAT is funny.
I’ve heard the argument that finance is too complicated for its own good, but never that it is not complicated at all. I guess Wall Street hires all those PhD physicists and statisticians not to design derivatives, but to wash the windows and get coffee?
Of course, the talents of Cameron Muir and all those 6-week course Realtors are working on a higher plane of intellectual existence than the Wall Streeters.
Again, it’s not that wall streeters are infallible. They are. But you’d have to be fairly ill-informed to argue that what they do is less complex than analyzing a boring asset like residential real estate.
July 7th, 2010 at 3:21 pm
@Mike: “The government can create all the inflation it wants. A few strokes of a computer key and they’ve doubled the monetary base. ”
Doubling the monitary base is meaningless if the money does not circulate; vilocity of money would simply fall by 1/2 and inflation would be the same. This is why dispite the printing in the US they are still experiencing deflation.
There have to be entry points that the govnt would implement such as public spending programs. Otherwise, it just sits on the banks balance sheet and gets gobbled up by the Canadian equivalent of the overnight lending mantience cycle. There are ways they can raise inflationary targets by combining monitary and fiscal strategies but BOC/Govnt would probably cry.
July 7th, 2010 at 3:11 pm
Well, I actually I can tell you that it is not a yield rate for real estate. What it is, is a calculation of an annual rate of return, assuming no costs to maintain and no financing. Oh, I suppose its fine when talking about bonds on a very elementary level of understanding. On assets that you don’t have to repair or mortgage, but this blog is not about bonds but real estate.
So, I suppose you could say that your home is giving you a 6% return. But is that based on your purchase price? The properties current price. Including or excluding expenses? over the last year or the 18 months you have owned it?
Would that be the same yield as someone else could get? Is it rational to say that since you get a 6% return, so will I?
The problem with using math from the finance world, is that real estate is more complex. For example, do you have anything in the bond market that has mortgage paydown in the calculations? All your calculations are based on simple compound interest tables. Canadian mortgages are not, giving you an effective interest rate that is not the same as what a car loan or an American mortgage would be.
July 7th, 2010 at 3:08 pm
Count the reasons this crash will be steeper than 2008:
1) Rental vacancies are way up and rents are falling. I’m laughing at the slumlord who owns the house next door as he tries to rent a basement suite in a former grow-up for $900 while nearby purpose-built rental apartments go for $700-$800. I know he easily found tenants before at $900, but now he has lost a months rent and reality is just setting in. He is going to have to shave off $200+ or forget it.
2) Many more “For Lease” signs on empty buildings throughout this city. Businesses are failing and new retail space is adding to the woes. Everyone with a set of eyes can see this.
3) Falling incomes for workers. I was laid off from eBay last year. Some of my former co-workers are accepting jobs at 25% less pay as their EI is nearing an end. Others, like myself, are retraining. And many more have gone home to Winnipeg or Cape Breton or Hong Kong.
and
4) The Owelympics have come and gone. No anticipation now. Just disappointment.
July 7th, 2010 at 3:06 pm
@Mike:
“The government can create all the inflation it wants. A few strokes of a computer key and they’ve doubled the monetary base.”
True (see graph), but not quite seeing the impact on US house prices you suggest.
http://www.chartingstocks.net/.....1917-2009/
July 7th, 2010 at 2:59 pm
I always read the posts that are marked “FORECLOSURE”
There something into them, worth reading
July 7th, 2010 at 2:57 pm
@Purp1: “If you asked today whether prices at 20% off would be a good deal, I’m sure the majority would say yes”
That doesn’t make it a good deal in my books. If you are stating that the direction prices will head will not be a straight line then yes I agree 100%.
“Are you talking all of Metro Vancouver or only certain segments?”
Based on the data VHB has sourced, between 2000 and now there have been more dwellings built than people who can accommodate them. Statscan shows incomes are flat to falling. So yes it’s a very big statement but also true in a very big way. It also means people thinking 20% off is a good deal can’t change the market price for very long because 1) there is significant competition and 2) they have likely already bought.
July 7th, 2010 at 2:54 pm
@patriotz:
Agreed. But if a 20% decline is not perceived as a bust, but a great buying opportunity and rates are low and jobs available, then there’s no fall in confidence right? To me that means the future includes the possibility of a rebound after a small correction. I hope I’m wrong.
So if this is true (link please), why didn’t people re-enter the market at this great buying opportunity? Maybe a decrease in the ability to pay, despite the desire? Lack of financing? Lack of employment? Lack of cash? If so, are you positive we are going to see the same thing here if prices drop 20%?
July 7th, 2010 at 2:51 pm
If a big crash happens in Canada and there are lots of foreclosures, who loses money on those mortgages? Banks, Government, Insurance companies???
July 7th, 2010 at 2:48 pm
@jesse:
Of course. And why can’t lower prices have the same effect? If you asked today whether prices at 20% off would be a good deal, I’m sure the majority would say yes (if they believed that prices were headed back up longer term). That might put some upward pressure back on prices. Of course if the mood is negative and everyone takes Patriotz’s introduction to price to income and price to rent ratio course, then maybe prices keep falling back to some sort of fundamentals. The point is you don’t know.
That’s a big statement. Are you talking all of Metro Vancouver or only certain segments?
July 7th, 2010 at 2:38 pm
Regarding what to short, just stay in cash. As house prices fall, the value of each dollar you have, priced in real estate, goes up.
July 7th, 2010 at 2:37 pm
@anonymous:
I think the government will tolerate a 20% decline in national averages. The government will largely step out of the way and allow a “correction”…
Some on this board are calling for a 60% crash in prices. This is very possible in nominal terms and very probable in real terms.
The government can create all the inflation it wants. A few strokes of a computer key and they’ve doubled the monetary base.
A 20% collapse in home prices, with today’s debt levels, will lead to fairly significant deflation and credit contraction. The government could easily increase the money supply to prop up asset prices without a significant increase in consumer prices…at least temporarily.
The government will not sit idly by and watch a crash. I wish they did, but they won’t. I also disagree with Pope. I think they have more tools than he or I can think of.
July 7th, 2010 at 2:26 pm
@Mike
I quite agree that the government does not want a housing correction. They played their hand in ’08 to prevent it. But I think that hand has been played and they are done.
(1) IMHO the biggest prop to the housing market was through the NHA MBS program by CMHC where CMHC insured roughly $300 billion in mortgage-backed bonds, effectively turning them into government bonds. A rough ballpark figure suggests this adds about $5-$8 dollars per $100 to the present value of the bond. The banks responded to this incentive by increasing mortgage lending since they were profiting roughly 5-8% with no risk. Thus the big run up in mortgage lending. Since the CMHC has wound down this program (roughly since April) mortgage lending is drying up. As goes lending so goes housing since most buyers borrow (and some quite heavily). I note that this program basically gave $15-25 billion to the mortgage lenders (and not all were big banks — I really wonder about corruption here). You can find this info on the CMHC site but you’ll have to dig into the various bond prospectus. Try 975 ones for example. I would imagine this is a bit of an accounting nightmare for the CMHC and indeed I can’t find it accounted for anywhere. Certainly not included in the $600 billion notational limit on insurance in force. And finally these MBS were exempt from the withholding tax for foreign holders (maybe why they are so popular?).
(1b) The CMHC also bought roughly $70 billion in outstanding mortgages — I’m guessing these were the Genworth ones that were only 90% guaranteed. The banks appear to be deleveraging housing.
(2) The BoC cut interest rates to near zero. This has lead to questions over the Bank’s commitment to its inflation target. But more importantly, this step has been done. Realistically, it can only be financed by higher short rates in the future. Since most mortgages have a 5 year term in Canada, this implies some risk further out and there isn’t much the Bank can do about it.
(3) QE — one could print money and the nominal value of the asset will rise. But see Hungary, Weimar, Bolivia and Zimbabwe as examples as to why the government and the Bank won’t pursue this policy.
(4) Real incomes are falling. Check the tourism and resource industries as examples. Or better yet, take a drive through the interior valleys. They are on sale because second-home buyers are disappearing and locals don’t make enough to afford the current asking prices. Seems like a good indicator of falling incomes to me. It’s hard to imagine tax revenues are not falling. So how is the government going to finance it’s current obligations and even it’s future ones? (e.g. pensions?)
On a side note, the US is in real trouble. Prices are still low even though they can get 30 year fixed mortgages at historically low rates. The US household balance sheet cannot be good. And QE 2 won’t help. After all, government debt is foregone taxes or fewer future services (think about shorter school years for instance — this increases daycare costs for parents). Both imply higher household outflows. (And 15 trillion is obviously a joke — that’s over 100% of GDP.)
So I’m not optimistic about a government bailout this time. I think those sellers that took advantage of the government’s largesse last year were smart. And @superbullboy, yes the Chinese will save the world, you’re right. Just like the Japanese before them. And the Brits and Dutch (if you’re Spanish). Oops, the Spanish are playing the Dutch and so that means super bulltime to buy homes in Spain getting loans from the Dutch while both are glued to the TV. Then if Dutch lose great time to buy in Mallorca! My bad.
July 7th, 2010 at 2:15 pm
OT: We appear to still have a problem with registration approvals. For now we’re manually approving them, so it may be anywhere from a few hours to a day for your account to become active after registration until we get this sorted out. The inconvenience is better than wading through a spam swamp.
July 7th, 2010 at 2:15 pm
@VHB: Note that I am offering a yield rate, not The Yield Rate. A yield is the rate of return on an asset, defined in some way.
It looks like a nice name to this kind of calculation I am offering is the Current Yield.
So long as you are clear on how you are defining it, I don’t care what you call it. Call it The VHB Yield for all I care. If you don’t find it a useful measure, then use your own. But you can’t tell me that I can’t call it a yield, ’cause that’s what it is.
I think it is useful because it tells us what percentage return there is on the value of the asset. If you are getting, say, 8% yield and your non-interest costs are 3% of value, then your net yield is 5%. Compare that to your cost of capital and figure out if it is worth the risk. That’s how I would evaluate a real estate investment opportunity, anyway.