My $370,909 Dream Home | Vancouver Condo Info

I’m getting settled into my new home, a newly renovated duplex in a great neighbourhood near recreation and transit. It’s got all the features I’ve been looking for – 3 bedrooms, 1 1/2 bathrooms, stainless steel appliances, fireplace, garage, you name it.

But the best thing about it is the price. I got it for a one-time payment of $370,909 – including all future taxes and maintenance.

Now wait a minute you say, nobody can get a deal like that. Well here’s how. I figure I get an after tax cash yield of about 5.5% on my investments. If I set aside $370,909 worth of my investments, I get $1700/month, which is what I pay for rent. My name is on my brokerage statement rather than on the deed, but I get the same shelter.

So what if I bought a similar property? I’d have to pay taxes, maintenance and insurance. Say these total $5K/year. Again using the 5.5% yield I’d have to set aside $90,909 more of my investments to pay these. So I figure the property would be a decent buy at $280,000.

Which gives a price/rent of 165. I’m quite willing to wait for that to buy – in the meantime I’m doing just fine.

patriotz

(hat tip to M-)

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9 years ago

@Russian Bear:

Yes, it's a portfolio of preferred shares and income trusts. I did not describe the portfolio in the original post because the point was not to give investment advice but to show that RE is grossly overpriced compared to stock market investments of comparable risk. In any case I think readers who have that kind of money would either be versed in investing or have hired someone who is.

I am not an active trader and I only spend a few hours a month checking out my holdings. When things get interesting like 2 years ago I spend more time as that's when it pays off. But the value of my time is insignificant compared to the portfolio value and monthly distributions.

Russian Bear

Patriotz, I am an accountant, so I do know about dividend tax credits. You were not mentioning dividends in your original post and yield could be in different forms, not just dividends. So anyway, now the question is how do you build completely diversified portfolio that yields 5.5% after tax? It is fair you provided 3 examples with above target yield, but you can't say that investing in 3-5 stock is good idea from diversification point of view. You need to be in what, 10-20 stock across the entire spectrum. I am not saying you are wrong, what I am saying is it would take considerable amount of effort/time for an average person to manage such a portfolio and if we include value of time in your calculation then we would get somewhat different result.

1.9milCrackHouse

@Dave: Your going to throw them in jail? That is ridiculous. I bet most of the ones in the photos have no criminal record and haven't really done much to break the law in the past other than a speeding ticket or two. Lets fill our jails with youths who got a little carried away. For the anarchists who regularily cause problems, this makes sense, but for your first time offender, forget it.

@Mike:

I didn't say guaranteed. I gave some examples earlier in the thread. Note that's not a recommendation for anyone else to follow my investment strategy.

Mike

Where do you get a (guaranteed) 5.5% yield (assume that's a real yield) on your investments? I'd really like to know.

@OWG:

If you want to have fixed or near fixed returns you would need to go with either long term bonds or preferred shared that typically cannot deliver more then 5.5-6% returns before tax.

You like another poster are apparently unaware of the low marginal tax rates on dividend income.

Note also that income trusts now pay dividend income. My largest holding is PGF, check out the yield on that.

Patiently Waiting

Try as they might, these kids can't come close to the speculators in ruining this city.

@Old guy: Youth unemployment/underemployment. Lots of time to drink, do drugs, and resent TPTB.

Anonymous

They shouldn’t have closed the liquor stores. All the morons would have got drunk out of their heads and passed out and everybody else would have just gone home.

Keeping An Eye On Th

"Given such developments, one cannot totally discount the possibility that some pockets of the Canadian housing market are taking on characteristics of financial asset markets, where expectations can dominate the underlying forces of supply and demand," he said.

This is how Carney says , the speculators, have taken over the housing market, and Vancouver is in a bubble, but for some strange reason doesn't
have the language skills to be clear.

He reminds me of Greenspan, or some of our local realtors

Raz

Tonight we witness the "future leaders" of the city. Best place on earth! Come and buy buy buy!

Extremely rich Van h

@Anonymous:

Your mentality is like those rioters.

Despite Canuck lost the game but Chinese money will keep flowing to the city;Vancouver Real Estate will alway be vibrantly surging ahead of Boston,a third world American city.

Cam Good better thank god for the censorship in China. If those wealthy Asians ever got wind of this riot they'd be dumping their crack shacks in a heart beat!

Mayor Gregor Roberts

To COV citizens

Yes its a riot but a GREEN one.

Much less GHG emitted than last one.

People have the right to freedom of expression (foam at mouth)

Next Riot in 2031…we will harness the energy of rioters, attach a kinetic energy storage device, and permits.

Rioters without permits will be fined.

Remember…Luongo for Vision Councillor !!!

Mayor moonbeam’s riot press release just came out and he managed to work in the phrase “world class city” into why riots shouldn’t happen in Vancouver. Ha, ha, the irony of it all is that riots occur all the time in world class cities; they don’t happen it places like Yale and Spuzzum. What a moron!

Eddie

Wow. Does this really happen in the "Best Place On Earth"?

YLTN @ Work

Making headlines around the world! What a world class city we are…a great safe place for your investment; better have fire insurance

Old guy

Ok folks I think this is about more than just a hockey game.

There is a lot of frustration in this City about wealth disparity and how some people are cut out of opportunity or prospects, while others live in the lap of luxury.

Maybe I am out in left base on this, and I do not think this is excusable at all, however I do think that there is more to this that just alcohol and bravado.

Anyone agree or disagree?