Rental property

Personally, I think residential real estate is great if it your house and your are living in it, but it makes a pretty poor investment for a number of reasons. First, if you already own your own house, you will doubling your exposure to the residential real estate market and unless you have a "large" portfolio ("large means different things to different people, but in this case lets say real estate is <20% of your net wealth) could end up with essentially all your eggs in one basket. If anything were to happen to lower mainland house prices (and nothing goes up for ever...), you could be out on not only your own house but also your "investment". Modern portfolio theory dictates having your capital invested in a diversified portfolio of uncorrelated assets. Don't forget about your human capital (i.e. job), if you work in the real estate sector, you are already getting lots of "exposure".

Second, residential houses are quite an illiquid asset class - if you need to sell, it takes a long time and the costs are high. Compare to stocks/bonds/mutual funds which can be sold at the click of a button with minimal fees. If you really want to invest in real estate, you can do it via a REIT which are currently yielding 2% - 9%.

Third, leverage. The reason people think their real estate returns are so great is that the returns are amplified via leverage (i.e. their mortgage). If you leveraged your stock / bond investments via a home equity loan, options trading, second mortgage, etc. and put that money into a stock/bond portfolio (and treated it like a mortgage by using the returns to pay down debt) you can generate similar returns with less risk. A good example pointed out by @Rain City is that Canadian banks have returned better over the medium and long term than even lower mainland real estate. The other way to think about this is if you wouldn't leverage up your stock/bond portfolio, why would you be so keen to do the same thing and take out a mortgage to buy one house?

Fourth is the regulatory/tax issues that others have been brought up - RTA is not your friend.

Lots of other things to consider as well. Over the long term, real estate has actually been shown to be a pretty poor investment compared to other asset classes. A good place to start as others have mentioned is talking to an accountant / investment adviser you trust. A sportfishing forum is an interesting place to come for investment advice...

There is something to be said in investing your money in sectors/stocks that you know. The one advantage that real estate over stocks/bonds for most people is that they have (or think they have...) a better understanding of their local real estate market than other asset classes. However, this needs to be weighed against the facts above.

Great points here to follow. Unless you are comfortable with some very difficult situations with tenants, real estate investing is best done with buying REIT's. Here is the EXTREME example of renting gone wrong.

https://www.cbc.ca/news/canada/nova...on-selby-rent-dodger-nadav-even-har-1.5387558
 
Some of my worst experiences were dealing with lousy tenants. They have too many rights in my opinion.

Was glad to get out of that business
 
Commercial is the only way to go. Triple net, rock solid lease, they don’t pay...give them the boot.
 
By square foot vs ROI without any tenant issues. =Investing in Storage facilities is paying very well. Love those hoarders. Paying for safari #4. for June and July.

HM
 
By square foot vs ROI without any tenant issues. =Investing in Storage facilities is paying very well. Love those hoarders. Paying for safari #4. for June and July.

HM
Man I looked at the numbers downtown and man o man what a racket. $300 a month for a 10x10x7 box with elevator access only.
In. Sane.
 
Man I looked at the numbers downtown and man o man what a racket. $300 a month for a 10x10x7 box with elevator access only.
In. Sane.
Yes sort of hard to understand, people pay more monthly on storage rental than the contents inside are worth. I have no idea why and right now am glad they are willing to pay it. Rental unit rules are very firm and hard, no A-Hole tenants but good cashflow.

HM
 
Yes sort of hard to understand, people pay more monthly on storage rental than the contents inside are worth. I have no idea why and right now am glad they are willing to pay it. Rental unit rules are very firm and hard, no A-Hole tenants but good cashflow.

HM
How do you get into the market? Did you buy units? Build out a warehouse? I was thinking about doing a development in the city. With all the new COV character retention rules you can increase FSR from .6 to almost 1.5 in some cases. License to print money if the market cooperates and you have the know-how. But commercial buy and hold does seem less risky.
 
Yes sort of hard to understand, people pay more monthly on storage rental than the contents inside are worth. I have no idea why and right now am glad they are willing to pay it.
I used to have a half ton and the junk I've seen friends 'put into storage' was beyond dumb-I always had a rule I'd provide the truck but they handled the goods I never touched a thing.

full-of-idiots.jpg
 
I used to have a half ton and the junk I've seen friends 'put into storage' was beyond dumb-I always had a rule I'd provide the truck but they handled the goods I never touched a thing.

full-of-idiots.jpg
Haha I did that to a buddy this year and he thought I was crazy. Looked at me funny the whole time he loaded the truck. I just stuck to my guns, loved it. What's he going to do tell me to f*** off?!!

Just keep loading buddy :D
 
Haha I did that to a buddy this year and he thought I was crazy. Looked at me funny the whole time he loaded the truck. I just stuck to my guns, loved it. What's he going to do tell me to f*** off?!!

Just keep loading buddy :D
Great time to catch up on paperwork, I risk my back for my living/family. Not other people’s junk....
 
Great time to catch up on paperwork, I risk my back for my living/family. Not other people’s junk....
My old boss used to hand friends a $50 bill when they asked him to move. Said they could hire someone to replace him lol.
 
How do you get into the market? Did you buy units? Build out a warehouse? I was thinking about doing a development in the city. With all the new COV character retention rules you can increase FSR from .6 to almost 1.5 in some cases. License to print money if the market cooperates and you have the know-how. But commercial buy and hold does seem less risky.
Your over thinking it. Knowledge is your friend, I read rich dad poor dad by Robert Kiyosaki some 18 years ago, then the rest of his books. Then went to a 6 week bootcamp. after a couple years following what I believe/learned=funds presented. I have a trusted investment agent. His company finds/are presented the investments, after a couple bad investments all due diligence is now done by a pro company with lawyers, their report says OK, bad or red flag. Really its about 100 pgs of lawyer writing but end state is go or stop. Look at offer and if I want invest. Investors do need to be financially aware/smart/knowledgeable. Lots are accredited so better opportunities. Rental unit company was a cashflow investment opportunity. Now I am OUT of the rat race. I stated many posts ago, find your definition of "rich". Mine is not making X but working 60 + hr work weeks to pay for toys.

HM
 
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