To buy or to wait ?
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http://www.greaterfool.ca/
So, let’s take a subdivision home in a western suburb of Toronto built three years ago, sitting on a 36-foot-wide lot with a double car garage, and currently on the market for $460,000. You can rent that three-bedroom home today (or a mess of others just like it) for $1,800 a month.
So, that’s a yearly rental income of $21,600, divided into an asking price of $460,000, for a P/R ratio of 21.2. Ouch! This baby is overpriced, especially so because comparable houses can be leased for up to $300 a month less in the same general area.
So, let’s ask a final question: Is it better financially (i.e. cheaper) to buy or to rent this particular house?
Well, let’s do the math on 20% down (that’s $92,000) and a mortgage of $368,000, plus maintenance costs, insurance and property taxes (charges not incurred by a tenant).
Downpayment cost (what $92,000 a year would earn in a 3% GIC): $2,760
Mortgage payments ($368,000 at 5-yr rate of 7.2%, 25-year am): $31,477
Maintenance (new house, virtually nothing): $1,000
Insurance: $1,700
Property tax (in this area, average on 3-bedroom, 2,000 sq ft home): $5,400
Total annual ownership cost: $42,377
Rental cost for the same house: $21,600
Cost of being a Greater Fool: $20,737
Location: Canada-Glorious and Free
Posted on: 03-11-08 19:03:45
Deleted by Poster
V
Location: Canada-Glorious and Free
Posted on: 03-11-08 19:07:06
Deleted by Poster..
To add to Big Vee, my mortgage rate now is at 3.4% not 7.2%; which brings the annual payment to <22K not >31K
Then there is the factor of equity built up - at the minimum around 6K in 5 yrs
Insurance is needed for Rental as well
Rent needs to be looked at a rate of ~1.4% increase per year!
And on top of that, add the 'favorite' price increase on the property
And yes... "Pride of ownership and the possibility of greater financial freedom --- PRICELESS"
Quote:
Originally posted by rahul_singh23
So, let’s take a subdivision home in a western suburb of Toronto built three years ago, sitting on a 36-foot-wide lot with a double car garage, and currently on the market for $460,000. You can rent that three-bedroom home today (or a mess of others just like it) for $1,800 a month.
So, that’s a yearly rental income of $21,600, divided into an asking price of $460,000, for a P/R ratio of 21.2. Ouch! This baby is overpriced, especially so because comparable houses can be leased for up to $300 a month less in the same general area.
So, let’s ask a final question: Is it better financially (i.e. cheaper) to buy or to rent this particular house?
Well, let’s do the math on 20% down (that’s $92,000) and a mortgage of $368,000, plus maintenance costs, insurance and property taxes (charges not incurred by a tenant).
Downpayment cost (what $92,000 a year would earn in a 3% GIC): $2,760
Mortgage payments ($368,000 at 5-yr rate of 7.2%, 25-year am): $31,477
Maintenance (new house, virtually nothing): $1,000
Insurance: $1,700
Property tax (in this area, average on 3-bedroom, 2,000 sq ft home): $5,400
Total annual ownership cost: $42,377
Rental cost for the same house: $21,600
Cost of being a Greater Fool: $20,737
DATA SEEMS INCORRECT;
Taking the right nos. and assuming 5 % interest, 25 yr amortization, bi-weekly payment, this is how the data may look like.
After living in the property for 10 yrs, selling it thereafter and assuming 2% pa price increase:
Selling price= $561,000
Mortgage balance paid off= ($271,000)
selling costs=($28,000)
Sale proceeds= $262,000
Compare this with your: Downpayment cost (what $92,000 a year would earn in a 3% GIC): $2,760
Leverage plays an important role in real estate. And mind you, avg. desi is much smarter than many GREATER FOOLS out there.
Everyday I hear desis paying down their mortgages faster to live debt free. The trick is to live within one's means and buy a home that allows some savings. Don't spend more than 30% of household income on home ownership costs.
Viggy said it so right, "Pride of ownership and the possibility of greater financial freedom --- PRICELESS"
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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/
I bought a detached house in 2006 and here is what I have paid in extra $$$
Driveway $2800
Roof Shingles $ 2300
Windows $7000
Washrooms renovations $ 3000
Replacement of Old Dryer $300
Replacement of Old furnace with new high efficiency one $2700 (got refund of over $1100 - 1400)
Cost of maintaining garden and Back yard Over $500/year
Snow removal Blower $1800
Property tax $ 3400/year AND rising every year
Heating/water cost $4000 AND rising every year
Insurance cost $100/month $1200/year
Can someone please take out the calulator and tell me how much I have spent in two and half years?
Quote:So in just 2 years, you've had to get your driveway redone, windows replaced, roofing done, washrooms redone and replace appliances, etc.
Originally posted by Gapodi
Driveway $2800
Roof Shingles $ 2300
Windows $7000
Washrooms renovations $ 3000
Replacement of Old Dryer $300
Replacement of Old furnace with new high efficiency one $2700 (got refund of over $1100 - 1400)
Cost of maintaining garden and Back yard Over $500/year
Snow removal Blower $1800
Property tax $ 3400/year AND rising every year
Heating/water cost $4000 AND rising every year
Insurance cost $100/month $1200/year
Can someone please take out the calulator and tell me how much I have spent in two and half years?
May I ask how old the house is?
Didn't you know all this work needs to be done when you were buying the house?
Did you get home inspection done on the house before buying?
Quote:How big is your backyard and garden and what are you doing that is costing over $500 a year?
Cost of maintaining garden and Back yard Over $500/year
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
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