I’m going to continue with the theme of hypotheticals from my last post and pitch you a hypothetical investment; would you buy, sell or hold?
Investment summary:
To purchase this investment you will have to:
Borrow a significant amount of money from the bank
Pay legal fees
Pay registration fees
Pay appraisal costs
To maintain ownership of this investment you will have to:
Pay interest on the money you borrowed from the bank.
Pay annual taxes to own the investment
Pay insurance premiums
Spend cash out of your pocket as well as your time maintaining the investment
To sell this investment you will have to:
Pay legal fees
Pay more taxes
Pay approximately 5% of the investment value to hire someone to sell it for you
And will take 3 -6 months for you to get your cash (best case scenario).
Rental Properties - Buy, sell or hold?
If I recommended investments with these characteristics I would be out of business, however, for some reason, people tend to overlook many aspects Rental Property ownership simply because they can touch, feel and see it. There is something about bricks and mortar that makes people feel safe and secure even it is stealing cash from their pocket month after month.
In summary; the housing market in Western Canada is not what it was in 2000 to 2010. The capital appreciation we saw in the past decade we may never see again. If you cannot count on 7-10% capital appreciation in your property can you still make money on a Rental? If you can’t make money, is it really an investment? Or is it just an expensive hobby?