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Real Estate not always a good investment

chuckparker

Member
Mar 25, 2006
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Wow, what a fucking windbag. Any moron that tries to compare a diversified investment portfolio to a house having a bedroom in toronto and a kitchen in vancouver.

I disagree with everything this guys says..... Am I a professor ?? No. But I am retired at 40 so I must have done something right.




Moshe Milevsky, an associate professor of finance at the Schulich School of Business in Toronto, has a similar take. "This blind devotion to investing in a house as being a very, very good idea might not make sense when all is said and done," says Milevsky, who held off purchasing a home for his own family for some time. He believed it was not a smart way to allocate money. In fact, it flies in the face of what decades of portfolio allocation theory have shown. "It's like a stock portfolio that consists of one stock," he says. "If I could buy a house where the bedroom is in Toronto, the kitchen is in Vancouver, and another bedroom is in South America, then that's a diversified house."
 

Tangwhich

New member
Jan 26, 2004
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Chuck, I think he's talking more towards your average consumer. Based on that he makes some good points.
 

Rockslinger

Banned
Apr 24, 2005
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Speaking of real estate, I heard that the Vancouver condos that housed the Olympics atheletes just went bellyup.
 

duang

Active member
Apr 17, 2007
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36
Wow, what a fucking windbag. Any moron that tries to compare a diversified investment portfolio to a house having a bedroom in toronto and a kitchen in vancouver.

I disagree with everything this guys says..... Am I a professor ?? No. But I am retired at 40 so I must have done something right.
It's OK Chuck, it is complicated. It's lucky you did something right before you wrote this comment.

D.
 

hinz

New member
Nov 27, 2006
5,672
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how the heck you retire when you're 40?
Maybe chuck is a pro Athlete or investment banker who managed to cash in his "chips" before Lehman Collapse. :rolleyes:

Or maybe he used to work for the government, getting gold-plated DB plan courtesy of the taxpayers.
 

toguy5252

Well-known member
Jun 22, 2009
15,978
6,111
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Buying a house is a form of forced saving. The owner builds equity even if the house does not appreciate simply based upon the amortization of the mortgage. In any event whether or not it is a good investment depends on ones horizon. Although there are certainly ups and downs and period of stagnation etc there is no doubt that over a long period of time, apart from the enjoyment one hopefully derives from owning a home it is the best after tax investment money will buy.
 
B

burt-oh-my!

Not really true toguy, stocks do better over the long run, many studies have confirmed this. However, in some ways you are right, I think more people make money out of their houses than via stocks simply because they stay permanenetly invested. The problem with stocks is that almost nobody can hang on to them permanenetly.
 

toguy5252

Well-known member
Jun 22, 2009
15,978
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Not really true toguy, stocks do better over the long run, many studies have confirmed this. However, in some ways you are right, I think more people make money out of their houses than via stocks simply because they stay permanenetly invested. The problem with stocks is that almost nobody can hang on to them permanenetly.
That is what a forced saving is. In addition you have to compare the after tax yield. Even though dividends and capital gains are taxed at a favorable rate the gain on the disposition of a principal residence is entirely tax free.
 

rafterman

A sadder and a wiser man
Feb 15, 2004
3,423
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Speaking of real estate, I heard that the Vancouver condos that housed the Olympics atheletes just went bellyup.
Ha ha ha.....guess folks who are looking at spending two or three million bucks on a condo are dissuaded by the "public housing" component in the development.

All you have to do is look south of the border for confirmation that timing is key. Peeples are still handing back the keys to the bank on houses where they are 30 or 40% or more underwater on their mortgages.
 
B

burt-oh-my!

That is what a forced saving is. In addition you have to compare the after tax yield. Even though dividends and capital gains are taxed at a favorable rate the gain on the disposition of a principal residence is entirely tax free.
Yes, there have been studies taking everything into account. Biggies of course are the costs of home ownership - taxes, upkeep, insurance, security.

Of course the REALLY REALLY thing about real estate investment which i forgot to mention is that almost everyone borrows to invest in it - so it is leveraged.
 

Mod100

Super Moderator
Feb 18, 2010
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I've owed seven houses. Bought in good and bad time. Never lost a cent.

Research is one of the keys.

:D
 

poseidol

Member
Mar 8, 2010
325
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18
I think some important factors in buying housing for investment purposes is location and how long you can hold onto it (so you don't sell during low price cycles, thereby incurring capital loss). It can be a good investment, but it isn't very liquid, unlike a widely held and traded company on the stock market. As the moderator pointed out, research is key.
 

GPIDEAL

Prolific User
Jun 27, 2010
23,355
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I've seen industrial land in Bolton drop by half the value during the 90s recession and come back up to it's original cost by 2005. If that money were invested in the stock market, it might not have faired that well considering the crashes (scam hedge funds excluded - those managers and salespeople should be shot). Many developers went bankrupt in the 90s when the bubble burst, but perhpas that was an anomaly.

You won't get home prices down more than 20% in Canada. Over the long term, it is still a great investment but it shouldn't be the only investment if you are able.

You must carefully choose your equities. I hear that high yields bonds should be avoided now. With equities, you must hold for the long term, and don't get into it when you're just a senior citizen (your investment advisor should tailor your picks to bear in mind your age and investment time horizon).
 
B

burt-oh-my!

I think some important factors in buying housing for investment purposes is location and how long you can hold onto it (so you don't sell during low price cycles, thereby incurring capital loss). It can be a good investment, but it isn't very liquid, unlike a widely held and traded company on the stock market. As the moderator pointed out, research is key.
It is real estate's ILLIQUIDITY that causaes people to do well in it! If they had a quote every minute, and all it took to sell was a $30 commission, people would do just as poorly in real estate as they do often in stocks.
 

fun-guy

Executive Senior Member
Jun 29, 2005
7,277
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That is what a forced saving is. In addition you have to compare the after tax yield. Even though dividends and capital gains are taxed at a favorable rate the gain on the disposition of a principal residence is entirely tax free.
I know dozens of guys who have made millions as a builder, but they really don't know a thing about construction, by hiring subtrades to build a home, live in it for about 6 to 12 months, and then sell and make a quick $100 to $200 thousand, tax free!!!!!!!


One guy has done this 17 times, you do the math. You have to have a family that will put up with it though, it can be quite lucrative.
 

Major Major

New member
Dec 15, 2002
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Toronto
I luagh when I hear people say the real estate is 100% safe....90% of them have no idea what they are getting themselves into.

and NO...your principle residence is NOT an investment...stop with that noise people
 
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