Rentah, where do you infer that???

If the rent that Mohican pays doesn't cover the LandLords costs , why would the payments be double if he bought?

I'll tell you why, because Mohican doesn't have a big enough downpayment.

The mortgage fund gives a return of 8%....don't you think that fund may be a little on the risky side??? I think it overstates return while understating the risk involved.

Johnny Horton wrote:

[size=200]Thanks for the illustration.
However, I think it's unrealistic for 3 reasons.

1) It implies a net return of only 2.6% on the condo, which is low. Therefore, the true rent should be higher.

The REASON why real estate is such a bad investment is because rents aren't high enough to justify the ridiculous prices we have. Right now, in Vancouver, $500,000 condos are renting for $1,500. That's why bears are renting.

As I have said many times in the past, I would not categorize condos as representing all real estate. It is one segment of the market. In that regard, and for other reasons, those aren't very attractive investments.

Johnny Horton wrote:

Thanks for the illustration.
However, I think it's unrealistic for 3 reasons.

1) It implies a net return of only 2.6% on the condo, which is low. Therefore, the true rent should be higher.
2) Yes the tax rate on $40,000 might taxed at a 35% personal rate but in reality, that $40,000 income will probably push the Tenant into a 50%+ rate. Therefore, the actual return should be less.
3) The mortgage fund gives a return of 8%....don't you think that fund may be a little on the risky side??? I think it overstates return while understating the risk involved.


Sorry, I'm not at all convinced. Not in the least.

1) It implies a net return of only 2.6% on the condo, which is low. Therefore, the true rent should be higher.

2) Yes the tax rate on $40,000 might taxed at a 35% personal rate but in reality, that $40,000 income will probably push the Tenant into a 50%+ rate. Therefore, the actual return should be less.

3) The mortgage fund gives a return of 8%....don't you think that fund may be a little on the risky side??? I think it overstates return while understating the risk involved.

hiandre wrote:

If the bears spent as much time focused on their "sky is falling" posts as they did on goal setting and
taking action in their lives, these guys could do quite well in business and other endeavors, and maybe a few of them do,
but I think many of them will just be spectators, wishing they could be a player on the field of life, how sad

I get the feeling a lot of them are bitter about missing the market upswing and bailing out early or
WORSE, never even being in the market ! There are those who "do" and those who teach... oh and those
who post WAY too much

Some of you guys need to get a life

Peace

Johnny Horton wrote:

Opportunity cost?
Elaborate.

hiandre wrote:

If the bears spent as much time focused on their "sky is falling" posts as they did on goal setting and
taking action in their lives, these guys could do quite well in business and other endeavors, and maybe a few of them do,
but I think many of them will just be spectators, wishing they could be a player on the field of life, how sad

I get the feeling a lot of them are bitter about missing the market upswing and bailing out early or
WORSE, never even being in the market ! There are those who "do" and those who teach... oh and those
who post WAY too much

Some of you guys need to get a life

Peace