Great video but I would add caveat that to afford 5k+ per month on housing, a couple/person/household would need to make 400k/annum to spend 33% on rent/mortgage of 5k. Also, purchasers have to somehow come up w down-payment of 25% and on Cdn real estate for eg that's 200k on an 800k home/condo. I don't know who can afford these housing costs and who is carrying savings of 200k. Unless Bank of mom and dad helped. No wonder so many cdns are moving out of cda to more affordable countries.
Great points you made and thanks for the comment! The detachment of income from shelter costs (owning or renting) is what allows prices to reach a level that the majority are not able to rent or own at a reasonable housing cost to income level. In Vancouver, you're likely to spend almost 45% of your gross income just to cover your mortgage payment. It's a big ask, and not sure most people think that's reasonable or would want to do that.
Here two things are missing: 1) Rental price keep going up but on the other hand your mortgage payment goes down over the period of time 2) Peace of mind of being evicted after 1 or 2 years down the line and then again you end up paying more 3) After the end of 25 years, a owner having a house for his retirement but on the other hand rental have to work even after retirement just to paid the rental income and obviously at 60 you are not able to earn like you are earning now
Thank you for the comment! I think it's important we have a more open conversation around money and financial assets, so I appreciate you taking the time to make a comment. Okay, let me address a couple of the points you made. 1. You are correct that rent prices will go up, but you are making the assumption, at least based on the comment, that the homeowner mortgage payment will not increase. For example, people who find themselves in a variable mortgage have seen their mortgage payments double, this will impact your timeline for paying off your mortgage. Aside from the mortgage payment, total homeownership costs also go up over time, such as home insurance, utilities, property taxes, and up-keeping costs. While the mortgage payment can go down with pay downs, that doesn't mean the overall homeownership cost is going down. Additionally, we are assuming the homeowner has the means to afford the mortgage or make extra payments, which most people in the most populated markets do not. I did a video in which markets like Toronto and Vancouver, you are required to spend over 45% of your gross income just to make the mortgage payment. This is before other housing costs, and this is based on gross income, not net income, which is what people pay their mortgage payments with. People are approved based on gross income (before taxes) yet they have to make payments based on their net income (after taxes). So right away, most people have a mortgage they can't afford if they don't spend the time to figure out what they can actually afford. 2. I agree with you. However, again we are assuming the renter can only access non-purpose-built rentals such as a basement suite or an investor renting an entire house. But if the renter finds a purpose-built rental, then this risk is reduced as the best use of that property is for it to be rented and likely will remain rented. Additionally, new laws are coming into place where the land and the building will stay rented forever. But this is a risk. Just remember, the homeowner also has a risk of losing their home, which is if they lose their job or life happens or perhaps the government wishes to do a project and would like to purchase land at market value. In Canada, we do not own our land. We simply have rights to the property, which most homeowners believe they own the land, which is not the case in Canada. Therefore, the homeowner is, in effect, just a renter of their home with more rights than a renter, but their landlord is ultimately the government of Canada or the Crown more accurately. 3. This is a common narrative I hear. Again, depending on your age, this narrative might have held up to be true in that you are going into retirement without any mortgage debt. But in today's reality, that's just not true. Most people are retiring with mortgage debt or having to sell their homes as a means to pay off the mortgage. Even people who have their homes paid off are also facing higher costs with respect to ongoing costs (property taxes, insurance, utilities, etc), so it's not like you've paid off your mortgage and then all costs are done. The home still has ongoing costs, and at retirement with a fixed income, this can put some homeowners still in a difficult position similar to someone who is renting. The traditional way of paying down your mortgage isn't possible with the higher cost of living and flat wages. If you are under 35, the reality of being able to pay down your mortgage before retirement is more unlikely than going into retirement with a mortgage debt. The reality is that most people will pay off their mortgage, but not in paying it off in the sense of paying down their mortgage payment but rather selling off their home and then buying somewhere cheaper. You saw this happened a lot during covid. As governments continue to print money, homeowners benefit. However, the downside is that their wages have stayed flat while expenses around them continue to increase. Additionally, a renter can also build their nest egg by investing in the market. And since most provinces have favourable renter policies, if you secure a purpose-built rental, you might end up with a lower total cost compared to a homeowner, or if you live in an expensive city, then you would be far better off renting, as the numbers support that. So to conclude, I think you make good points to consider as some of the benefits of homeownership. But we also need to understand renting is also an excellent option for obtaining shelter. It's not one or the other but rather depends on your specific market and your personal situation. I made the video as I heard this trashing of renting and as a kid, I bought into it, but when I learned more about money, I realized this argument today just doesn't make sense, but people continue to push it. But appreciate your comment!
Good video!! I currently have 1 rental property, but I’m moving across Saskatchewan, and am debating renting or buying my next property for my primary residence. Thanks for the insight :)
Thanks for the comment! Good luck with your search too! SK is one of the more affordable places in Canada so the buying option might be better there. All the best!
Thanks for the update! With interest rates going up not surprising to see rental rates go up. While it's higher, it's much higher to own as mortgage payment is just the starting point. A 5yr fixed mtg rate of around 5% and variable is not an option these days. So most people buying investment property in Van are doing a capital appreciation play and hoping to sell when rates go low. But in the interim, they are losing money each month on their investment. Hopefully, we continue to see more rental supply come online and stay online to reduce overall rent costs.
I did the reseach and anaylsis but I couldn't confirm the result is valid until I watched your video. I rather put my cash into other investment or even put it on my business instead of put in a 2 bed room CAD 70-80k apartment.
That's awesome to hear the video helped you! And you are right. There are other ways to create wealth aside from real estate only, such as investing or creating a business that can generate a cash flow stream.
Would you suggest to buy home in Brampton,approx purchase price is 600k? Only would be living for 3-4 years in Canada then moving out to diff country. Btw thanks for the informative video👍
Thanks for the question! I do not know the Brampton market, so I cannot speak to that, and with regards to what you should do, I think a lot need to be known before I can speak on specifically what you should do for your situation. However, from what you said, it seems to me you've got some big life events in the next few years. I would caution against speculating on real estate with such a short time horizon. If you're planning on leaving the country, then perhaps investing is a better option to consider. In doing so, this asset will stay with you regardless of where you move next and can be utilized where ever you go since it's more liquid than real estate. But yeah, hopefully, that helps, and I think I would focus my effort on preparing for the next chapter and doing the things that will help me in the next phase. Real estate cycles are generally 10 years. Hope that helps!
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Great video but I would add caveat that to afford 5k+ per month on housing, a couple/person/household would need to make 400k/annum to spend 33% on rent/mortgage of 5k. Also, purchasers have to somehow come up w down-payment of 25% and on Cdn real estate for eg that's 200k on an 800k home/condo. I don't know who can afford these housing costs and who is carrying savings of 200k. Unless Bank of mom and dad helped. No wonder so many cdns are moving out of cda to more affordable countries.
Great points you made and thanks for the comment! The detachment of income from shelter costs (owning or renting) is what allows prices to reach a level that the majority are not able to rent or own at a reasonable housing cost to income level. In Vancouver, you're likely to spend almost 45% of your gross income just to cover your mortgage payment. It's a big ask, and not sure most people think that's reasonable or would want to do that.
@@thewealthmarathon The rents in Vancouver are insane. I would move there in a heartbeat but couldn't afford it.
Bad analysis! With time the mortgage stay the same but the rent is increasing all the time, so your hypothese is wrong!
Here two things are missing:
1) Rental price keep going up but on the other hand your mortgage payment goes down over the period of time
2) Peace of mind of being evicted after 1 or 2 years down the line and then again you end up paying more
3) After the end of 25 years, a owner having a house for his retirement but on the other hand rental have to work even after retirement just to paid the rental income and obviously at 60 you are not able to earn like you are earning now
Thank you for the comment! I think it's important we have a more open conversation around money and financial assets, so I appreciate you taking the time to make a comment. Okay, let me address a couple of the points you made.
1. You are correct that rent prices will go up, but you are making the assumption, at least based on the comment, that the homeowner mortgage payment will not increase. For example, people who find themselves in a variable mortgage have seen their mortgage payments double, this will impact your timeline for paying off your mortgage. Aside from the mortgage payment, total homeownership costs also go up over time, such as home insurance, utilities, property taxes, and up-keeping costs. While the mortgage payment can go down with pay downs, that doesn't mean the overall homeownership cost is going down. Additionally, we are assuming the homeowner has the means to afford the mortgage or make extra payments, which most people in the most populated markets do not. I did a video in which markets like Toronto and Vancouver, you are required to spend over 45% of your gross income just to make the mortgage payment. This is before other housing costs, and this is based on gross income, not net income, which is what people pay their mortgage payments with. People are approved based on gross income (before taxes) yet they have to make payments based on their net income (after taxes). So right away, most people have a mortgage they can't afford if they don't spend the time to figure out what they can actually afford.
2. I agree with you. However, again we are assuming the renter can only access non-purpose-built rentals such as a basement suite or an investor renting an entire house. But if the renter finds a purpose-built rental, then this risk is reduced as the best use of that property is for it to be rented and likely will remain rented. Additionally, new laws are coming into place where the land and the building will stay rented forever. But this is a risk. Just remember, the homeowner also has a risk of losing their home, which is if they lose their job or life happens or perhaps the government wishes to do a project and would like to purchase land at market value. In Canada, we do not own our land. We simply have rights to the property, which most homeowners believe they own the land, which is not the case in Canada. Therefore, the homeowner is, in effect, just a renter of their home with more rights than a renter, but their landlord is ultimately the government of Canada or the Crown more accurately.
3. This is a common narrative I hear. Again, depending on your age, this narrative might have held up to be true in that you are going into retirement without any mortgage debt. But in today's reality, that's just not true. Most people are retiring with mortgage debt or having to sell their homes as a means to pay off the mortgage. Even people who have their homes paid off are also facing higher costs with respect to ongoing costs (property taxes, insurance, utilities, etc), so it's not like you've paid off your mortgage and then all costs are done. The home still has ongoing costs, and at retirement with a fixed income, this can put some homeowners still in a difficult position similar to someone who is renting. The traditional way of paying down your mortgage isn't possible with the higher cost of living and flat wages. If you are under 35, the reality of being able to pay down your mortgage before retirement is more unlikely than going into retirement with a mortgage debt. The reality is that most people will pay off their mortgage, but not in paying it off in the sense of paying down their mortgage payment but rather selling off their home and then buying somewhere cheaper. You saw this happened a lot during covid. As governments continue to print money, homeowners benefit. However, the downside is that their wages have stayed flat while expenses around them continue to increase. Additionally, a renter can also build their nest egg by investing in the market. And since most provinces have favourable renter policies, if you secure a purpose-built rental, you might end up with a lower total cost compared to a homeowner, or if you live in an expensive city, then you would be far better off renting, as the numbers support that.
So to conclude, I think you make good points to consider as some of the benefits of homeownership. But we also need to understand renting is also an excellent option for obtaining shelter. It's not one or the other but rather depends on your specific market and your personal situation. I made the video as I heard this trashing of renting and as a kid, I bought into it, but when I learned more about money, I realized this argument today just doesn't make sense, but people continue to push it. But appreciate your comment!
@@thewealthmarathon excellent response
Good video!! I currently have 1 rental property, but I’m moving across Saskatchewan, and am debating renting or buying my next property for my primary residence. Thanks for the insight :)
Thanks for the comment! Good luck with your search too! SK is one of the more affordable places in Canada so the buying option might be better there. All the best!
Just to bring you up to speed with rentals. A two bedroom in Vancouver that is similar to the condo listing is going to cost at least 4000 per month.
Thanks for the update! With interest rates going up not surprising to see rental rates go up. While it's higher, it's much higher to own as mortgage payment is just the starting point. A 5yr fixed mtg rate of around 5% and variable is not an option these days. So most people buying investment property in Van are doing a capital appreciation play and hoping to sell when rates go low. But in the interim, they are losing money each month on their investment. Hopefully, we continue to see more rental supply come online and stay online to reduce overall rent costs.
I did the reseach and anaylsis but I couldn't confirm the result is valid until I watched your video. I rather put my cash into other investment or even put it on my business instead of put in a 2 bed room CAD 70-80k apartment.
That's awesome to hear the video helped you! And you are right. There are other ways to create wealth aside from real estate only, such as investing or creating a business that can generate a cash flow stream.
I'm glad we own our home.
I just subscribe to your channel! I just purchase your book! Keep up the good work!
Hi! Thank you for the support and encouraging words!🙏🏾 Thanks for also getting the book!
Thank you for this, great video
Awesome! I'm glad you liked it and thanks for the comments!
That home doesn't cost 1million ...it costs 2million or more with mortgage payments But on market will sell for 1 million.......
Haha yep, knowing the complete and total cost of homeownership is critical to ensure you know what you signing up for.
Would you suggest to buy home in Brampton,approx purchase price is 600k? Only would be living for 3-4 years in Canada then moving out to diff country. Btw thanks for the informative video👍
Thanks for the question! I do not know the Brampton market, so I cannot speak to that, and with regards to what you should do, I think a lot need to be known before I can speak on specifically what you should do for your situation. However, from what you said, it seems to me you've got some big life events in the next few years. I would caution against speculating on real estate with such a short time horizon. If you're planning on leaving the country, then perhaps investing is a better option to consider. In doing so, this asset will stay with you regardless of where you move next and can be utilized where ever you go since it's more liquid than real estate. But yeah, hopefully, that helps, and I think I would focus my effort on preparing for the next chapter and doing the things that will help me in the next phase. Real estate cycles are generally 10 years. Hope that helps!
No
Good video
Thanks! Glad you found value in it!
You gotta own land new hi interest rate has 6300 mortgage earning 3k per month in rent brutal but you still have to buy
Good video
Thanks! I'm glad you liked it:)