The Rule Of 30 by Vettese Frederick;

Author:Vettese, Frederick;
Language: eng
Format: epub
Publisher: ECW Press
Published: 2021-09-03T00:00:00+00:00

Scenario 1

Scenario 2

Condo option

$742,000

TFSA option (stocks & bonds)

$630,000

Megan whistled in delight. “I knew it! It’s better to invest in real estate after all!”

Jim nodded and said, “It does look pretty good, doesn’t it? If you could rely on such an optimistic scenario materializing, you would never have to worry about stocks and bonds again. But we’re not done yet.”

Before Jim could go on, Brett wanted to be sure he had enough information to vet the example. He asked, “Will you give us the details behind your calculations, just so we have them?”

“Certainly,” said Jim. “I’ll print it all out for you at the end of this session.20 The trouble is, you can’t count on having a best-case scenario. A lot of things had to go right to be able to achieve the result I’m showing on the whiteboard. Now, let’s move on to Scenario 2. It’s more pessimistic, but equally plausible. It is just as likely to happen as Scenario 1. Consider it the flip side of the coin.

“In Scenario 2, I will assume the following:

You have fair-to-middling experience with renters; their average stay in the condo is just two years rather than five, but at least they are still paying their rent and doing so on time.

When you do need to rent it out again, the condo is vacant for two months until you can get someone else in there instead of just one; and each time, some improvements have to be made to attract a new tenant (same cost as Scenario 1, just incurred more often).

Inflation rises by 2 percent a year rather than 2.5 percent.

You can still increase the rent in line with inflation each year, but the housing market is not quite robust enough to be able to bump up the rent an extra 5 percent each time there is a new tenant.

The annual budget for repairs is a little higher than under the best-case scenario but is still not too punishing.

Interest rates on mortgages start at 2.5 percent again but ultimately rise to 5 percent; this is nothing like the bad old days, but it’s definitely higher than homeowners have seen in recent years.

The property appreciates in real terms by 0.5 percent a year (which becomes nil after offsetting it by the depreciation I mentioned earlier).”

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.