Hello BP investors,
I have a brain scratcher for everyone.
My spouse and I are confused if you should buy our first property (duplex) and become owners instead of renters OR continue renting and increase our stock portfolio.
Key points to consider:
- We live in a small city and our rent is super cheap ($400 per person)
- Hence, we are able to save or invest 60% of our monthly income into RRSP and TFSA (Canadian tax-free accounts). We buy etf's/index funds in them (6-12% average return every year)
- We are not savvy real estate investors. I have read some books and listened to 100s of podcasts and know the concepts.
- BUT, calculating the better way to grow our wealth is unclear. WHY? If we buy a property, we won't be able to save or invest 60% of our incomes. It would reduce to 20-30%.
Hence, is it still a vice decision to buy a duplex and house hack?
What do you think?
I think it depends what you want in the end. If you house hack you gain income and can refinance and pull out cash to further invest if you wish.
House hack all day long. I love buying stocks but I really love owning real estate. Yes the s and p has returned 10% every year over the course of its life but that is MUCH different than returning 10% each year. There have been periods of 20 years with 0 return. Keep that in mind
Be careful when comparing stocks to real estate because you have to factor in leverage. Unless you're a margin investor (which you cannot do in registered accounts), you are always paying 100% of your cash for your investments. If you're in a market that has appreciation, it can easily provide a return better than stocks but there's an obvious risk when buying and hoping for appreciation. I buy for cash flow and typically shoot for 15+% which is better than most stock investment.
Do you research but don't compare "apples to oranges" because the details matter.