Lurking For Many Years Here This Thread Prompted Me To Register
I have had a wonderful time for several years just reading the posts on this forum and reading Canadian Couch Potatoe and learnt a tremendous amount based on individuals perceptions, albeit I've remained frozen on moving forward outside of what we know, but that needs to now change. Thank you to all that contribute. Now as we are prepping for the highlight of our twilight (hopefully), I decided to register, prompted by this interesting post and everyone's individual perceptions regarding real estate ownership versus other types of investments.
Ironically our wealth (for what it is) has solely been built up through real estate over the years = buying revenue properties, building properties ourselves and selling them, picking one of the last 5 lots in a community then flipping upon possession for a 20% return in the late 90's and early 2000's, and lastly buying a canal lot in the USA in 2009 when their market was at rock bottom low, which is now approximately worth just under double what we paid and cost of build. Have we made a few errors = Sure! Overall though RE has enabled us to build a 7 figure Net worth, whereas my consistent attempts in the stock market for over 15+ years has been sad to say the least by comparison. So we've stuck with thus far the "if it ain't broke, don't fix it" theory.
The biggest problems with RE which has been our personal experience over several decades, has been when people have tried to speculate and not look at long term buy and hold or a double sided option = fix and flip, but if market not there at the time, would it be a cash positive/initial low subsidise rental option? Typically, we all need a roof over our heads, food in our stomachs and somewhere warm to sleep at night, this is unlikely to change in the future, and has been our premise with what we've done over the years.
It was generally greed and speculation of folks seeing a huge rising $$'s in RE market in the 2004/5/6 era where folks saw their neighbours sell their homes after contracting a builder to build and then saw the price of the same property go up by another $100/$200K plus between sale and possession of the new home. We heard many say "I'm not going to lose that much, I'll lock in at today's rate with the builder, and sell my current house just before possession date". They became gamblers or speculators. All of a sudden a glut of product hit the market (bubble), then folks were having to fire sale large highly leveraged properties, to meet their mortgage approval of "subject to their current home being sold". I recall even builders having to adjust their agreed to prices by 6 figures here in Calgary area because the lenders some 18 months after contracts being agreed would lend based on the rapid declining appraisal prices.
OTOH, we have many many friends and family that bought properties over the years and have created a wonderful retirement portfolio. EG: One bought 9 properties back in the early to mid 90's at around $69,000 to $89,000 and these are obviously paid down now through huge rental increases, and the values are in that $350,000 to $400,000+ range. That same person about 8 years ago bought a 10 plex for a $1million from what he'd saved from the previous 9 rentals once paid off, and we questioned whether it was a smart move at the time based on lofty values then. Well, today it's worth considerably more than that and his rental rates have increased exponentially. My father paid UK600 for a piece of land in 1960, to build a luxury then, house on it total cost was UK4000 and he worried himself sick on having a loan at that time for the actual build. Sold in 1987 for UK82,000 Today it is worth even with up down markets in-between over UK650,000. Uncle bought a farm in late 1950's for a few thousand pounds, in 1980's bought the one next door for exponentially more, converted many of the granite outbuildings to holiday rentals being coastal area, and now so less change out work, rents out all as long term rentals - the value of his holdings here are worth a few million UK, and he has paid down many years ago any owings. These are just a handful of many many folks we know who have created their wealth being low income earners through using OPM for leverage through RE.
Of course it all depends on which market place you are in - we've always considered investment for RE only in areas where there is a large economic centre, and accordingly after the peak prices of 2007, the declines throughout the following 3-4 years, we are today even with recent declines still seeing single family properties worth more than they were in the peak of first quarter 2007. 1995 properties were selling here for less than they were bought in 1993 but today they are worth more than double that again. There's very few things you can invest in we've personally found that long term can give you the returns of what RE has for such a small initial investment by comparison. Every market rise, we hear that "oh don't you think properties are too high priced to buy now", yet just like the S&P500 long term they've still gone up, up, up.
For sure RE is not as liquid to sell as stocks, ETF's etc but for someone young enough and with time on their side, just as I see advised in the stock market long term, I'm curious how one could go wrong for such a small initial investment leveraging with OPM when in a large economic centre. Don't get me wrong, I'm going to start a "Pls advise/help me thread" regarding liquidating our assets now we are older, as we wish to start travelling, but reading the comments on RE here, I found it quite interesting our actual experience over the past several decades versus some other's thoughts.
I've really enjoyed this thread and it's comments, have been envious of what so many folks here on the forums generally have achieved at such a young age with good incomes and being able to retire so young like Jon Snow, MOA (great website by the way). RBull I like how you write very much also. Unfortunately we have always been what my father termed "house rich and cash poor", now we need to liquidate and decide where to put it all for a half decent return as risk adverse as possible all things considered. Hoping in future posts to glean your knowledge utilizing other less hands on, more passive investment vehicles outside of RE.