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The Vancouver Life Real Estate Podcast Episode 7 - Should I Buy or Rent?

Dan Wurtele

Living in Vancouver for the past 26 years it has been exciting to watch it grow into one of the most desirable cities in the world...

Living in Vancouver for the past 26 years it has been exciting to watch it grow into one of the most desirable cities in the world...

Aug 4 37 minutes read

The Vancouver Life Real Estate Podcast Episode 7 - Should I Buy or Rent?

EPISODE 7 - August 4, 2020

People often ask the question "Should I Buy or Rent?" and this podcast takes a deep dive into answer that question.  We discuss not only the financials aspect, but look at the emotional, tactical and practical elements as well.   We run a comparison to see how the real estate market has performed compared to putting that same downpayment in the stock market instead.  Who has more money after 5 years?  How about 10 years?   The answer may surprise you.

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Dan Wurtele  0:02  

Hi, and welcome to the Vancouver Live podcast. 

Ryan Dash  0:06  

This podcast is created to answer the most talked about questions when it comes to navigating the Vancouver real estate market. 

Dan Wurtele  0:12  

I'm your host, Dan Wurtele, a licensed agent and accredited Real Estate Investment Advisor based here in Vancouver, and I'm joined by my co host Ryan Dash.

Ryan Dash  0:22  

Hi Dan. I'm also a local realtor and exhausted father of two, husband of one and really happy to be here. Let's get right into today's episode.

Dan Wurtele  0:35  

Hello and welcome back to the Vancouver life podcast and also Today we are filming this for our YouTube channel 

Ryan Dash  0:42  

Yes we are so just so you can see why we have face for radios, but that being said, we want to provide just a bit more material for our listeners and you can actually see some nice graph overlays to the things we're going to do. Just to kind of help with the argument, so you can visually see it a bit better.

Dan Wurtele  1:02  

Mm hmm. Yeah, exactly. We're gonna show graphs, charts, and it's just basically to help you consume content the way you like, if you prefer YouTube videos, then great. We're here to supply those as well, 

Ryan Dash  1:12  

Totally. So let's talk about what we're going to talk about.

Dan Wurtele  1:15  

Great. Yeah, today we are getting into the age old question of should I buy? Or should I rent?

Ryan Dash  1:22  

Well, should I?

Dan Wurtele  1:23  

It's a big question and it's one that we hear very often. Yeah and generally, it's always about money. What does my finances look like if I buy compared to if I rent?

Ryan Dash  1:34  

Yeah, I think the most people look at this from a financial perspective, but I think before we jump into the finances, because they're they're pretty easy to talk about, and a lot of people talk about them. Why don't we first of all, let's touch on like, I don't know, the fields versus buying versus renting. Because a home isn't just an asset, it shouldn't just be looked at as a transaction, it needs to be looked at as a, you know, a place where you're going to potentially bring up a family create memories, enjoy your your space, personalize it so many other things, right. So why don't we look at, you know, the value of buying versus renting from an emotional and stability perspective first before we jump into the data, in terms of numbers,

Dan Wurtele  2:25  

right, I think that's a very key point and there's some aspects of course of renting that people may not always consider, maybe you haven't rented, maybe it's your first time leaving home. But of course, a big one and this is one that kind of is close to home for me because I know a single mother who's had this happened to her three times in the last three years and she was renovicted three times. 

Ryan Dash  2:46  

So what is what does that mean what is renovicted

Dan Wurtele  2:48  

That means she was renting and the owner decided to do a substantial renovation, and that basically means that she was given her notice to leave, right and this would be the same of course, if home sells and the new owners coming into, you know, equal, you have basically equal rights you are being forced out of that property that you're in and so could you imagine having to move three times in three years unexpectedly, 

Ryan Dash  3:12  

I mean, it's it's a huge uprooting. We know as realtors, whether you're buying or renting, moving part of the transaction is one of the most stressful parts for for anyone. So not having any control around how long you get to live in your house without any control but some degree of control as to how long you get to live in the home that you're, you begin to love and to feel emotional about to me, you know, I'm a father of two, and I, you know, everyone knows that. I'm very, very sensitive to where the memories are formed with my family, you know, and I want that to be in my house and I don't I don't want those memories being I guess, train wrecked because a landlord's decided he wants to change his kitchen. Right, right. And I just don't think that that's something that I would want to subject my family to. And that's a luxury that I've had, but something I've worked really hard for.

Dan Wurtele  4:09  

The word control, like you mentioned earlier really does jump out, you know, when you have when you're paying rent, and you're giving your money to somebody else who literally, you know, kind of hold that over you and force you to make moves that you don't want. It's, it's can create a bit of an uneasy feeling for some people, you know, it's just, instability is always looming,

Ryan Dash  4:29  

especially in a market where, you know, rents are rising and, you know, a landlord might see, well, you know, I've got a unit that's 10 years old, and it does need some improving and, you know, they've been in there for three years now, and I haven't raised the rent on them and, you know, maybe it's time that I I put 20 grand into my place, and I'm going to turf, my renters and I'm going to renegotiate for a much higher rent.

Dan Wurtele  4:51  

And you know, sometimes people want to live in a very nice property nice home or its big home and so what they do is they bring in roommates and that's great. You can have a great home, you can have great roommates, but of course, sometimes when you've got roommates, you don't control their lives either. 

Ryan Dash  5:06  

Or the space they live in

Dan Wurtele  5:07  

That's it. Yeah, fair, fair, right, they can turn into not being who you thought they were 

Ryan Dash  5:12  

My children are roommates! You know, they don't pay any rent either.

Dan Wurtele  5:20  

So, so again, maybe you have to go through that process of finding a new roommate every six months or a year or whatever it is, you know, it's never something that you look forward to doing

Ryan Dash  5:28  

no, and you don't know who you're gonna end up with. You know, and that you start adding financial pressure to it, you maybe make a decision that you have to make as opposed to one you'd like to make. You know, and speaking of children, a kind of a point that really sticks to me is you know, if I've got children and they're in school, and a renoviction comes my way. What if I can't find a place in their catchment or or I you know, I have to go across boundary and that application gets denied and I get told to go to a new school and I have to tell my kids that they need to live somewhere else and make new friends at a crucial time in their development. I don't know to me. I think that's why a lot of guys like to own property before they get married. It's something I've seen.

Dan Wurtele  6:16  

people like stability, right? It's not always about your own stability, its family stability. It's your children's upbringing and having them comfortable and maintaining friendships, like you said, at a crucial age. So these are some of the things to consider outside of just the financial aspects to owning versus renting.

Ryan Dash  6:33  

Yeah, but I mean, without a doubt, certainly, I think the biggest argument is financial. You know, there's, you look at the majority of wealthy people in the world and real estate is a part of their portfolio for many reasons, especially when they're on the investor side collecting rent as opposed to paying rent. With that being said, why don't we start breaking down some of the financials then 

Dan Wurtele  7:00  


Ryan Dash  7:00  

and so let's, let's say, you're a first time homebuyer in Vancouver, and you've got a few years of your salary saved up here, you've got 60,000 bucks, you know, give or take 10% for closing costs. Sorry, 1% closing costs

Dan Wurtele  7:22  

and 10% downward. Yeah, yeah, the scenario that we'll run here is a $500,000 home purchase right? with someone who has had $60,000 in the bank. Yeah, and they can also take this money and put it into the stocks will be the other scenario that we play but for the home purchase side $60,000 as the cash 10% down plus closing costs, you can afford up to about 500,000

Ryan Dash  7:43  

Yeah, and that'll put you in a one bed in Vancouver. You know, comparatively a two bedroom in Burnaby. If you go further out, you can even go to three beds and Surrey Port Moody Langley, of course, they'd be a little bit older, but you you know, you should be able to achieve something decent. For that price point in those areas,

Dan Wurtele  8:02  

so there you go, depending on where you need to live, you know, you have options from again, a one bed up to a three bed or even larger, depending how far out you go, you know, from the downtown core,

Ryan Dash  8:12  

right? So with 60,000, down on 500 K, you know, that leaves you with a $440,000 mortgage. You know, depending on your credit score, depending on how your mortgage application plays out. We're looking at one here that has mortgage insurance, so 10% down, you would need mortgage insurance and we're looking at a rate of roughly 2.29% at 440,000. That's roughly 450 sorry, 450. That's roughly 1725 a month 

Dan Wurtele  8:51  

in your mortgage payment. 

Ryan Dash  8:51  

That's right,

Dan Wurtele  8:52  

yeah, and 2.29 is a rate that we're seeing all day long right now. You can get less we've seen last I've seen 2.09 And even just last week, but we'll run it a little bit on the conservative side and say 2.29% interest rate on your mortgage. So as Ryan said, about $1725 per month mortgage payment, but of course, there's other costs to living and owning a home, one of them being your property tax, we've estimated this at around 1500 dollars a year, about $135 per month is safe for these types of property prices in these areas. Insurance is going to run you about $500 a year, approximately, so let's call it $40 a month. And realistically the type of properties we're looking at today are going to be stratified and these are likely condos, maybe a townhouse further out, but either way, you're going to be looking at strata fees. So we've penciled those in at $300 a month. Yeah, this equates to a total monthly cost to own that home of $2,200.

Ryan Dash  9:52  

Right, which is very, very comparable in terms of what you would rent in the downtown core. You'd rent a one bedroom for, you know, at 2200 bucks a month. And, you know, we think that those numbers are pretty accurate considering where we're at in today's market.

Dan Wurtele  10:09  

And that continues all the way. Oh, yeah, so our two bedroom in Burnaby, around that 2200. Same with your three bedroom out in Port Moody, for example. Those are kind of the rental rates that are equivalent to an almost monthly outlay to actually have a purchase

Ryan Dash  10:23  

Right. Okay, so inside of that monthly cost of that 2200 bucks a month, it's important to note that of the 1725 that makes up your mortgage, a large portion of that particular payment is actually a principle reduction payment. So when you're looking at rent at 2200 bucks a month, that's 100% interest, you are getting nothing other than a roof over your head for that money, but when you actually own a mortgage, you begin to pay down the debt that you're servicing and that's roughly between 40 and 60% of each payment you make,

Dan Wurtele  10:57  

correct Yeah, and also just for a little bit further clarification, just in case some of our listeners or viewers aren't aware of this, why aren't we putting the whole 60,000 towards the downpayment, there are closing costs. And just to break those down as well, property transfer tax on a half million dollar home is $8,000. You're gonna have some legal fees, your lawyer about 1200 dollars, we always recommend an inspection. So you're looking at around 400 bucks for that, 

Ryan Dash  11:23  

especially if it's an older property.

Dan Wurtele  11:25  

That's exactly it. And also, you know, there's gonna be some potential miscellaneous, maybe you're paying some of the strata fees for the remainder of the month property taxes for the rest of the year. Yeah, regardless with the 50,000. down, you're looking at about 10,000 in closing costs, there's your 60,000. Now you're a property owner.

Ryan Dash  11:41  

Right and so is this better than taking my same 60 K and going applying it elsewhere in say, the stock market? I mean, that's the scenario we're going to run. So let's look at that.

Dan Wurtele  11:54  

Yeah. So let's look at that. Exactly. I think. So we are very fair here. People know The way we're going to initially analyze this is looking at the last 10 years of not only how the Dow Jones is operated, but how the Vancouver stock market has operated over a 10 year time frame, because we're looking at what happens if you just take that 60,000 investment straight in the stock market for 10 years, where do you stand financially compared to taking that same 60,000? investing it into a home living in it for 10 years? Where do we stand apples to apples? And then we can adjust the numbers up and down to run alternative scenarios after the fact.

Ryan Dash  12:29  

Yeah, or you know, more likely what's happened, actually, versus what we're what we're analyzing here,

Dan Wurtele  12:35  

right. So everyone is aware, the real estate market in the Greater Vancouver area for your average home has appreciated at the rate of 6% a year for the last 10 years. Big number and I'll pull up the stats here just to let everybody know where we were at so July of 2010, the average home in Vancouver was $574,000

Ryan Dash  13:00  

That's incredible. That's 10 years. Where was it? 10 years ago?

Dan Wurtele  13:03  

Yeah. Well, and now we look at today, your average price today $1,025,000.

Ryan Dash  13:11  

That's almost doubled.

Dan Wurtele  13:12  

That's 10 years, right? These are just real numbers and yes, we have seen some unprecedented increases, potentially, no one really saw it coming, but these are, these are factual numbers and we have seen a couple of cycles, a couple price reduction timeframes during that 10 years, right, it's gone up, it's gone down, it's gone up, it's gone down. But overall, you know, you're up about, gosh, $500,000 over that 10 year timeframe for the average home.

Ryan Dash  13:36  

Right, so, so I took my $60,000. And the way that I really achieved that was by leveraging my $60,000 and watching my $500,000 asset begin to appreciate at 6% and I think that's the the big big difference here is if I took that same $60,000 and walked into the stock market and looked at my average returns, which actually The Dow Jones over the last 10 years has done quite well,

Dan Wurtele  14:02  

incredibly well. Incredibly we are in a bull run that we have not seen before. Yeah, I actually outperformed the Vancouver market if you can believe it.

Ryan Dash  14:10  

Yeah, it's upwards of 10% per year in terms of averages.

Dan Wurtele  14:15  

We 10 years ago, the Dow was at 10,000. Now we're at 26,000.

Ryan Dash  14:19  

Yeah, that's, that's huge, but so let's let's look at that, then that 10 year play out if I bought a property, what is it going to look like 10 years from now versus let's put $60,000 into the market and let's play that out for 10 years and see see the way it unfolds. 

Dan Wurtele  14:37  

Got it. 

Ryan Dash  14:38  

So, let's start with let's start with the stock market. 

Dan Wurtele  14:43  


Ryan Dash  14:44  

So if I have $60,000, I'm bringing to the stock market in year one, and I can average a 10% gain over those 10 years. That's $6,000 that I will gain on my 60,000 in that first year. Meanwhile, I still have to pay rent, because I didn't use that money towards the purchase of a home and at 2200 bucks a month, I'm looking at roughly $26,000, 26,400 to be exact of annualized rent for my place. So, I mean, your rent number certainly wipes out any profit that you will have made in that year. Right. So if we, if we took out rent just for the sake of the argument, just so we could watch the multiplying effect of compound interest in the stock market, from year one, by year five, you would have made roughly $36,000 on a 10% gain. annualized every year and then by year 10. You would be way up there at $95,000 

Dan Wurtele  15:56  

95,000, That's a pretty big number. That's an impressive return. 

Ryan Dash  16:00  

Yeah, it is. But like I, like I said earlier, I mean, you're still dealing with this annualized rent, right? So by year two, you will have paid 56 or sorry, $26,000 times two. So that's $52,000. Now that you've paid in rent in two years, it gets way worse.

Dan Wurtele  16:20  

And we're also being kind and pretending that your landlord is not increasing rent for 10 years. That's right. You're maintaining the same Yeah, yeah. Just for the argument's sake of this,

Ryan Dash  16:28  

right. So by year five, I've paid $132,000 in rent and by year 10, I will have paid $264,000 nearly a sorry, over a quarter of a million bucks. Paying down somebody else's investment. I'm sorry, I difficult

Dan Wurtele  16:47  

Yeah, it's it's, it's a hard number to ignore. Yeah, that's it. So let's back that off of the gains here from our $60,000 investment into the stock market. So we're up 95,000 we go to cash out is all about money ours? 

Ryan Dash  17:04  

No, sorry. Government wants their piece too 

Dan Wurtele  17:06  

That's right. Yes. Your gains in the stock market are taxable. These are capital gains. Depending on your income level, you can expect somewhere in and around 30, 35 upwards of even 50% taxation rate. Yeah. 

Ryan Dash  17:21  

On that game for sure. 

Dan Wurtele  17:22  

Let's be nice. Let's call it a round of 35% taxable rate that'll leave you around $60,000. That's right. That's your take home. Yeah. So you put in 60, you're getting 60 back, it's 100% return it is very respectable return. Very much. So and that's over our course, our ten year timeframe here, but let's look at our rent again. That was about $264,000. Correct. So 60,000 minus 260,000. We're still negative about 200 grand cash for that time, your 10 year timeframe to have paid rent. 

Ryan Dash  17:58  

Yep, that's right. wiped out. That's the way to look at it, you know,

Dan Wurtele  18:04  

but we had a home, right? You were living somewhere,

Ryan Dash  18:05  


Dan Wurtele  18:06  

You had somewhere to work and live and 

Ryan Dash  18:08  

and that's also I think, before we kind of go any further, that's a point really worth making that whether you've purchased your home or whether you're renting it, it's money out. You got to pay money out. Yeah, but how that money gets used is what we're talking about here and where where it ends up. So if we comparatively look at a 6% gain, which is what's happened in the real estate market here over the last 10 years. Let's look at the power of leveraged money,

Dan Wurtele  18:34  

as we mentioned. So the Dow Jones has actually averaged at a higher rate than Vancouver real estate over the last 10 years. Yeah, but of course, that 6% is applied to the total home price, the 500,000. 

Ryan Dash  18:47  

That's right. 

Dan Wurtele  18:47  

So 10% on 60,000 is one way of looking at it or 6% on 500,000 

Ryan Dash  18:54  

missing a zero

Dan Wurtele  18:54  

right, you're essentially leveraging the bank's money. For your own gain.

Ryan Dash  19:00  

That's exactly what you're doing while you live in a place. And instead of paying 20 $200 a month in pure interest, you actually pay far less than that in interest. And the balance of your payment is principal reduction payment, which means you're paying down your debt. You're not paying down somebody else's debt and that's where the power really comes from. 

Dan Wurtele  19:22  

As an example, in the first year alone, the amount of principal pay down on your mortgage for the same outlay, you know what, yes, it's 2200 total, but we're applying 1725 to your mortgage. The total pay down in year one alone is $10,500.

Ryan Dash  19:38  

So that's almost half the entire payment, or of your rent payment. In in just living and using that $2200 a month differently and your gain is where the work. You just can't keep pace. I mean, even at a modest 6% You know, you're looking At $30,000 in your first year, right? That's that's a gain of 30 grand in your first year. Oh, and the other side of that is you don't actually have to pay the government any of that money.

Dan Wurtele  20:13  

That's right. Yeah. Your principal residence is not applicable to capital gains tax. 

Ryan Dash  20:19  

Right. So by year two, I would be up $61,800. I'm almost halfway to my stock market portfolio. Gains here. 

Dan Wurtele  20:30  

Mm hmm. And at year two here, now, you're also at about $22,000 In mortgage paid down Yeah, we're looking at around an $80,000 swing so far, you know, I mean, again, so we're looking quickly back to our gain in the stock market. We were only at 12 six then. Right. So you know, you're almost double by your two.

Ryan Dash  20:48  

Yeah. And then by you get to your five things start to get tremendously exciting. You're upwards of $169,000.

And what does the mortgage pay down look like by year five. 

Dan Wurtele  20:59  

Well, you're I would have to double check on that Ryan, But

Ryan Dash  21:03  

let's, let's assume for the sake of argument, it's gonna be somewhere around 50 or $60,000. Sure, yeah, it's right.

Dan Wurtele  21:11  

Sorry, it's a it's $55,000.

Ryan Dash  21:14  

Right. So by the time you end up in year 10, I mean, you're looking at a potential gain of $395,000 on a one bedroom apartment.

Dan Wurtele  21:25  

Yeah, that that home that you bought for 500,000. Should the market emulate what it's done? The last 10 years is now worth just under $900,000. 

Ryan Dash  21:33  

That's incredible. Right? 

Dan Wurtele  21:35  

Now, of course, that gives you some options. Yes, right. Maybe now. It's you have a family. Maybe now you want something new. Maybe now you want to move to something bigger, whatever the case may be. You're sitting on about 535,000 in equity. Now, after your mortgage paid down, you've been paying for 10 years. Yeah, plus the appreciation. You've got over half a million dollars to play with or to access

Ryan Dash  21:58  

and that's So what nobody ever told me, Well, when I grew up, was that everywhere I saved my money, I had to get it from the bank, but what this what this really is, is it's more or less your own personal bank, it's you have tons of options that become available to you once you've got this kind of equity. Even you know what, if you back off the 10 year number and even go to the five year number, and you look at $169,000 gain, that $169,000 can be applied towards your down payment on a new home, which there's no doubt in my mind, today's cheap rates, you would be able to launch yourself forward into a much better property type far beyond or sorry, far before the 10 year mark. Right. And where it gets crazy is when you look at you know the gains in the stock market by comparison. I gotta wait 10 years to get a two year return in real estate.

Dan Wurtele  22:59  

big change big difference. Yeah, it's it's kind of shocked me to hear. When you look at numbers, it really rings true here.

Ryan Dash  23:07  

Yeah and so, you know, when you look at the vast majority of why, you know, people who are wealthy that own real estate, it's because they have this kind of power. It's it's, it allows them to negotiate on all kinds of things because now that they have this equity they've got they've got a whole other bank that they can access as lines of credits. It's it's goes on and on. Right?

Dan Wurtele  23:33  

That's a good thing to touch on because it's something that maybe a lot of people don't recognize or don't think about it first and yes, you do kind of add an additional layer of stability and security in your life. Yeah, you know, let's let's look at Covid for example, what just happened, a lot of people suddenly found it very difficult to pay rent or to pay their mortgage right, but the homeowner was allowed to defer their mortgage, or potentially even access the equity in their home. That's right to cover their expenses, their their living costs, whatever it is, yeah. Right. They're just in a stronger position and let's be honest here too, right with with the stock market. Let's say you buy Apple stock, for example and for some reason Apple starts tanking. Yeah. Well, you can't go down to Apple and tell them to work harder, and make make their company worth more. But you know what, you can't 

Ryan Dash  24:19  

invent something new!

Dan Wurtele  24:20  

Yeah. But what you can do with your own asset with your own home is you can make improvements. So if you are thinking about selling, and you're like, well, what if I just do a nice little 20 $25,000 Kitchen reno totally to improve the value of my home. Will, I see a return on that. Yeah, yeah, you're very likely will, but maybe a 40 to $50,000 return.

Ryan Dash  24:40  

And here's the crazy part is that I can take the profits out and pay for my reno. Hmm. So I don't even have to dip into my own bank where I'm getting paid through my job to do that. You know, if I decide to do it, and you're three and I can take out $20,000 in equity to do that. That's up to me. That's it. Right and that improved your quality of life. Yeah. And it's it's not like you can like, like Dan said, You can't just walk down to Apple and say, Hey, work harder, you know, I'm trying to add value to the stock here. You can't, you can't add value to your stock, right, but you can add value to your investment, your real estate investment.

Dan Wurtele  25:19  

Right and you know, it also gives you other options. Let's say, life changes, work changes, whatever it is, and you want to or you get the option to go travel for a year. Yeah, well, you can now rent your place out.

Ryan Dash  25:29  

Yeah and and that's, I don't, you know, instead of giving up everywhere you live, like, I want to go travel for two months. I changed my mind. Sure. You know, I want to come back. I've got a short term rental, so I'm okay. Here you go. Right. We don't have that when you rent a place. The only way you get to keep your home is by renting while you're gone. Yeah, or subletting if that's something your landlord will even allow. But again, you don't have control over that.

Dan Wurtele  25:53  

Right. So I think yes, these are all incredible advantages to homeownership and yeah, we were talking about some big numbers here, but I think some people might say, okay, sure, guys, but we're in a once in a lifetime bull run in Vancouver real estate. So let's pull these numbers back. Let's say we don't get the 6%. Okay, what what does it look like that? You know, let's do it 

Ryan Dash  26:13  

lets back right off, let's go to 1% 

Dan Wurtele  26:14  

1% a year. Okay. And I think before we do that, a couple things we should mention, when you look at the history of Vancouver real estate prices, and we're going back to when the data began in the 70s. Yes, everything has gone in a cycle. There's been highs, there's been lows. But something very important to notice is that even if someone has bought at the quote, unquote, top of a cycle at the height of a market before a crash or a decline, it's never taken longer than seven years for that price to have fully recouped up to where it began.

Ryan Dash  26:49  

Yeah. So at 1% gains. We're looking at a very, very modest market here something that really no real estate market has has kind of seen over 10 years of growth, especially in emerging markets like Vancouver specific here, but if we back it right off to 1%, and we look at that half million dollar gain, that's, that's only five, five grand in the first year.

Dan Wurtele  27:12  

Right and again, we're also let's play it out to that, let's say somebody buys today, the market absolutely tanks, but then it starts to come back. Yeah, right. This is the other scenario. And so we're just ultimately saying over a 10 year period, do you see a, you know, a total of a 10% appreciation? You know, I think it's we haven't seen it historically, it's always been higher, but let's run a worst case scenario here. So we can just see what that outlay looks like. 

Ryan Dash  27:34  

Totally and I think there's a couple other variables in the scenario that are worth mentioning. You know, I think if the economy does suffer and housing does go down or doesn't appreciate where it's supposed to, you know, rent is typically reflects that as well, but if you're smart and you've got yourself a variable mortgage rate, then your payments may go down as well. So, again, something to chat with your finances. But but worth exploring, I think, where you really see the value in a 1% annualized return is in the actual the mortgage pay down, because that doesn't change. Right, exactly and I think that's where the spread really starts to make sense. Because we even at a 1% gain, I'm still paying down 10,500 every year, right at a minimum and that is creating a spread going the other way, even when there's very, very marginal gains. And as a result, you know, by your five I will only have made, you know, $25,000 on my place, but all of actually paid down 55,000 as we discussed before, you know, plus that 25,000 now, I'm up at 75 grand again, and that's changing my scenario again. Right

Dan Wurtele  28:51  

that's it. So look, let's jump all the way to your 10 Yeah, so that $500,000 home is now worth 550,000. Okay. Sure. That's 50,000. It's nice and, you know, I think we can say that's definitely on the safe side, but again, let's remember, we've also seen $117,000 in mortgage pay down, So even after your selling costs, should you want to sell that home either to cash out or put that equity towards something larger or different. You're still sitting at over $200,000 in equity there.

Ryan Dash  29:22  

Yeah, and equity being the key word here, right? Because that $52,000 gain over 10 years is similar to the $60,000 gain you'd get in the stock market. But the big kicker here being that you're paying down your interest and you're paying down your mortgage, creating that equity gap, whereas on the other side of the equation, yeah, you go in and you make 10% gains on your on your market investment, but you still have $22,000 a year going out just to live. So you don't have that kicker on the other scenario, which isn't creating a gap for you in a slower market and to me, I think that's that's one of the huge benefits of, of having a mortgage.

Dan Wurtele  30:04  

Right. So again, with this 200,000, we look back and reference the stock market option, where I believe we were What? 200,000? Negative? Yeah. So right there, you're looking at a $400,000 swing. Yeah, in a almost worst case scenario market. That's right. Whereas if it emulates the last 10 years, and you've got that 500,000, it's $700,000 swing,

Ryan Dash  30:26  

how else how else can you make 700 grand if you're making 60 or $70,000 a year? You know, you'd have to save everything not paying $1 in tax, right, which is impossible. For 10 years. 

Dan Wurtele  30:39  

Well, and let's be fair here, too, right? We are paying interest on this. So there is about 130,000 in interest paid so we can kind of remove that off the top end, but we're still looking at in and around 600,000

Ryan Dash  30:51  

I don't know how you how the market can compete with that without becoming seriously educated and buying incredible computers and knowing information that people don't know, I just, you know, to me this is a much simpler method, a much more risk averse method for people to gain equity and to equity to a point that would change their life.

Dan Wurtele  31:12  

Right. So whether renting or buying is right for you. Hopefully this helps kind of helps you analyze the different scenarios of what it looks like, on either side. 

Ryan Dash  31:23  

Yeah and again, make sure you go to our YouTube channel, because we'll actually show these graphs so you can see the numbers for yourself. You can you can take a closer look. and again, these are factual numbers, numbers we've used from historical data.

Dan Wurtele  31:36  

And again, like I said, even a worst case scenario moving ahead. 1%, even zero percent. Ultimately, you're, you're paying money to have a house or a roof over your head. Yeah. So whether you want to pay someone else or pay yourself, the 10 year numbers look very promising in my opinion. If you are a homeowner, I can tell you personally, I've lived in my property for 16 years now. It has gone through some cycles and I'm up for the property is up for about 250% right now, that's just for holding. 

Ryan Dash  32:05  

Yeah, I mean, I've I also own property in False Creek, but prior to that, I think, you know, I remember here The one thing I think that this has taught me here, both being in the market and this exercise is that yes, while people try and time the market as best they can, especially with stocks. This exercise simply shows you that even if you don't time the market, well, it's your time in the market that makes you money. 

Dan Wurtele  32:31  

It always is and that's the thing you can actually just get in and stop looking at the market. 

Ryan Dash  32:35  

Yeah, just get in buy something. So you have something as we continue to grow at we're going to get more and more dense property is going to become more and more scarce. It's just a reality.

Dan Wurtele  32:47  

So there it is, again, thank you so much for listening, or thank you so much for watching. Yeah, we hope this helps you make some decisions on what you want to do with your money and your lifestyle moving forward. 

Ryan Dash  32:56  

See you next week. 

Dan Wurtele  32:57  

Thank you.

Ryan Dash  33:00  

That wraps up this edition of the Vancouver life podcast.

Dan Wurtele  33:04  

For more information on this podcast and to access a ton of free downloads, investment opportunities, current market info and homes for sale. You can find it all at

Ryan Dash  33:16  

thanks and we look forward to bringing you more podcasts about Vancouver real estate.

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