Station Park | 18, 28, 36, 40, 50 fl | U/C

[Rainrider22]

Don't get me wrong: I have owned rental units, and am not negative about real estate as an investment generally. I just can't see the sense in purchasing at today's prices. You've been very lucky the last five (more like fifteen) years in Canada with real estate, but at some point- logically- the luck will run out. The people buying today are I think in most cases in a cash flow neutral or negative position, and are speculating that prices will continue to appreciate. I'm not really in a position to say whether they will or not, but the one thing we can agree on is that there is risk.

You're right that real estate offers the ability for individuals to leverage, and that's a benefit. But, of course, leverage cuts both ways, and if we see capital depreciation in the future, leverage will magnify that loss.

To answer your question about your hypothetical stock pitch, of course I would take that deal if I knew the stock was going to appreciate- but that can't be known. Buying equities on margin is rightly considered by most people to be an extremely risky proposition. But leveraging into real estate for some reason is not.

I think traditionally, and historically, you wont go wrong investing in real estate.  And as long as your building up equity at someone else's expense, I don't see a downside even if the unit price does not appreciate substantially.  And again, the amount of tax advantages makes it worth it for me personally.  The caveat to all this is you have to be in it for the long haul, if you are looking to flip and make a lot of money than I agree, right now you might not want to invest in real estate.