I recently read an inspiring article in the Vancouver Sun, written by Andrew Renton, that I thought I’d share. In Renton’s words, financial gurus rarely suggest that investors buy a second property. But if you buy a house or condo with 25% down and it appreciates by 25%, he says, you will have doubled your money. He’s right. Although there have been periods where investment values have been stagnant, they have rarely dropped. And if they have dropped, they have always risen again shortly after. Seems to me that buying that second property, if you can do it, is a no-brainer.
Renton uses the Vancouver market as his example. Although the market isn’t quite the same there as it is here, it is similar enough to make the comparison. “In the past 35 years a 33-foot lot in Vancouver’s West Side has risen in value from $14,000 to over $1,000,000 ($28,000 per year!) and I’m sure the next 35 years will bring golden returns to lucky owners,” Renton says.
There is no tax paid on appreciation until the property is sold. At that time, capital gains taxes apply, but they are based on the owner’s income, which could easily be their retirement income. Something to think about…
Could you see a second property in your investment portfolio?