In your personal example, you’re renting luxury and you also bought luxury. You’re choosing to live in the lesser of the two luxury properties that you own because it provides greater financial utility to do so. The 3.5% is not realistic rate for buying an investment property. I recently bought my condo I am living in and got preapproved for 3.275%.
This ensures that the pieces are sturdy, durable, and look good. For a modern apartment, it’s vital to look for eco-friendly furniture that has been sustainably manufactured. Buying green will ensure you do your part in conserving the environment and saving the future.
Some investors are even willing to buy a building that just breaks even on cashflow with rent, because they are confident they will make a great return on their investment with appreciation. Luxury apartments are known for offering high standards of lifestyle and opulent living. Most of them have unique amenities and facilities which you cannot find in the standard apartment buildings. Whether you are planning to travel overseas or improve your living styles, you should choose the right apartment. Headlines always discuss the latest news of the most expensive apartments that are selling in New York, like the $250 million purchase by Ken Griffin or $100 million penthouse purchase by Michael Dell.
I’ve even considered selling our co-op when we outgrow it and go back to renting, but once again would feel like I’m missing out on the appreciation here. I bought an investment property in Kansas City, MO and it’s been going okay. I think my house there has taxes just slightly under $1000. I might consider crowdfunding but prefer to invest more directly so I can take advantage of leverage, tax benefits, etc.
My understanding is that your 12% “rental yield” would imply a cap rate in the 6-7% range under US-conditions with its high property taxes. That would be a satisfying compensation for the risk indeed. If the location is a good one where probability of rents increasing ist very high, in my book you might consider Buy Off The Plan Apartments North Shore accepting a cap rate in the 3-4% range. If you are paying more you are betting on a decent amount of inflation for the future and interest rates at least not going up significantly. I have townhouse in San Mateo which is close to freeway and thinking if I should sell or rent it out for 4500$/month.
I thought market was going to crash, so I tried a bond fund, lost money, took losses at the end of 2016, and then put that into the stock market and have done OK. Too nervous to put more in, but overall, I increase the savings from my paycheck and my daughter’s 529 contribution . Your rule of “pay no more than 100X the monthly rent as the purchase price. ” or “the 1% rule” according to Paula Pant, is the rule I like to use as well when evaluating whether it makes sense to buy or own. As you said, it’s nearly impossible to find something that follows the rule in massive metropolitan cities like NY, SF, or Toronto. That’s why it makes more sense to rent in the bigger cities and own in other places where you can follow the 1% rule.