I an not retired yet, just counting the hours (57 months)
My target is 2M in assets
Right now, i have several rentals and some money in etfs
To follow my stury, i lower the 2M into 200K investments and them i will multiply everything by 10
I am thinking in two optionsafter having the 2M)
option 1-To have 100% of a rental property (no mortgage) that will give me around $9K per year after canadian tax.
option 2- to have the same property, 80% mortgaged and invest the 160K into etfs. The mortgaged house will give me around 6K yearly (after withdrawing principal paid every 5 years) and expecting a 4% yearly return on the 160K. So the total for option 2 will be 6K+4%x160k=14.4K
after multiplying everithing by 10, i have
option1 9K*10=90K
Option2 (4% return) 14.4K*10=144K
The beauty of option 2 is that i can sell anytime the etf and pay the mortgage balance (if they are in variable rate) with almost no penalty.
Also, if the real esta market increase (that is what eveyone expect in a big city) at least 2% per year my kids will inherit a bigger chunk of capital (but the same quantity of properties)
Am I missing anything to opt for option 1?
My target is 2M in assets
Right now, i have several rentals and some money in etfs
To follow my stury, i lower the 2M into 200K investments and them i will multiply everything by 10
I am thinking in two optionsafter having the 2M)
option 1-To have 100% of a rental property (no mortgage) that will give me around $9K per year after canadian tax.
option 2- to have the same property, 80% mortgaged and invest the 160K into etfs. The mortgaged house will give me around 6K yearly (after withdrawing principal paid every 5 years) and expecting a 4% yearly return on the 160K. So the total for option 2 will be 6K+4%x160k=14.4K
after multiplying everithing by 10, i have
option1 9K*10=90K
Option2 (4% return) 14.4K*10=144K
The beauty of option 2 is that i can sell anytime the etf and pay the mortgage balance (if they are in variable rate) with almost no penalty.
Also, if the real esta market increase (that is what eveyone expect in a big city) at least 2% per year my kids will inherit a bigger chunk of capital (but the same quantity of properties)
Am I missing anything to opt for option 1?
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