It’s True. You Don’t Always Make Money on Real Estate

Investing articles can be long and boring.  How about I read the article and provide you with the important information for DIY investing success.

Here it is:

For the past 20 years many Canadians, especially those who live in Toronto and Vancouver has come to be convinced that you can’t lose money in real estate because houses always go up in value.
Well here’s a story featuring everyone’s favourite singer Michael Buble that shows this isn’t the case.

Michael bought a home in West Vancouver for $4.55 million in 2007.  He spend an unknown amount of money putting in a pool and landscaping.  22 years later, the house was sold for $5.18 million. 

If instead of buying this home, Michael has invested his $4.55 million in a low cost S&P 500 fund, he would now have $11.14 million in his account.

You have to live somewhere but if Michael had instead bought a really nice home for $2 million and invested the remaining $2.55 million, he’d now have a home worth $2.5 million or more (the less expensive homes have done much better than expensive homes) and a stock portfolio worth $6.2 million.

The key takeaway for me is we all need a diversified group of investments with real estate being just one part of the mix.   Secondly, prices for any asset class (stocks, bonds, real estate, farm land, art, etc.) can change very quickly so don’t be surprised when a sure thing becomes a money loser.

Here is the article (need subscription to Globe and Mail to read):