Today I learned of a tale of emmense heart-break that I need to share with you so it never happens again to anyone.

An investor purchased a beautiful property in a great area in the GTA. Here are some of the pictures of the house, take a look, its a beautiful house, don’t you think?

2 car garage	big rooms
open spaces	elegant dining room
fireplace	spiral staircase
pretty big	even big here too
back yard

What do you think? Wouldn’t you like to live in a house like this? I certainly aspire to have something similar one day.  Did you notice the large master bedroom?  The good sized yard?  Ceramic floors? Maybe I would modernize the flooring, but all-in-all its a great house. A house like this typically sells for $400,000.

So the plan was something like this:

Put $60,000 down, get $340,000 mortgage, debt service would be $1623 per month and rent the house out for$2200  This would yield the owner 9% on his investment of $60,000 way better than what he would get with it sitting in the bank. Plus he would score a second cash-out when he sells the property years down the road because the values of homes always increase right?

Right? Isn’t that the case?

Isn’t that a good investment?  This is one of the fundamentals of buying a property for rental purposes and you mostly see it with condos. Lots of people have different strategies on what types of properties to hold and for how long. So does this type of investment appeal to you? Are you worried about a possible down turn in the economy? A downturn that would destroy the value of your investment?  That is certainly a possibility to consider, but todays tragedy involves something worse than this.

Today we will consider a bad tenant.

In this sad situation the tenant was a criminal.  They modified the house in order to grow marijuana plants, causing serious structural damage. This is a horrible situation that happens more frequently than you would think.  So not only did they ruin the electrical and structural system of the home. Mould from the intense heat required to grow the perfect buds penetrated the building creating spores dangerous to the health of humans and animals.  And to add insult to injury, the re-wiring was a disaster and the house caught fire.  This is the same house now.

Know who your tenants are!  Check on your property regularly!

For sale right now in the beautiful city of Austin, Texas. This three bedroom, two bathroom house has a two car garage and is only four years old. The price - $115,000!

By now, I am sure you have heard about the homes that are available, for example in Houston, Texas, a beautiful six year old bungalow, four bedroom, two bath home sells for $120,000 something comparable here in the GTA would easily be $360,000!  If you are just starting out, and don’t need such a luxurious home,  the housing market in the United States has made it possible for a young couple to purchase their first home, a beautiful starter home, a three bedroom, two bathroom bungalow with a garage for around $50,000!   I am not talking about a house that you have to throw hundreds of thousands of dollars to repair,  they are almost new, ready for you to move right in.   Search Realestatebook.com to see it yourself.  Pick your city, then your price, and then call me when you see something you want to buy!   The dramatic price differencial between homes in the GTA and those in the United States are so great that now when young couples meet with me often the options they are weighing are 1. buy a home here in the GTA, or else 2. move to the United States and buy with a much lighter debt-load with the aim being a hopefully better quality of life.

For many couples, it does look appealing, especially in the southern states which have their warm climate, friendly people, fresh food, as well as a familiar culture to ours.  For Canadians, to get your work permit you need a job offer, but, there is not too much risk involved.  You can send your job applications from Canada, to wherever you want to live.  When you find work, there is not too much bureaucracy to stop Canadian citizens from starting their life in a U.S. neighbourhood.  Out of the people I know, once their employment was confirmed, their visa came shortly thereafter and they were out of the country off to start a new life within a month.

A lot of my friends from school left for the United States many years ago upon graduation.  It was a great opportunity to earn more money and be able to pay student loans back faster.  Now, another wave of them are leaving, this time the opportunity is in the quality of life and the value you get in return for your money.  However, not all things are the same as they are here. One of the many who were ready to leave Canada in the past year told me that he found a job in an area he and his wife wanted to live.  As soon as he received his job offer,  they started to prepare their things for the big move.  One of the things they did was get a quote on health insurance.  The day they got the quote, they called the agency to see if there had been a mistake, they also called two other agencies down there for similar quotes, just to be sure.  However all the quotes were similar, that one piece of paper ended their dreams of living in the southern states.  Health insurance in the United States is a lot like car insurance here.   You choose your deductible and based on that, you pay a set monthly fee.  In their case, they had a lot of deductible options, (one of the schedules is below) but, a $1,000 deductible would get them a monthly premium payment of $530.00 per month. Apparently that is a good deal.  Suddenly, the quality of life debate became more like a lottery.  It was too much of an expense for them, especially since he would be making slightly less money in U.S. Dollars and his wife’s employment status would not be certain for a few months.  Now the questions they were considering were : Would they bother to get health insurance? Could they risk not having it? They were not a couple who go to the doctor that much, but they wanted to keep the option open if they felt it necessary.  Another consideration was that they were planning to start their family very soon, medical costs with the expected children would be significant.  So, my friend had the sad duty to call his would-be employer and break the news to them that he wouldn’t be able to accept the position.

Quality of life includes quality of healthcare. Image courtesy of DIAC Images.

 Maybe its because I am a Realtor, but I always look at monthly payments and think what kind of mortgage it could get me.  $530/month is kind of like a mortgage of $85,000. If I add that to the price of a nice Texas house, I get $200,000 which starts to sound more like a price one would pay in the outskirts of the GTA.  So, if you are one of these many young couples comparing houses here to those you could buy in the U.S. remember: when you buy a house you are also buying the neighbourhood, and don’t forget a bit of the nation too.

This is why healthcare is such an important issue here in Canada.  We are people who decided that health must come before all other considerations.  I have heard it through-out my life so many times, that ‘without your health, you have nothing’ .  Amenities make a neighbourhood a great place to live, and infrastructure makes a nation better.  People can live without some amenities, and so prefer one neighbourhood over another.  Can you live without some government programmes?  This is an important question you must ask before you move to another country.  Whether its roads, healthcare, ambulance, fire fighters or one of the many resources we enjoy maybe without noticing, they all contribute to a community. So, if you see a nurse please thank them for the work they do.  That includes their work at keeping the value of our real estate elevated.

A sample Deductible / Monthly Premium schedule for health care for a young family in their early 30′s of two Canadian immigrants to a city in the southern United States.