Is Vancouver Real Estate a good investment?

Vancouverites are obsessed with real estate. And for good reason. Vancouver real estate has increased 175% since 2005. But is it a good investment? Let’s compare with a low cost ETF such as the S&P 500 ETF XSP.TO.

Capital gains

Vancouver real estate has increased 175% since 2005, which is an annual increase of 8.1%. However, this includes almost insane gains since 2015 that seem in some part related to foreign investment. Will these gains continue?

XSP.TO has risen 99% in the same time, an annual increase of 5.5%. However, this includes the prior 2008-09 which was a financial crisis. Since 2009 the gains have been much higher. Normal gains are more like 7%.

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Dividends

XSP.TO pays a dividend of around 1.5%.

Real estate dividend is harder to calculate, but let’s try. A one bed apartment in Kitsilano costs around $500,000. Rent is around $1,600/mo. Strata fees are $200/mo. Heat and cable and $100/mo. Repair costs are $200/mo. Occupancy is 95%. That’s an annual net income of around $12,240, or 2.4%.

Liquidity

I can sell an almost unlimited amount of XSP.TO in a minute for $9.99.

It would take months to prepare and sell a property, with realtor costs of maybe $10K and taxes of $9K.

Risk

Hard to assess the risk of Vancouver real estate investment. Rising interest rates. Capital outflow from oversees. Government lending regulations. The risk seems medium-high.

The S&P 500 is high diversified but is also dependent on macro-economics, US government policy, inflation. The risk feels lower but not low. Let’s call it medium.

Summary

Real estate beats the S&P 500 for capital gains and dividends. Historically. Hard to predict the future.

The S&P definately wins on liquidity and perhaps on risk.

Pick your poison!

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Getting into Berkshire Hathaway

I have been considering investing in Berkshire Hathaway for a while. The stock is legendary. I have owned it before and it did well for me. I wish I had stayed in.

The major indices have pulled back in the past few days and Berkshire is down 9% in recent days. When people are fearful, be greedy!

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Portfolio Update – Down 0.20% in December 2017

My portfolio balances at close of trading on 31st December were:

Ticker

Price (C$)

Price Change

Percentage

XMW $‎ 37.60

-3.59%

21.6%

XIU $‎ 24.13

1.09%

23.0%

XSP $‎ 30.38

0.13%

35.5%

XBB $‎ 30.96

-0.67%

17.4%

XQQ $‎ 52.24 n/a

2.2%

Cash

0.3%

Total

100.0%

My portfolio is down 0.20% since last month. For comparison my TI Index is up 0.67%, the DOW is up 1.84% and the TSX is up 0.88%. My investments are down and performed poorly against the TSX, DOW and TI Index.

My Global Fund (XMW.TO) down 3.59% is the loser this month. No particular winners.

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Portfolio Update – Up 1.53% in November 2017

My portfolio balances at close of trading on 30th November were:

Ticker

Price (C$)

Price Change

Percentage

XMW $‎ 39.00

2.52%

22.4%

XIU $‎ 23.87

0.00%

22.7%

XSP $‎ 30.34

3.06%

36.2%

XBB $‎ 31.17

0.68%

17.5%

Cash

1.2%

Total

100.0%

Overall my portfolio is up 1.53% since last month. For comparison my TI Index is up 1.47%, the DOW is up 3.83% and the TSX is up 0.26%. My investments are up and performed well against the TSX and TI Index, less well against the DOW.

My S&P500 index (XSP.TO) and the Global Fund (XMW.TO) are winners this month.

Screen Shot 2017-12-18 at 4.14.50 PM

Portfolio Update – Up 2.98% in October 2017

My portfolio balances at close of trading on 31st October were:

Ticker

Price (C$)

Price Change

Percentage

XMW $‎ 38.04

4.97%

22.4%

XIU $‎ 23.87

3.11%

23.2%

XSP $‎ 29.44

2.44%

36.0%

XBB $‎ 30.96

1.31%

17.8%

Cash

0.6%

Total

100.0%

Overall my portfolio is up 2.98% since last month. For comparison my TI Index is up 2.18%, the DOW is up 4.34% and the TSX is up 2.50%. My investments are up and performed well against the TSX and TI Index, less well against the DOW.

All my investments were winners this month, particularly my Global fund (XMW.TO) up 4.97%.

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Portfolio Update – Up 0.05% in September 2017

My portfolio balances at close of trading on 29th September were:

Ticker

Price (C$)

Price Change

Percentage

XMU $‎ 42.63

0.90%

0.0%

XMW $‎ 36.24

0.86%

22.2%

ZAG $‎ 15.35

-0.39%

0.0%

XMI $‎ 34.00

0.80%

0.0%

XIU $‎ 23.15 n/a

23.4%

XSP $‎ 28.74 n/a

35.6%

XBB $‎ 30.56 n/a

18.3%

Cash

0.5%

Total

100.0%

Overall my portfolio is up 0.05% since last month. For comparison my TI Index is up 1.22%, the DOW is up 2.08% and the TSX is up 2.78%. My investments are up but performed poorly against the TSX, DOW and TI Index.

During the month I sold my low volatility US (XMU.TO) and EAFE (XMI.TO) funds, replacing with a TSX index fund (XIU.TO) and an S&P500 index fund (XSP.TO). I also swapper out the ZAG bond ETF for XBB. The low volatility funds were underperforming. I kept the low volatility Global fund (XMW.TO) to provide diversity.

No real winners or losers this month. Flat.

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