My friend Mandy is looking for a house to retire in. Since she is single, a three room condo would be acceptable. Even though she has a valid driver's license, she has not driven in the last ten years. That handicap would limit her to properties within five hundred yards to a sub way station.
She has been viewing, what fits her criteria does not go for less than four hundred thousand. But her budget is three hundred thousand. Her real estate agent advised her to wait a year or two as the speculation driven bubble has to break at some point. Meanwhile, I suggest that she looks at three room condo a little further from the city that are near future lines. In fact that day my daughter saw some initial earth work done in the vicinity of a future sub-way line.
I am not surprised that she was not interested. Fifteen years ago she was in a position to buy apartments. She insisted she really wanted a linked house. Eight years ago she finally saved up enough to put a down payment on her dream house. Looking back, she saw her friend who purchased apartments owning two to three properties by the time she was struggling with paying for her first house. She waited and actually has to pay at least a hundred thousand more for the same type of house her friend bought five to ten years earlier.
You see, those friends started with a two room apartment. When they earn a little more, they pay down payment for a three room apartment. Once they get the keys to the new property, the let out the old one and live in the new one. When they are offered a good price for the first property, they sold immediately and bought a landed property. Meanwhile, Mandy's hard earned savings were actually staying idle in the bank earning little interest. She dares not invest in the stock market or unit trust. Year by year her savings in real terms dwindles because it cannot grow at the rate of inflation.
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