First of all I'm far from a financial advisor so always discuss this with someone EXPERIENCED and what I mean by experienced is learn from someone who has achieved what you want. NOT a family friend that just started, experience is invaluable.
If you've been reading Dog Paws & Sandy Hair for a while you'll know that my husband and I have been investing into the Real Estate market for the last 18 years in Canada and in Costa Rica. So I have experience in both avenues and you'll have to bear with me on explaining the difference.
Canada especially in my market of Ottawa Ontario is considered LOGICAL Real Estate Investing. As you can see from this chart home prices has increased year over year with some jumps spiking as high as 21.34% of growth. That's HUGE if you think about it. Let's say you bought a town home in Ottawa for $450,000 and that year the average price rose 21% that means you the home owner would have your property value increase by $94,500.00 I'm not sure about you but for someone to SAVE that type of cash in 1 year you have to have a very lucrative job. So it's safe to say it's pretty logical to buy a property in this market because it's been proven to grow constantly time over time and not drop majority. This is due to being a government city where growth is constant, jobs are steady and immigration is pretty consistent. Not to mention we were one of the cheapest major cities to live in for years!!
Now Costa Rica is more of an EMOTIONAL Real Estate Investment only for the fact that if you had $250,000.00 to invest into a property in ALL of the world there are probably plenty of areas you can invest it to have a higher faster return. Costa Rica does not have a MLS system to track all real estate sales so monitoring appreciation over the years is quite difficult. I've read that it's generally 3% but it is also very subjective to how the US Economy is doing. Now, emotional investing isn't a bad thing necessarily. For example Eric and I put in an offer to buy a home this year in the mid 250 range and we are fully aware that it won't make us the same return as it would here in Ottawa and were ok with this because to us this is our future RETIREMENT HOME. We feel that where else would we want to live than in this growing community filled with people we call our friends. In a perfect world if we held onto this property and it did grow 3% a year then 20 years from now that's about $7,500 increase per year x 20 = $150,000. Not too shabby but not the same as Ottawa's returns (yes of course ottawa won't grow 20% a year but those little bumps are huge).
Sure we could take that money and invest it here make much high returns then turn around sell what we grew and buy a home in that are with that other asset growth. The only reason why we chose to not do that is because we are EMOTIONALLY invested into owning that home 2 doors from the ocean with 1/4 acre. Most homes in that area have smaller land and we really do love having a veggie garden.
When it comes to emotional investing vs logical investing there are very different end goals in mind as well as different returns. There is really no wrong way to invest, though I know someone reading this will strongly disagree with me and feel logical is the only way. With that say you should NEVER invest money into anything that you're not willing to lose. Investing has a level of risk and you'll have to determine what your level is for yourself.
I would love to know what your investing style is like.
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Kristy & Eric
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Thinking of Buying / Selling in Canada or Costa Rica? Feel free to reach out and I'll be able to connect you with a trusted professional in your market.