I know lots of small time investors who had the cash flow to weather the storm, unfortunately lenders got skittish and called mortgages. That put more stuff on the market, making prices go even lower.
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It was a win for private mortgage lenders, if Mr small time folds, as a private lender you now own a rental property. For what he owed you not market value, which can be close since the reason he's dealing with you is there is little equity. And your interest rate isnt a bank rate , he doesnt want to fold but the bank has shrugged.
There is always money to be made on the downside of the market, dont own the houses, own the owners.
The market went on a tear starting 1985. A 1500 sq' new home on a 60x120' lot in Stouffville or a 1/2 acrre lot in Holland Landing cost about $100,000. By 1989 those houses were worth $325K. The market took a tumble and they went down to about 200K in 92 - it was a housing bubble, more speculators than potential owners. That was a pretty big correction.
I know lots of small time investors who had the cash flow to weather the storm, unfortunately lenders got skittish and called mortgages. That put more stuff on the market, making prices go even lower.
That combination left GTA housing undervalued for years, prices recovered by about 2005. Those $100K houses bought in 1985 are worth nearly $1M today, that would be about a 15% annual rate of return.
Keep in mind that mortgage rates peaked to about 22% in around 1982. If someone bought a house in 1980 and took over an existing 5-6% mortgage with two years to go before renewal they could have been in deep trouble. I know. We dodged that bullet.
Keep in mind that mortgage rates peaked to about 22% in around 1982. If someone bought a house in 1980 and took over an existing 5-6% mortgage with two years to go before renewal they could have been in deep trouble. I know. We dodged that bullet.
I know those years were tough on interest rates, but you have to remember wages were rising at up to 20% a year too. My dad bought his first house in 1975 for $50K - he made 20K per year. By 1980 he made twice that in the same job, those interest rates had a brief sting, but they didn't kill like the correction of the late 80s.
It was a win for private mortgage lenders, if Mr small time folds, as a private lender you now own a rental property. For what he owed you not market value, which can be close since the reason he's dealing with you is there is little equity. And your interest rate isnt a bank rate , he doesnt want to fold but the bank has shrugged.
There is always money to be made on the downside of the market, dont own the houses, own the owners.
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