COVID and the housing market | Page 224 | GTAMotorcycle.com

COVID and the housing market

Lightcycle said:
It shouldn't be an issue. I carried a perpetual balance on my HELOC for well over half a decade while trying to crawl out of a badly leveraged investment after the DotCom bust.

Also the banks push loans for investment all the time. Of course, the investments they are pushing are the bank's own mutual funds.

High MER on the fund + collecting interest on the loan - win win for them, they are eating the customer's sub sandwich from both ends...

:mad:
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The golden rule is "don't buy bank product (mutual funds /other investments) buy the bank (bank stock)
Why pay them MERs when they will pay you with dividends?
 
GreyGhost said:
It's 20% of the initial mortgage. That number is far higher than the amount I borrowed to invest.
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I think we're getting our signals crossed.

I thought we were talking about taking out a fixed term loan dedicated for investments vs HELOC? You take a $100K loan out for investing, you are only allowed to pay $20K a year without penalty even though you've liquidated all your investments after a few months. With a HELOC, you can put the money back immediately.
 
Lightcycle said:
I think we're getting our signals crossed.

I thought we were talking about taking out a fixed term loan dedicated for investments vs HELOC? You take a $100K loan out for investing, you are only allowed to pay $20K a year without penalty even though you've liquidated all your investments after a few months. With a HELOC, you can put the money back immediately.
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Instead of a separate financial product, at refinance, I could combine mortgage and heloc to become a mortgage at a level we were already approved for. Saves some interest but makes a mess of financial tracking. I highly doubt I would go this route. If I wanted to keep the investment loan as a separate loan, that is also a mess. Then the 20% per year could bite me and I presume the bank would somehow screw me up (probably reduce heloc by loan amount to limit their liability).
 
GreyGhost said:
Instead of a separate financial product, at refinance, I could combine mortgage and heloc to become a mortgage at a level we were already approved for. Saves some interest but makes a mess of financial tracking. I highly doubt I would go this route. If I wanted to keep the investment loan as a separate loan, that is also a mess. Then the 20% per year could bite me and I presume the bank would somehow screw me up (probably reduce heloc by loan amount to limit their liability).
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Ah.

You forget you're talking to a lowly renter here. No mortgage, no refi... ;)

(yaya, no HELOC too, I know I know)
 
3 interesting conditions on the HELOC:

1. Not to be used to buy property
2. Not to be used for investment
3. Any renovations performed with it cannot be structural…only cosmetic / upgrades…

Wtf…

Nothing about no Vipers!
 
mimico_polak said:
3 interesting conditions on the HELOC:

1. Not to be used to buy property
2. Not to be used for investment
3. Any renovations performed with it cannot be structural…only cosmetic / upgrades…

Wtf…

Nothing about no Vipers!
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Hmm. Need to look at my paperwork. I transferred from heloc to investment account at the same financial institution. I guess if the market took a dump they could use a similar clause to try to call the loan and screw you.

Now, as far as tracking where it went, lots of people don't keep good records. I borrowed it, I spent it. Who's job is it to prove that you complied with the conditions? It's all a shell game anyway. I could use heloc to pay credit card for a few months and use employment money to invest.
 
I think it's a more CYA by them...'see look, we told them they can't use it....it's on the client now.'
 
GreyGhost said:
I guess if the market took a dump they could use a similar clause to try to call the loan and screw you.
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This exact thing happened to me in 2001.

IMO, the rules around how you use the funds from a HELOC or any kind of loan are virtually unenforceable.

The bank has no idea what you do with the money once it's in your hands. As long as you keep making the minimum payments or keep the loan amount underneath the max, the bank is more than happy to keep accruing and collecting interest on your loan.

The last thing they want is a default on their books. When home values cratered in the US during the GFC, some banks turned a blind eye towards lowering HELOC limits by the commensurate drop in value. As long as the client kept making payments, the bank was happy not to record a loss.
 
mimico_polak said:
I think it's a more CYA by them...'see look, we told them they can't use it....it's on the client now.'
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I haven't been able to easily find the long form but the web page specifically mentions using it for purchasing an investment property, paying bills or "invest in your future". Seems to promote the things yours discouraged.

Percentage limits were as per MM. Max heloc limit of 500K if you want visa access or 1.5M if you don't want visa access.
 
GreyGhost said:
I'm not sure if that's an issue related to taxes/regulations or of that's just a marketing opportunity. Why is rsp money going near tangerine these days? I have a small pot left there and it was convenient but damn are the returns ever substandard.
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1% for the Mrs.
 
GreyGhost said:
I haven't decided yet where my HELOC limit to invest is. My current plan is every time I pay off x dollars, pull another x dollars to invest so the total owed stays relatively constant. Started in december, so far paid off 3% using dividends and unrealized cap gain of 9%. As long as all three securities don't suspend dividend, I am fine. Any one of them will more than cover interest. Two of the three are funds so they can't go to zero (and the third is big and highly unlikely to go to zero). If they go down, that's ok as the loan shouldn't get called and put me in a cash crunch.

I am reasonably convinced that I need to keep leverage up on the house. It has become unhealthy to have such a high percentage of net worth in one asset (although you are likely the same way with your business but at least on average it is kicking money out instead of sucking money).
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Try the 95% in real estate as a friend is at. House and cottage with a massive cap gain on the cottage. If he croaks his estate gets a quarter million tax bill. I'm not sure if he can gift the cottage to his kid and eliminate that big hit. He's getting up in years and needs serious estate planning.

His kid is no Warren Buffet. More like Bernie Madoff.

The kid would likely have to sell the cottage as there are mounting legal debts due to bad marriage choices. At some point the government gets its share.
 
GreyGhost said:
Douggie just announced "foreign" buyers tax of 20% province wide starting tomorrow. When it was first implemented at 15% in the gta, our house dropped 35%.

www.cp24.com

Ontario to hike tax on foreign homebuyers while expanding it provincewide

The Ontario government is hiking its tax on foreign homebuyers ahead of a provincial election campaign where affordability is expected to be a key issue.
www.cp24.com www.cp24.com
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So the offshore buyer has to pay an extra $75,000 on a $1.5 M property. Will that turn them off? Then there are the offsetting federal loopholes re Cap gains.

It might have a bigger impact on the non-GTA areas. Was K-W or Barrie included in the earlier 15% tax?
 
nobbie48 said:
So the offshore buyer has to pay an extra $75,000 on a $1.5 M property. Will that turn them off? Then there are the offsetting federal loopholes re Cap gains.

It might have a bigger impact on the non-GTA areas. Was K-W or Barrie included in the earlier 15% tax?
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I don't know where the limits of the old zone were. Until they redefine foreign buyer to be accurate (eg money from a foreign source), these are all just games with little chance of substantial long-term impact.

As far as will 75K matter? Maybe? When BC introduced tax, tons more money came to Ontario. I suspect Alberta real estate will be on fire because of this decision.
 
GreyGhost said:
I don't know where the limits of the old zone were. Until they redefine foreign buyer to be accurate (eg money from a foreign source), these are all just games with little chance of substantial long-term impact.

As far as will 75K matter? Maybe? When BC introduced tax, tons more money came to Ontario. I suspect Alberta real estate will be on fire because of this decision.
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I like the idea of expanding it Ontario wide, I've seen the impact of foreign buyers in Ontario's north -- sight-unseen buyers bidding family homes up on the locals by as much as 100% in 2 years. My northern realtor has sold $5M worth of residential property, 20+ homes, to a single offshore investor.
 
GreyGhost said:
I don't know where the limits of the old zone were. Until they redefine foreign buyer to be accurate (eg money from a foreign source), these are all just games with little chance of substantial long-term impact.

As far as will 75K matter? Maybe? When BC introduced tax, tons more money came to Ontario. I suspect Alberta real estate will be on fire because of this decision.
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One of my buddies just bought a pre-build condo in Calgary...he's a grand total of 3k into the transaction as that was the first deposit.

I think the condo he bought is 230-250k or so. I didn't ask for too many details.

nobbie48 said:
Try the 95% in real estate as a friend is at. House and cottage with a massive cap gain on the cottage. If he croaks his estate gets a quarter million tax bill. I'm not sure if he can gift the cottage to his kid and eliminate that big hit. He's getting up in years and needs serious estate planning.

His kid is no Warren Buffet. More like Bernie Madoff.

The kid would likely have to sell the cottage as there are mounting legal debts due to bad marriage choices. At some point the government gets its share.
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One of the reasons I was pushing for the HELOC was in case anything happened with my parents, I'd have available capital for the CG on the cottage.

I hate the thought of it...but I need to start thinking ahead, even if my parents refuse to.
 
anybody see the news last night on the "housing" collapse in Saskatoon and North Battle ford? 126m in real estate and 400+ properties, controlled by an investment company selling on the women empowerment and affordable housing theme . High end investors from across Canada thinking they were doing 'good work' investing and are now landlords in a place they cant even see onm a map.
Looking like a money funnel for somebody, since the money is gone......

what a mess
 
crankcall said:
anybody see the news last night on the "housing" collapse in Saskatoon and North Battle ford? 126m in real estate and 400+ properties, controlled by an investment company selling on the women empowerment and affordable housing theme . High end investors from across Canada thinking they were doing 'good work' investing and are now landlords in a place they cant even see onm a map.
Looking like a money funnel for somebody, since the money is gone......

what a mess
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Seems like a straight up ponzi scheme with a tiny bit of reality to make it look legitimate. Vacancy rates of >50% on their managed rental pool yet they were still paying 15 to 20% returns to their backers. Apparently a large portion of the rental pool is uninhabitable. So not only does a gta high-end investor own a house in SK, they own a house that likely requires a gut and flip if they want to recover their investment or rent it out.
 
crankcall said:
anybody see the news last night on the "housing" collapse in Saskatoon and North Battle ford? 126m in real estate and 400+ properties, controlled by an investment company selling on the women empowerment and affordable housing theme . High end investors from across Canada thinking they were doing 'good work' investing and are now landlords in a place they cant even see onm a map.
Looking like a money funnel for somebody, since the money is gone......

what a mess
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We were just discussing the idea of doing good work and the biggest problem is the government over the last 50-60 years. Now no good deed goes unpunished.

Fifty years ago I felt I could trust Canada to look after me if my things went sour. Now, if I invested good socially but financially poorly the government wouldn't reciprocate if I needed something so screw everyone because everyone intends to screw me.

I'm totally jaundiced with bailing people out. I'm tired of people with more attitude than money or brains. "You're so smart, fix your own problem with your own money."
 
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