Housing Market

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mmmnaked said:
$350k will buy a 1-5 year old Toronto condo near a subway station, rentable for $1650. It'll be a 1 or a 1+1, 600-699sq-ft.

If you borrow $300k at 2.2% you're out $1300/mo in mortgage payments. Add $450 maintenance, $200 taxes; $1900 out of pocket.

$1650 rental income covers the $500 in interest, $450 in maintenance, and $200 in taxes. It then provides a further $500 directly into paying down your principal. You're -$300 per month, but that's money going directly into your principal, it's not a loss. The $350k condo is also then appreciating at 2-3% per year, if you buy smart.

Your post falls completely apart because you look at negative cashflow as a loss.

Also, I never said you can buy pre-construction with 5%. And the days of buying with 5% down are MOST CERTAINLY not over. I have no idea what you're talking about.
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Right. So, pay into a negative cash flow on the hopes that the asset price will rise indefinitely, and so your tenant can pay down part of your mortgage. You're a hell of a contrarian, I'll give you that.

I too remember the florida crash in 2008. Betcha the ones who lost their a**es on the negative cashflow weren't the ones who scooped them up again at foreclosed prices. http://www.economist.com/node/12670800 ; http://www.economist.com/node/12608205

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I'm not bearish on RE investments in the GTA, but if you're in your late 20's/early 30's, it does not make sense to make a condo investment that will account for 75% of your portfolio. 25%, maybe.
 
Dresden said:
more stuff
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$300 negative cashflow to pay $800 into the principal amount every month. Even if it doesn't appreciate in value, you're still ahead $500 per month that the tenant is giving you on top of paying down the interest, taxes and maintenance.

Not sure how Im contrarian at all. Ive been there, done it, know the market. Im not preaching it, Im simply saying its a viable avenue. Every investment has a risk factor. There are lots of units out there with a solid growth potential, you just gotta know how to pick em. If it DOES grow 2.5% thats an additional $9000 in the first year.
 
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mmmnaked said:
$300 negative cashflow to pay $800 into the principal amount every month. Even if it doesn't appreciate in value, you're still ahead $500 per month that the tenant is giving you on top of paying down the interest, taxes and maintenance.

Not sure how Im contrarian at all. Ive been there, done it, know the market. Im not preaching it, Im simply saying its a viable avenue. Every investment has a risk factor. There are lots of units out there with a solid growth potential, you just gotta know how to pick em. If it DOES grow 2.5% thats an additional $9000 in the first year.
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Since you are experienced in these investments, why not break down the potential some real-life listings on MLS currently on the market for us younger investors?
 
"Stuff" lol priceless... 5% down is not out of the question.
 
mmmnaked said:
$300 negative cashflow to pay $800 into the principal amount every month. Even if it doesn't appreciate in value, you're still ahead $500 per month that the tenant is giving you on top of paying down the interest, taxes and maintenance.

Not sure how Im contrarian at all. Ive been there, done it, know the market. Im not preaching it, Im simply saying its a viable avenue. Every investment has a risk factor. There are lots of units out there with a solid growth potential, you just gotta know how to pick em. If it DOES grow 2.5% thats an additional $9000 in the first year.
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Are you a Real Estate Agent?
 
Dresden said:
Since you are experienced in these investments, why not break down the potential some real-life listings on MLS currently on the market for us younger investors?
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Gonna pay me? Didnt think so.
 
mmmnaked said:
Yeah I'm licenced but its not my primary job and I don't advertise. I also don't say no to money though.
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Just thinking that you and anyone else in the biz should declare the potential conflict of interest beforehand.
 
Baggsy said:
Just thinking that you and anyone else in the biz should declare the potential conflict of interest beforehand.
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Like I said it's not my 'job' and I don't care what you do with the information or misinformation presented in this open forum discussion.

Maybe Dresden owns a rental apartment building and benefits from telling people that buying real estate is dumb
 
mmmnaked said:
Yeah I'm licenced but its not my primary job and I don't advertise. I also don't say no to money though.
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And there you have it folks... true colours.


Buy a negative cash flow asset he says, it will be fun he says. Ghad damn.

This is almost as bad as the CXV.V penny stock in the other thread. What's it trading at today, below IPO price.



To any youngsters watching the thread here's a principle of life. When a salesman tells you to buy into an already shaky looking asset, we're nearing the top and he's offloading.
 
Dresden said:
And there you have it folks... true colours.


Buy a negative cash flow asset he says, it will be fun he says. Ghad damn.

This is almost as bad as the CXV.V penny stock in the other thread. What's it trading at today, below IPO price.



To any youngsters watching the thread here's a principle of life. When a salesman tells you to buy into an already shaky looking asset, we're nearing the top and he's offloading.
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The ever-present doom and gloomer. How's the rental building business?
 
Dresden said:
And there you have it folks... true colours.


Buy a negative cash flow asset he says, it will be fun he says. Ghad damn.

This is almost as bad as the CXV.V penny stock in the other thread. What's it trading at today, below IPO price.



To any youngsters watching the thread here's a principle of life. When a salesman tells you to buy into an already shaky looking asset, we're nearing the top and he's offloading.
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incompetent-aig-john-mccain-economy-fundamentals-incompetant-demotivational-poster-1248823308.jpg
 
Been listening to these bells toll for about 10 years now it's pretty great
 
SNAKEOILSALESMAN said:
The ever-present doom and gloomer. How's the rental building business?
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SNAKEOILSALESMAN said:
Been listening to these bells toll for about 10 years now it's pretty great
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*flash back to mmmmnaked's RE licensing classes*
When faced with financial/numerical facts, just throw em off with some doom and gloom insults. YEAH!! that'll get him on your side!!!
/flashback

This guy reminds me of some of my parent's friends who are nearing the end of their working careers. Work a 9-5 and sling a few RE deals on the side. Great biz for the phenomenal bull market we've had (you could have bought anything and made money), but they disappear if things ever went south.
The same snakes that shilled us Florida properties from 2001-2006. "You're going to miss out ON THE OPPORTUNITY OF A LIFETIME!!!! Refinance your house and buy 5 as investments! You're gonna be priced out if you wait another second!". Funny how none of them had more than 1 property invested but gave off the impression that they owned multiple holdings.

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A rising tide raises all ships. In 2000 you could have bought a house in Toronto that literally collapsed and still made money on the land value today. That's not going to continue forever. I am not saying there is no money to be made, but the small % of income on the condo rentals today is quickly being offset by the higher downside risk.

10 years ago condo's were cheaper to buy, the rental market was pretty strong and you more than covered your costs month over month. Today I'm not seeing too many properties that are positive cashflow, ESPECIALLY in pre-construction. I keep looking, I don't see it so I'm welcome to have my mind changed.


If it's not already obvious, all of my posts above are for an investment property, and not a primary home.
 
At least be knows what he is talking about and does not pull bull **** like "you can't not put 5%down" if you don't know that basic facts how can anyone take you seriously about anything else regardless of the walls of "stuff" you write
 
I'm in my 30s and run an established business. The numbers I quoted earlier are based directly on the data available to me as a realtor, which is vast. The growth potential is still there. Its a modest 2-3% on a good condo and a young person looking to invest a few bucks and get their feet wet can make a reasonable return as I've outlined before. Especially youngins who are still with their parents. Even charging below market value rent still translates into the tenant covering ALL the expenses including the interest on the loan. The negative cash flow is no different from simply putting money into a savings account, with the added benefit of a tenant matching your every dollar... and the potential for 2-3% growth on the entire purchase amount.

I dont know why your panties got bunched up. Do you simply not believe this to be true? Because the data is there to back it up. I have nothing at all to gain from it. I don't own condos nor do I buy or sell them. A family friend asked me for help recently in just such a venture so I've been knee deep in the condo market for the last 2 months - that's what qualifies my opinion. I don't want this person to make a bad investment, the conclusions I've reached are based on this first and foremost.
 
Dresden said:
10 years ago condo's were cheaper to buy, the rental market was pretty strong and you more than covered your costs month over month. Today I'm not seeing too many properties that are positive cashflow, ESPECIALLY in pre-construction. I keep looking, I don't see it so I'm welcome to have my mind changed.
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Cashflow will depend entirely on how much you're borrowing from the bank to make the purchase so its a moot point. Positive cashflow on a condo with 5% down? Absolutely not. 30%, you're getting there.
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