Housing Market

[Dresden]

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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

Show me how you put 5% down when a developers schedule asks for 15% and the last 5% on final closing. Not all, but most I've seen.

You know something i dont about how I get around the CMHC' mandatory insurance if you go with less than 20% down? Yes you can go with 5% down but you are essentially borrowing the money back from the bank at final closing and taking a 95% mortgage. Tell me if I'm wrong. You still need to have put down 15% before the building is up in this scenario... 15% that has returned 0% to you over the duration of the build.

You know something I don't about investment properties bought under a numbered company needing 20% down.

Go ahead. Kthxbye

 

[mmmnaked]

Who ever said you can get a condo from a developer with only 5%? What are you smoking?

And who said anything about getting around CMHC insurance? At 5% down you're paying 3.6% CMHC, which can get rolled right into your mortgage. Its not an out-of-pocket expense. Only the HST on the insurance is out of pocket.

 

[backmarkerducati]

They realize that if the market keeps going down this road, condo life will NEVER lead them into a detached home.

$5000 rent is quite the handsome amount. Is this a million dollar home?

Listing was for $1.7M. not sure of selling but it went quick.

 

[ZX600]

You're either dreaming or ill informed.

First off, you can't buy with 5% down any more. Those days died a LONG time ago. It's 20% if it's an investment, and even if it's not an investment, most (if not all) developers ask for 15% within the first year and the last 5% on occupancy. If you decide to borrow more than remaining 80% from the bank at the time of mortgage, then you have to purchase the mandatory CHMC insurance.

Then factor in that pre-construction condos are being priced at tomorrow's price today. I.E., for the price of a new condo built in 2-3 years, you can walk across the street and purchase an existing unit (probably more spacious) for the same price right now, the only difference being the higher maintenance fees.

Then the occupancy period where you pay "rent" to the developer before the final closing (sometimes one year).
Then closing costs
etc.

-------------------

Take a $350k 1 bedroom + den - roughly 600 sf, assume $0.50/sf. maintenance fee + $50 parking. This would be a $583/sf. unit purchase price.

Downpayment - $70K (20%),
mortgage $280K (80%)

Rental value = $1800 (if you are lucky... $350k is etobicoke/Mississauga prices, not downtown Toronto)

Mortgage payment = ~$1200/mo at today's rates
Fees = $350/mo
Prop Taxes @1%/yr = $291.67

Monthly cashflow: $1800 - ($1200-$350-$291.67) = -41.67
We've not even factored in your closing costs yet, lawyers fees etc. that you had to pay out of pocket, or repairs, or your tenant missing payments or insurance or having your property vacant while looking for a new tenant or or or..

--------------

Let's assume you miraculously get $2000 rental income.. you're making a whopping $150 a month. That's $1800 a year rental income or 2.5% return per year on your $70k.

You put that $70K into a bank stock paying 4% you would have $2,800/yr. Better yet, you put it into a DRIP fund, you are now making interest on interest year over year and you don't have to worry about finding a new tenant.

RE investment and stock are LONG strategies. Difference with RE is you can leverage 10x your investment. Remember the age old adage - "Time IN the market, NOT timing the market"

Those who got in when downtown condos were selling for $400/sf. and could rent them out for 10% comps/yr are laughing today. Great for them. At today's prices, it doesn't make much sense.


Please show me where one could "net big gains" in the current pre-construction condo market.

kthxbye

You comment was and I quote " first off, you can't buy with 5% down any more"

And the fact is that if you are a new home buyer you can.

I never said pre buy or condo as I was responding to this direct comment

Not sure what else to say

 

[mmmnaked]

You comment was and I quote " first off, you can't buy with 5% down any more"

And the fact is that if you are a new home buyer you can.

I never said pre buy or condo as I was responding to this direct comment

Not sure what else to say

Just to correct slightly, 5% down is available to anyone buying a property under $500k.. not just first time buyers.

On properties over $500k, the downpayment minimum is 5% of $500k, and an additional 10% on the amount beyond $500k.

When you get to a million, the rules require 20%.

 

[Dresden]

You comment was and I quote " first off, you can't buy with 5% down any more"

And the fact is that if you are a new home buyer you can.

I never said pre buy or condo as I was responding to this direct comment

Not sure what else to say

I was always talking investment properties which should be clear from my posts. Do you not need to have 20% in under a number company? Have I been mislead??


You're boy snakeoilsalesman is the one pushing negative cash flow investment properties as grade AAA

 

[mmmnaked]

Listing was for $1.7M. not sure of selling but it went quick.

At 20% down, their mortgage payment alone is over $6000/mo so they're definitely having to put up cash to prop up their investment. On the flip side, continued growth of 10% means they're potentially ahead 150k+ in equity every year so its a fine tradeoff indeed.

 

[mmmnaked]

I was always talking investment properties which should be clear from my posts. Do you not need to have 20% in under a number company? Have I been mislead??


You're boy snakeoilsalesman is the one pushing negative cash flow investment properties as grade AAA

You're the ONLY person in here talking about numbered companies. I can't see any other mention of such a thing until you brought it up. I sure as hell didn't. The context of this entire thread is first time home buyers and individuals purchasing real estate.

You're one confused soul.

 

[Dresden]

You're the ONLY person in here talking about numbered companies. I can't see any other mention of such a thing until you brought it up. I sure as hell didn't. The context of this entire thread is first time home buyers and individuals purchasing real estate.

You're one confused soul.

Numbered company, 20% down, CMHC fees etc., and negative cash flow are entirely separate discussions. The only one important here is your assertion that a negative cashflow property is a good idea which I categorically disagree with.

Thanks for Baggsy to bring up that you are actually an Agent, which explains why you will always paint a rosy picture no matter what.

 

[mmmnaked]

Numbered company, 20% down, CMHC fees etc., and negative cash flow are entirely separate discussions. The only one important here is your assertion that a negative cashflow property is a good idea which I categorically disagree with.

Thanks for Baggsy to bring up that you are actually an Agent, which explains why you will always paint a rosy picture no matter what.

Your position on my negative cashflow property idea is based entirely around your gloomy outlook on the real estate market. So far I've spelled out the positives at 2.5% growth as well as some positives even if the market stagnates completely, which is far far more likely than an actual crash (which screws us all, no matter the industry)

If someone were to GUARANTEE you annual 2.5% on the property value for the next 5 years, is my idea still ****? Im genuinely curious why you think so.. you're being a d-bag which is typical of your posting style, but we could've had a normal discussion on the topic.

 

[Dresden]

Your position on my negative cashflow property idea is based entirely around your gloomy outlook on the real estate market. So far I've spelled out the positives at 2.5% growth as well as some positives even if the market stagnates completely, which is far far more likely than an actual crash (which screws us all, no matter the industry)

If someone were to GUARANTEE you annual 2.5% on the property value for the next 5 years, is my idea still ****? Im genuinely curious why you think so.. you're being a d-bag which is typical of your posting style, but we could've had a normal discussion on the topic.

I'm not being a d-bag. And conversation is a two way street. I am not above changing my mind when the facts present themselves.

If you want me to believe a negative cashflow condo is a good investment, show me why. Show me the income and gains over a 25 year period. I'll show you the same investment in another asset class (stock/bonds) and can compare and contrast.


Until then, this is my impression:

 

[mmmnaked]

25 years holding onto a condo? :lmao: you can't be serious.

What about a $330k condo rented at $1650 for 5 years? That's a little more modest and realistic. Maybe even 5 years is too long. I think condos should be bought relatively new, in a boutique or smaller development, and then sold after 3-5 years. Just my thoughts on the subject. Its what I would do if I were in that market.

$330k purchase, 20k down.. at 2.2% works out to $1395/mo with CMHC fees factored in to the equation. Allow for another $5000 in LTT and lawyer fees or whatever other closing costs should be factored in place. You'll just have to take my word that such a condo is out there, and that it can be rented at $1650.

Mtg+tax+maint: -$1950
Rental income: +$1650
Monthly cashflow: -$300

Assuming worst case 5 vacant months and 55 occupied months (and this can be avoided by keeping the rent below market value and simply taking the extra $50-100 monthly negative cashflow hit), out of pocket spent at 5 years is just under $30k. At 5 years, principal owing is $270k. Assuming 2.5% annual growth, property value at that time is potentially $375k.

Is it a bad scenario? Personally I don't feel its a half bad situation to be in.. you've owned a condo for 5 years, you had to deal with the usual tenant stuff, you had to top up your investment at about $300/mo.. but when you sell the unit you're pocketing upwards of $100k.

edit: to clarify, pocketing $100k means you're walking away from the condo with that amount. Take away the 30k expenses and 20k initial downpayment, its $50k in profits. $10k/year for very little work. I like it.

 

[shanekingsley]

25 years holding onto a condo? :lmao: you can't be serious.

What about a $330k condo rented at $1650 for 5 years? That's a little more modest and realistic. Maybe even 5 years is too long. I think condos should be bought relatively new, in a boutique or smaller development, and then sold after 3-5 years. Just my thoughts on the subject. Its what I would do if I were in that market.

This is actually exactly what we have done, with a condo off Fort York that is worth about $340 rented at $1650. We lose about $40/month on it, but someone else is paying down our mortgage and it will be paid off in about 9 yrs

We also plan to keep it until retirement, then live in it or sell it, or just enjoy the income.

 

[mmmnaked]

This is actually exactly what we have done, with a condo off Fort York that is worth about $340 rented at $1650. We lose about $40/month on it, but someone else is paying down our mortgage and it will be paid off in about 9 yrs

We also plan to keep it until retirement, then live in it or sell it, or just enjoy the income.

I'd shake your head if you were in front of me, please don't keep it for retirement it's gonna be a ghetto and maintenance fees will be astronomical, condos aren't long term. Even if the market continues on this trend, its value will taper off and eventually go backwards. If anything, sell it and buy a different one in 5 years.

Also, you're not losing that $40. Its negative cashflow (dresden HATES THAT!!) but its going right into your equity.

 

[油井緋色]

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.

I bought some of that and watched it tank so ****ing hard. :'(

 

[crankcall]

I'd shake your head if you were in front of me, please don't keep it for retirement it's gonna be a ghetto and maintenance fees will be astronomical, condos aren't long term. Even if the market continues on this trend, its value will taper off and eventually go backwards. If anything, sell it and buy a different one in 5 years.

Also, you're not losing that $40. Its negative cashflow (dresden HATES THAT!!) but its going right into your equity.

I'm watching exactly this scenario right now on a condo, 30yr old building. It hasn't increased at all in the way other properties around here have, and the property management company gave us an 'assessment' of 15k per unit to fix the roof/parking lot of the underground garage. Payable over 1 yr. Drop 15k in real cash, not negative flow, and this condo rental unit produced nothing for the last three yrs.
I still like condo rentals as an investment, but its not all sunshine.

 

[mmmnaked]

I'm watching exactly this scenario right now on a condo, 30yr old building. It hasn't increased at all in the way other properties around here have, and the property management company gave us an 'assessment' of 15k per unit to fix the roof/parking lot of the underground garage. Payable over 1 yr. Drop 15k in real cash, not negative flow, and this condo rental unit produced nothing for the last three yrs.
I still like condo rentals as an investment, but its not all sunshine.

30 years old. End of discussion right there, she's done! Id never recommend an old building as investment. Said it several times already its gotta be new-ish. And even then you're right it's not all sunshine.. you gotta select the right condo and the right building but they're out there.

 

[nfq]

25 years holding onto a condo? :lmao: you can't be serious.

What about a $330k condo rented at $1650 for 5 years? That's a little more modest and realistic. Maybe even 5 years is too long. I think condos should be bought relatively new, in a boutique or smaller development, and then sold after 3-5 years. Just my thoughts on the subject. Its what I would do if I were in that market.

$330k purchase, 20k down.. at 2.2% works out to $1395/mo with CMHC fees factored in to the equation. Allow for another $5000 in LTT and lawyer fees or whatever other closing costs should be factored in place. You'll just have to take my word that such a condo is out there, and that it can be rented at $1650.

Mtg+tax+maint: -$1950
Rental income: +$1650
Monthly cashflow: -$300

Assuming worst case 5 vacant months and 55 occupied months (and this can be avoided by keeping the rent below market value and simply taking the extra $50-100 monthly negative cashflow hit), out of pocket spent at 5 years is just under $30k. At 5 years, principal owing is $270k. Assuming 2.5% annual growth, property value at that time is potentially $375k.

Is it a bad scenario? Personally I don't feel its a half bad situation to be in.. you've owned a condo for 5 years, you had to deal with the usual tenant stuff, you had to top up your investment at about $300/mo.. but when you sell the unit you're pocketing upwards of $100k.

edit: to clarify, pocketing $100k means you're walking away from the condo with that amount. Take away the 30k expenses and 20k initial downpayment, its $50k in profits. $10k/year for very little work. I like it.

How do taxes work? Do you claim it as your primary residence?

 

[mmmnaked]

You can only designate it as a primary residence if at some point during the year you actually lived in it. Im not sure how long this period has to be, or if its defined at all.. best ask an accountant. This is done on an annual basis. If you rented a condo out for the whole 5 years and then sold it, you'd have to report it as such and (probably) pay capital gains on it. If you lived in it part of the time, you have to report capital gain on the portion related to the periods it was not your primary residence.

(if you're playing by the rules you'll be paying capital gains tax at your marginal rate on 50% of the gain)

 

[ZX600]

Believe it or not, you can probably get more money monthly.

This is actually exactly what we have done, with a condo off Fort York that is worth about $340 rented at $1650. We lose about $40/month on it, but someone else is paying down our mortgage and it will be paid off in about 9 yrs

We also plan to keep it until retirement, then live in it or sell it, or just enjoy the income.

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