Housing Market

[GreyGhost]

Forum Sponsor

Talk to an accountant, but there can be tax advantages for any investment properties to be held by a corporation. You can defer any income (if you want) to future years when your income is lower, you can include your children as corporate shareholders and give them dividends once they are 18 to avoid personal income tax entirely etc. If I had more than my primary residence, it would definitely be inside a company (especially if I am renting it out, it provides another layer of protection for me).

 

[mmmnaked]

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

I've yet to see a condo under 350-375k net anything more than $1650-1700 on the rental market. Which building/units do you think are getting more? I'm curious to look it up..

 

[Joe Bass]

As far as the 5% down goes, can't you get around that? Like mortgaging your principal residence and paying off the investment in full? I understand that at that point you can't right off the interest on the mortgage, but then you also need nothing down.
And @dresden, I REALLY hope that it wasn't me that recommended that CXV.v stock.
I know that some are giving @mmmnaked a hard time, but he's not telling anyone to do anything, merely relaying the same thing that any RE investment book/ seminar would say. Many ppl made wads of cash in this fashion. Others lost everything. Ymmv

Sent from my custom purple Joe Bass mobile device using Tapatalk

 

[mmmnaked]

Talk to an accountant, but there can be tax advantages for any investment properties to be held by a corporation. You can defer any income (if you want) to future years when your income is lower, you can include your children as corporate shareholders and give them dividends once they are 18 to avoid personal income tax entirely etc. If I had more than my primary residence, it would definitely be inside a company (especially if I am renting it out, it provides another layer of protection for me).

As a corporation you'd also only be paying corp. tax rate on the capital gain, as opposed to upwards of 45% marginal rate.. so that's a huge plus too. The minus, as relates to this discussion, is the need for 20+ percent downpayment on purchase of said property.

 

[Dresden]

And @dresden, I REALLY hope that it wasn't me that recommended that CXV.v stock.
I know that some are giving @mmmnaked a hard time, but he's not telling anyone to do anything, merely relaying the same thing that any RE investment book/ seminar would say. Many ppl made wads of cash in this fashion. Others lost everything. Ymmv

Sent from my custom purple Joe Bass mobile device using Tapatalk

Wasn't you from what I recall.


Yes I guess I was in a sour mood, didn't mean to be a d1ck, so I apologize for that mmmnaked.

Numbers check out in the previous scenario, but I've not come across any 330k condos renting for 1,650/mo, at least not recently. Port Credit has high rental values but they are very expensive condos to begin with, so the math doesn't quite check out (not for me anyway and I've been looking).

I still don't like with negative cash flow holds especially when there are alternatives; yes, I understand you can recover it on the sale.

 

[inreb]

Capital gains? Every thing is so complicated. Rats on a tread mill. When I moved into the 'hood my neighbour two doors down owned 25+ houses. He is now deceased from not taking vacations. Awful tempting to cash out my house and buy a ****** $70-$90k condo in a non-TO location. Spend remainder of my years doing this and fun stuff. Thanks about the alert on broken down old slum condos. Another reason to read fine print and spidey sense.

 

[ZX600]

I've yet to see a condo under 350-375k net anything more than $1650-1700 on the rental market. Which building/units do you think are getting more? I'm curious to look it up..

The thing with that area is that the rentals are to rich business men from Japan, their sons and daughters here for school, athletes and etc. not normal rental population. At least that was what most of the renters I meet at Luna were

 

[Joe Bass]

Here's my view, and I don't have any investment properties yet, but here is the plan: buy something further away, that I could afford even if I couldn't find a renter. I have 22 years to retirement. Pretty much any area will increase over that time. Yes, it's a long term strategy, but less risky, imo.


Sent from my custom purple Joe Bass mobile device using Tapatalk

 

[inreb]

Here's my view, and I don't have any investment properties yet, but here is the plan: buy something further away, that I could afford even if I couldn't find a renter. I have 22 years to retirement. Pretty much any area will increase over that time. Yes, it's a long term strategy, but less risky, imo.


Sent from my custom purple Joe Bass mobile device using Tapatalk

That's a good strategy. Southern Ontario is going to be the next (insert high density world destination here) so prices will only go up. People used to laugh at Hamilton. I'd go Tillsonburg.

 

[Joe Bass]

That's a good strategy. Southern Ontario is going to be the next (insert high density world destination here) so prices will only go up. People used to laugh at Hamilton. I'd go Tillsonburg.

My Nonno had a place in Tillsonburg years ago. Dirt cheap back then.
Will look into that.
And who laughed at Hamilton? 15-20 years ago people said to buy a 2nd place in Hamilton. But y'know, kids in their 20s didn't think like that. Oh, if I could go back...

Sent from my custom purple Joe Bass mobile device using Tapatalk

 

[crankcall]

Rent if your in the GTA can be an enormous spread on condos of very similar value. Rent to execs that have a housing allowance, they will pay what they want to be close to where they want, My drinking buddies place near Queens park is rented to an actor from the TV show 'suits'. He's getting a fair bit above market. Then there is the "rebated' rent that makes the numbers skewed. Add to that if there are 2000 units available its harder to get more than an area with 2 units available. Sort of that supply demand thing, but there is no shortage on Toronto rental properties.

 

[crankcall]

Tillsonburg, my back still aches when I hear that word

 

[-D-]

Given the knowledge base here and what seem to be decent ppl, it would be interesting if a conglomerate (legally) was formed to pool funds and buy and sell, everyone wins. Think of the fun, ride out to destinations to check out property across North America, lol.

 

[BigEvilDoer]

That's a good strategy. Southern Ontario is going to be the next (insert high density world destination here) so prices will only go up. People used to laugh at Hamilton. I'd go Tillsonburg.

Woodstock still isn't a bad area to buy in - housing is reasonable, commute to the GTA wouldn't be advisable.
But, it's 40ish minutes to Hamilton, 30 to Kitchener-Waterloo/Cambridge and 30 to London. Relatively central for those 3 cities.

 

[eljay]

My wife bought a condo a few years ago for $450k. It's at Yonge/Finch, 2bed/2bath with parking/locker. High floor, corner suite, nice view. 7 years old.
She put 40% down so that she could afford the mortgage payments.
Now we rent it out for $2050.
We used to rent for for $2300.
Was vacant for 3 months looking for new tenants.
Condo fees go up 5% a year like clockwork.
It just breaks even on cash flow.
All the profit is in the equity.
If prices drop it loses money.
If there is an assessment it will lose money.
If rates go up it will lose money.
We're thinking of selling after the current tenants want out and before all the appliances die and the building needs new windows and the bathroom tiles look out of date etc etc etc.
It probably hasn't appreciated in value since it was bought either. I see newer nicer ones on MLS for about the same price.

 

[crankcall]

I'm no guru, but I like to appear as one on the interweb, here is my advice having been down the road of long distance rentals. If you live in T.O. and have a rental in , lets say Tillsonburg, and the shitter plugs, your paying plumber X large to look after it. Its really a PITA to have to do maintenece on property thats a long way away and hard to keep an eye on the renters.
You can get a property management company that has trades on call but thats not cheap and really eats into your spread.

Real estate has always been a little more stable in Ontario long term than many investment but there are no guarantees in life.

 

[Joe Bass]

I'm all about the property maintenance company. I will factor that 10% in.
But yes, if you are handy, you will save much more.

Sent from my custom purple Joe Bass mobile device using Tapatalk

 

[crankcall]

Since I love sharing, here's an example of how far off the rails investment property can go. And yes the US market is nothing like CDN but its all i got.
My house in Arizona which I bought 2013 on the wave of mortgage defaults, had sold for a high of $235,k , the guy I bought from (well short sale so bank) had paid $185K on the down side. He had three mortgages on an $185k property , banks owed $160k. I offered $110K cash sale, CDN dollars. At that time the CDN dollar was actually $1.04US. Banks do not want to own houses, they took my offer because they wanted to dump the file. That's how crazy the market can go.
Now they have rebounded and similar places are selling for 180-189K US. With exchange I would gross about $220K CDN. A 100% gain in about 4yrs.

Now the downside, I did not create a corporation holding company to buy the property, I didn't the hassle of paper trail being worth it. So when it sells the US revenue will take US foriegn investment capital gains off the top, I have to file US tax return, then when the funds come back to Canada I have CDN capital gains payable at the foriegn investment rate so I could net $50k on the deal, thats still very good money, but its a long shot from how it looks at first blush.

We had a 'family' condo in Clearwater Fla. when the market tanked in 2008. Some of the family deadbeats that had never been able to cover thier portion of the tab objected to the sale but we sold it for $100.00 US, yes one hundred, to get out from under the $735.00 a month condo fees. It was a crap hole and inland, but someplace warm in February. Lesson in there someplace.

 

[mmmnaked]

My wife bought a condo a few years ago for $450k. It's at Yonge/Finch, 2bed/2bath with parking/locker. High floor, corner suite, nice view. 7 years old.
She put 40% down so that she could afford the mortgage payments.
Now we rent it out for $2050.
We used to rent for for $2300.
Was vacant for 3 months looking for new tenants.
Condo fees go up 5% a year like clockwork.
It just breaks even on cash flow.
All the profit is in the equity.
If prices drop it loses money.
If there is an assessment it will lose money.
If rates go up it will lose money.
We're thinking of selling after the current tenants want out and before all the appliances die and the building needs new windows and the bathroom tiles look out of date etc etc etc.
It probably hasn't appreciated in value since it was bought either. I see newer nicer ones on MLS for about the same price.

Its tough renting a 450k+ 2/2 condo.. its a tough rental market and its a tough resale market, because you're approaching people who would at that point probably rather buy a town or semi in the GTA.

I feel you would've done better with a 1+1 in the $350k range. Its easier to keep tenanted, and its easier to sell. Lower maintenance, lower taxes, and stronger appreciation if its the right building.

 

[mmmnaked]

Wasn't you from what I recall.


Yes I guess I was in a sour mood, didn't mean to be a d1ck, so I apologize for that mmmnaked.

Numbers check out in the previous scenario, but I've not come across any 330k condos renting for 1,650/mo, at least not recently. Port Credit has high rental values but they are very expensive condos to begin with, so the math doesn't quite check out (not for me anyway and I've been looking).

I still don't like with negative cash flow holds especially when there are alternatives; yes, I understand you can recover it on the sale.

Just a random example I looked up https://www.realtor.ca/Residential/Single-Family/16993053/1

Asking $319k, relatively low maintenance. I'm seeing comparable units leased at $1550-1600 in that building.

I've found many in the $320-350 range and rents in that pocket (1+1, 600-699sf) are $1500-1650 universally. I'd have to look up Mississauga to see if the ratios are the same.. maybe its not quite as strong for obvious reasons.

For Toronto, on a subway line, a $350k condo will almost certainly get $1650/rent. If I was motivated and din't care too much about cashflow I'd probably rent it out at $1550 and never have a vacancy.

Forum Sponsor