Housing Market | Page 15 | GTAMotorcycle.com

Housing Market

Dresden said:
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.

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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
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Just wanted to point out it's more than 2.5% return because you have to include principle recapture into the net.

That being said, I agree with you that condos are looking less and less attractive as an investment. And if one still want to do this, there's better be an exit strategy as to selling it once maintenance fees hit a certain threshold.
 
ZX600 said:
Believe it or not, you can probably get more money monthly.
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We were told by our tenant and previous one that of the many places they saw at city place and across the fort York area, ours was by far the nicest unit had seen in the 1+1 size/price point. We have all the good upgrades inside and take very good care of it, but the end of the day, we wanted it rented fast. Listed and rented in under a week. If we raised the rent we might get more coin and wait a month or two to rent it and then take longer to recoup those losses.

And I don't know for sure how long we will keep it, but I agree that it's a good idea to flip it and get a newer one in a few years.
 
so what we can all take away is
there is going to be a pile of crap buildings (in the near future).

just think when all the roof top pools start leaking
windows falling or need replacing
foundation issues
elevators
paint
carpets
or they just leave it and let it roll, lol
 
Half glass empty kind of guy eh? in basketball and life ;)
 
Joe Bass said:
My Nonno had a place in Tillsonburg years ago. Dirt cheap back then.
Will look into that.

Sent from my custom purple Joe Bass mobile device using Tapatalk
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Oh crap, Joe, that was a joke. Do not look into that. What crankcall said about long distance rental should be obvious to anyone with a pulse. Having said that, you can buy houses in Manitouwadge for $80K.
 
inreb said:
Oh crap, Joe, that was a joke. Do not look into that. What crankcall said about long distance rental should be obvious to anyone with a pulse. Having said that, you can buy houses in Manitouwadge for $80K.
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Yes. And no. If you're going to hire a property management company, does it matter if it's not in your backyard? I won't make any money/ can't afford to invest in Vaughan.
Checking for a pulse.

Sent from my custom purple Joe Bass mobile device using Tapatalk
 
Joe Bass said:
Yes. And no. If you're going to hire a property management company, does it matter if it's not in your backyard? I won't make any money/ can't afford to invest in Vaughan.
Checking for a pulse.

Sent from my custom purple Joe Bass mobile device using Tapatalk
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you could always try and buy an acre or two of unused land closer in.
 
ZX600 said:
Half glass empty kind of guy eh? in basketball and life ;)
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likely
Did you not read mmmm's post about not keeping a condo past 5 years due to issues that will surface.
Get over it, the Raptors lost...who didn't see that coming, lol
 
-D- said:
likely
Did you not read mmmm's post about not keeping a condo past 5 years due to issues that will surface.
Get over it, the Raptors lost...who didn't see that coming, lol
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They did? damn
 
Joe Bass said:
Yes. And no. If you're going to hire a property management company, does it matter if it's not in your backyard? I won't make any money/ can't afford to invest in Vaughan.
Checking for a pulse.

Sent from my custom purple Joe Bass mobile device using Tapatalk
Click to expand...

Well, I suppose......you'd have to work thru the numbers, not rely on flippant forum buzz from the likes of me. My buddy, a retired millright, performs that service to quite a few Mac student houses. It didn't sound to expensive as long as everything is tikityboo.
 
-D- said:
so what we can all take away is
there is going to be a pile of crap buildings (in the near future).

just think when all the roof top pools start leaking
windows falling or need replacing
foundation issues
elevators
paint
carpets
or they just leave it and let it roll, lol
Click to expand...

Before investing in a condo read the Condo Act. Things like the above are mostly covered by a mandatory reserve fund.

One thing Harris got right was the Condo Act. If it wasn't for the act all the condos with "NO money" would be begging for government assistance. The condo has to have a study every three years. If they don't or the numbers aren't right the government can, in essence, take over running the building.

Re Management: A lot of (Most?) condo managers I deal with don't know much about bricks and mortar so can be conned by the trades.

Can there be sweet deals between the managers and trades? Is the pope catholic?
 
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Knowing the condo act and having a good management team and healthy reserve fund are all important, and a legal responsibility. However don't think you cant end up on the end of an assessment when the bid to repave the parking garage roof is 200k and the rebar holding up the garage is pooched from salt and now your jackhammering concrete and over 1mil pretty fast.
If you have a good group of managers they may see it coming, mmmms advice regarding older condos is probably based on some degree of reality
 
crankcall said:
Knowing the condo act and having a good management team and healthy reserve fund are all important, and a legal responsibility. However don't think you cant end up on the end of an assessment when the bid to repave the parking garage roof is 200k and the rebar holding up the garage is pooched from salt and now your jackhammering concrete and over 1mil pretty fast.
If you have a good group of managers they may see it coming, mmmms advice regarding older condos is probably based on some degree of reality
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Another factor is the rental resident factor. If a building is largely owner occupied they tend to be more proactive with things. In buildings that are in essence rentals the owners don't have to live with the garbage and the residents don't have a say in the running. There are some previously decent condos that have become vertical slums due to massive rental percentages.
 
It was bought to live in when she was single, not for investment. We got married and bought a house. It became an investment. It'll get sold on the next vacancy. Current tenant has right of first refusal on best offer on sale.


mmmnaked said:
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.
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