There's one that's going to go up for sale in my neighbourhood....quick and dirty flip, but a nice bungalow that was owned by a 90 year old grandma until she passed away 6 month ago.I just want a Bungalow
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COVID and the housing market
- Thread starter mimico_polak
- Start date
Come live near me. Bungalows are available, a decent size and aren't tragically different in price to splits in south GTA. Also much closer to fun roads and no traffic before a corner.I just want a Bungalow
Barrie right? That's gonna be a hard sell on the wife, she hates commuting.
CVH isn't that far (especially if she can have hours that don't align with normal office hours eg 7-3). Or switch to a closer hospital.
You have a good memory
If we get up to looking that way I'll make sure we 'run' into you in a bar or something and watch you go to work on convincing her.
I like beer , hate Barrie and have friends at CVH . I’ll come watch .
House across the street just listed for 2.3 m , it’s a nice but not extraordinary place . Talking with owner he says getting the equity out now , moving to his cottage . I mentioned with pricing you may never be able to come back , he said ‘ why would I ever come back to the GTA ? ‘ , can’t argue against that .
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House across the street just listed for 2.3 m , it’s a nice but not extraordinary place . Talking with owner he says getting the equity out now , moving to his cottage . I mentioned with pricing you may never be able to come back , he said ‘ why would I ever come back to the GTA ? ‘ , can’t argue against that .
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Mad Mike
Well-known member
I’m exactly 2.0km north of the 407, in the summer I can hear fartcan tuner cars and 600cc super sports late in the evenings.
Gotta get worse as you get closer.
I'm with her. I tried to push my brother to hurry up but he is sticking with his path of avoiding stability. Mentally he wants to look late summer right when rates drop and we are back to bidding wars from pent up demand.
Mad Mike
Well-known member
I’ve had real estate guys/gals since 1980. I don’t remember a single point in time where their advice to friends wasn’t ’buy now!’
I don’t see a lot of rapid price changes on the horizon. Lenders are getting tougher, an increasing number of people with pre build closings and unaffordable renewals will be hitting the market in the next year. And that will continue for a few years as 2025 begins a surge of renewals that will force listings.
I’d be piling money into TFSA right now, not GTA real estate. Chase 20% returns on US equities while that market is hot, bank that cash and watch for strong positive signs if you like real estate.
Looking for some advice from all the money savvy guys on here. I'm thinking about buying a rental property, probably 3-4plex.
Currently 37, mortgage scheduled to be paid off in 9 years but with the lump sums I throw at it could be 4-5yrs. I have to renew my mortgage in the fall. Will the bank let me put say $200K reversed onto the mortgage so that I can have a down payment for a rental?
Currently 37, mortgage scheduled to be paid off in 9 years but with the lump sums I throw at it could be 4-5yrs. I have to renew my mortgage in the fall. Will the bank let me put say $200K reversed onto the mortgage so that I can have a down payment for a rental?
3 plex is the better value IMO, simply because 4 plex now requires a commercial mortgage / property tax / +++ and the rules are much different than residential.
When we had our 6 plex, 7-plex was the trigger for commercial mortgages and more onerous terms. Our 6 was a residential mortgage, property tax, etc etc and it was much better and easier to do. I believe the commercial mortgage required 30-35% down payment, 15-20 year amortization (instead of 25-30), and a few other harder to reach conditions for most people.
Do your research, and make sure you're ready for bullcrap tenants as it takes a LONG time to get them out.
Yes, the HELOC / LOC secured against your home can be used as a down payment...that's what we did when we bought. That's what my cousins did, and that's what my buddy is doing right now as he searches for a property this month.
We were landlords for 10 years, and I regret deeply selling at the start of COVID...but we had no choice unless we decided to go the crooked mortgage broker route (in hindsight I should've done as my cousins and friends did...).
If I had the money and ability to buy another 3-4-5-6 plex...I would in a heartbeat. Sure it comes with headaches, but I found it a rewarding experience (both financially and personally).
Go in with your eyes open, do your research, and it's a great path toward financial stability long term.
You want to refinance to add to the amount owed. Sounds plausible but it can involve costs and paperwork. Bank is happy to give out more money and the reason doesn't matter much to them. If you want to increase above the amount they have already approved, that probably triggers an appraisal (which is stupid if you are obviously well below 80% but you cant avoid it). It may also trigger lawyers and needing to buy title insurance again. Not a big deal in the grand scheme of things but could be $2000 or so. If you have room in your HELOC, that is simpler to access as they have already done the approvals to let you access the money. You could get them to move that room to the mortgage but in my case, heloc and mortgage have the same rate and they track together so there isn't a huge downside to writing a heloc cheque.
When getting the rental property mortgage, they will care about your outstanding debt and payments.
Good luck. With the epic failure that is the ltb, I would not do conventional residential rental. Str or commercial are much safer imo. If you have enough money for a 3-4 plex, you probably have enough to get into commercial (where it is easy to lock the doors if they don't pay).
Mad Mike
Well-known member
Financing a second property is different than your primary property, here's what I would do:
1) Don't throw the lump sums at your primary mortgage (unless it's a variable) - throw it into short-term GICs or some solid dividend stock as you'll earn more than you save. Every dollar counts.
2) Banks make it easy to remortgage your primary property for 80% LTV (loan to value). A mortgage is a form of installment credit, which will always be cheaper than a LOC or HELOC, but requires slightly higher income as your payments include a principal portion.
3) Keep it to 4 units or less -- 5 or more is considered a commercial asset and will have stricter, sometimes onerous mortgage terms. Qualifying for a commercial mortgage depends more on the 'business' and your experience managing rentals, it might require you to maintain substantial liquidity as a loan covenant. Might add complications for a first-time real estate investor.
4) See what you qualify for! This is a calculation based mostly on your income and expenses. Banks will accept 50% of your projected rent as income, so add that to the average of your last 2 year's NOA gross income when using the online qualification calculators. Assume LTV of 80% on the first million for each property, then 50% LTV for anything above $1M (Toronto CMA only -- if you go outside assume 50% for anything above $750K).
Research landlord & tenant risk.
Another idea: If you have a family member that is willing to live in your property, consider renting rooms as opposed to units. This gets you out from under much of the weight of dealing with the LTB.
Mad Mike
Well-known member
If he's up for renewal and has been good for the lender and they know you're not up against the wall -- lenders will bend rules and absorb most re-fi costs to keep a good borrower. Replacing a $1m mortgage costs a lender up to $15K in commissions, fees, and staff costs.
HELOCs always have higher interest rates than mortgages (complicated). Well sort of... banks play games with interest rates to make customers bite on HELOCs, or feel better when originating HELOCS -- beware, they want you to take both, they make more on HELOCs. If the bank offers you the same interest rate on both your mortgage and HELOC (or has a fancy term for a combo loan like Flexible Mortgage, ask them for their best rate on mortgage without a HELOC -- I guarantee it will be better.
Commercial real estate is always an option. I dabbled a bit a few years back, borrowing covenants are onerous, and tenant changeover can be very expensive.
There is a movement afoot to change the regulations on rooming houses.
Presently, with a rooming house many facilities are shared and it's easier to boot out someone who doesn't fit in.
Partially due to foreign student situations where every bedroom has several bunk beds and more in what used to be the living and dining rooms there are justifiable concerns about safety.
There is no way in hell that the bleeding heart, nanny state governments will miss this opportunity to make life harder on the perceived filthy rich home owners.
Commercial is hardball both ways. No LTB means a quick eviction if rent doesn't come in on time. A few minutes with a locksmith and paste a notice on the door that the premises are a no trespassing zone.
However, in case of a recession companies fail and no longer need space but their laid off workers still need homes. Homes have a more stable demand.
Dresden
Well-known member
Rewind back to 1980:
Interest rates trended down from 18% to 1.5% over 30 years. As a result, asset prices rocketed up as the dollar significantly lost its value over time. You could have bought anything, anything, even a house that caved in on itself and would have been bailed out by decreasing rates in the years to come. Your only concern? Can you hang on.
Now take 2024:
Interest rates at 7.2%. Highest in almost 2 decades.
House prices within splitting hair of all time high.
Yes rates will come down over time but nowhere near the pace as it did in the past. Meanwhile a million dollar mortgage pays $75k/yr in interest and that’s close to the norm.
Some other thoughts:
Early Millennials looking for their first homes were up against broke 35-45 year old gen-xers in 2008-2012 who’s investments were reeling from the 2008 fiasco. Gen Z is going to have a WILD TIME competing against late-to-the-game millennials who are well invested and have significantly higher incomes over 200k+ together.
This is exactly what growing up in a major metropolitan city in a developing country felt like pre 2016. Real estate was beyond the means of the middle class. Hence their desire to leave for a first world country at any cost.
This is not a Canada specific issue but Trudeau has absolutely exacerbated the issue.. his administration has shown complete inability to match federal goals with provincial policy. As a result, we have significant shortages in construction starts and infrastructure.
We just hit 41M population at the end of march. Of that, just 2.4% was natural births.. the rest immigration. It’s a necessary requirement to keep up gdp and keep us from the greatest depression known to mankind.
The bottom line IMO: we never deserved to grow this quickly.. In all areas.. wealth, health and otherwise. We now have a forever divide between the haves and have nots. Canada was the First g7 Nation To emerge out of the recession. Trudeau inherited a phenomenal economy and juiced it TO THE GILLS.
It’s going to get much much worse imo (affordability)
I read today that CMHC is expecting prices to continue to increase due to the planned extra 1 million people over the next 2 years. No sense in waiting I figure. Going to set up a bank appointment.
What everyone's thoughts on this place?
What everyone's thoughts on this place?
It appears too reasonable, and that last 20% to finish the Reno’s is why someone else wants out . If you could do it with your own trades and financing , great , but I think there’s a reason it’s on the market.
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