3% mortgages?
How`s your house pricing doing?..
- Thread starter Glenn/RZ500
- Start date
F-n ballers in this thread.
Mad Mike
Well-known member
You know your mortgage rate is 3%, fixed. A 6% investment return is a reasonable expectation - whether it be bank stocks, etfs, rental housing - it’s simply putting your home equity to work.
The investment income pays the mortgage, and interest paid on the mortgage portion used for investments is tax deductible.
A lot of winning to be had if your willing to sort thru the details.
Relax
Well-known member
I think this is basically the Smith Maneuver?
Mad Mike
Well-known member
Yup.
A mortgage *is* a type of leveraged investment. You're borrowing money from the bank to buy an an asset hoping for appreciation.
It's a conservative investment, but still an investment that could potentially go down. Just like stocks - as this thread is demonstrating.
Same consequences as well.
Foreclosure is basically a margin call. Both force you to liquidate your asset if the lender is uncomfortable with your equity to loan ratio.
You do not get to simultaneously complain about housing in certain parts of Canada being unaffordable while also complaining about the value of your house going down.
Unaffordable housing costs are the inevitable flipside of decades of people treating their house as an investment that goes up in value faster than inflation ... sooner or later, that collides with affordability.
Unaffordable housing costs are the inevitable flipside of decades of people treating their house as an investment that goes up in value faster than inflation ... sooner or later, that collides with affordability.
Mad Mike
Well-known member
The mortgage is just leverage, not an investment. The house is the investment.
They don’t really use foreclosure in Ontario - power of sale is faster and easier - a lender can sell the house after you’re behind 60 days. If the borrower is a prick, you may have to evict - that takes 2-3 weeks.
It’s quite different than a margin call. Margin calls happen when a borrowers portfolio debt to equity falls below a contractual threshold. Foreclosure or POS happens when a debtor falls behind on payments or mortgage covenants (failure to pay taxes, insure the property). Lenders can’t foreclose or POS just because a mortgage goes underwater.
POWERMAN
Well-known member
How are the banks able to evict in 2-3 weeks but private landlords need to wait 2 years to do the same?
Maybe private landlords can identify as a bank and avail of the 2-3 week eviction process then.
Mad Mike
Well-known member
It’s more than that.
If I rolled back to 2000 norms and code I could build a new 1200 sq’ house for $200k today in Keswick. Development & permitting fees plus changes to the building code more than double the build cost today. I’d be hard pressed to build that house for under $400k.
I’m very risk adverse and my personal experience is that real estate works best for me.Buy something you can afford and plan on keeping it for ten years or more. I worked for almost 27 years for a holocaust survivor who came to Canada with nothing more than a suitcase. I’m pretty sure he’s almost a billionaire.He owns a couple of hundred of millions in real estate for sure.I think he’s 98 and still with us.Bought real estate over the years usually when everyone was selling and never sold one property in the 27 years I had worked for him.
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Mad Mike
Well-known member
Mortgage holders are not governed by LTB. Got to court, get a default judgement in about a week, then the sheriff can act.
Recent changes to LTB have shortened eviction orders to 37 days - was running at 9 mos this time last year.
Deadbeats can no longer contest or appeal unless they’ve paid at least 50% of arrears by the hearing date
What has changed in the building code since 2000 that significantly added to build cost?? I don't see anything blatantly visibly different about how they're building them now versus (let's say) my 2003-built house. It sure would have been nice to have a 240V outlet in the garage ... but to do that when the house was bare framing inside would have been a couple hundred bucks for an outlet, a breaker, and a few metres of cable.
I know the price of materials has spiked in the last few years.
ACFI is one thing that's driven price to the roof and insulation standards
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And some behind the scene changes that require many more hours of engineering with zero benefit. That applies to multi-family. I'm not sure if single family has similar turds.
My current one is prime - 1.3%
Last I talked to my broker it was approx 4%.
I don’t know if my remaining bit has the risk awareness required for this type of move.
I think heat recovery systems are now required in new homes as well as high efficiency furnaces and AC.
