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thompson2
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Re: why condos aren't good investments

Fri Apr 17, 2015 10:41 am

The same condo cost is $400K plus stata and taxes.
So the total debt servicing is liely around $2500-2600/month.
That can't be right. But consider you said "liely" I would not ask you to show your math. :)
 
Geyser
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Re: why condos aren't good investments

Fri Apr 17, 2015 10:52 am

ETB2 wrote:
That's old school thinking rofina. The new breed give their money to their children when the kids need it, not when they pass away. So the children of Vancouver homeowners will stay in Vancouver because they're thinking like 2015, not 1980.
In reality the "new breed" are either renting or are up to their necks in massive mortgage debt. If (when?) mortgage rates revert to their historical long term averages the "new breed" will be begging their children to help with the mortgage, not using their long gone illusory paper profits to make their kids "instant millionaires".
My kid gets my house when he turns 25. I make him an instant millionaire and my wife and I live in the laneway house.
I admire your self-sacrifice, spending a big chunk of your life buying and maintaining a slanty, run-down old house in a ratty and inconvenient neighbourhood awash with basement suites. Then spending your twilight years existing in a shoebox on the lane in that same scetchy neighbourhood. Your dedication to your kid is inspiring but others might see it as a life wasted in support of a parasite.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
Geyser
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Re: why condos aren't good investments

Fri Apr 17, 2015 11:13 am

agree....somewhat. They aren't ALWAYS terrible investments.
If you buy one and consider it an investment in yourself. It's a place to live that provides for some comfort and independence.
I just don't think they're a good financial investment - unless you buy one to rent out and let someone shoulder the payments for you.
So if you buy it to live in, its a good investment. And if you buy it to rent it out, its a good investment. But other than that, they're not good investments? What are the other scenario's for condo ownership that you are referring to?
not what I said pal.
It's not a good FINANCIAL investment to live in one and pay your own mortgage.
When you factor in the interest payments, strata fees, taxes - the gain on a condo the past 5 years is not a gain at all, it's a loss.
Plenty of condos that you can rent for much less than a mortgage if you aren't needing to secure a residence for your family.
If I'm a single guy or a childless couple there's no way I buy a damn thing in Vancouver
But you recently stated that your house will be worth a lot more in the not too distant future. Why would you shy away from what you appear to think is a sure bet?

It's also very interesting to see that you now appear to view real estate investments as a short term thing. Or do you think that somebody made a bad investment if he accumulated numerous rental condos in the seventies, eighties and nineties, paid them all off over the years and then sold about half of them at near the recent market peak and now continues to collect a fistful of monthly rents off the remaining clear title suites. Why was that a bad investment? I recognize that as a recent first time buyer with a massive mortgage on an old Eastside house, you probably have a much better understanding of our local market than I do. Please educate me. :D

If that investor also bought a well located, spacious luxury condo as his own residence, at a fraction of today's value, why was that a bad investment?
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
Geyser
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Re: why condos aren't good investments

Fri Apr 17, 2015 11:46 am

"Warren12"
ETB seems to change their story and reasoning every few minutes.
never liked condos and have never changed my position on them.
Bear in mind that Eyes has very low standards, when it comes to condos he seems clueless about anything other than grubby old shoeboxes on the Eastside, which he thinks don't own any land and are suspended from skyhooks.

I agree that condos in his neighbourhood could be unpleasant to reside in, but so are the old houses there too. It's pretty obvious that he hasn't ever lived in a luxury condo in a great location, if he had he might understand why so many people choose to pay multiples of the current value of his old shack for the priviledge of living in a really nice condo. The fact that there are plenty of Vancouver condos selling for multiple millions is beyond his limited comprehension.

Remember that lifestyle is not on his radar either, he is content to live out his life in a scruffy old house in an inconvenient part of town and spend his final years in a laneway house behind that decomposing slum. He is not a normal participant in the housing market, he is a saintly father who is up to his neck in mortgage debt and is committed to dedicating his life's efforts to giving his son a leg-up in life, regardless of how miserable that might make his own existence.

In some ways his choices are admirable, perhaps we should respect his values and his questionable choices which appear to be born of inexperience, then we can sympathize with his predicament and cut him some slack. :D
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
eyesthebye2
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Re: why condos aren't good investments

Fri Apr 17, 2015 12:17 pm

I have a way of bringing all the condo owners out of the workwork, don't I?
 
Geyser
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Re: why condos aren't good investments

Fri Apr 17, 2015 12:19 pm

I have a way of bringing all the condo owners out of the workwork, don't I?
I have a similar effect on Eastsiders. :lol:
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
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Warren12
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Re: why condos aren't good investments

Fri Apr 17, 2015 2:06 pm

Warren!!! How have you been? Nice to see you. :D
Thanks... I haven't gone anywhere, just checking in to see if the same people are saying the same things around here. Newsflash: they are. :mrgreen:
Yup, condos have been a great investment for many, and they should continue to be. They will prove in the long run to be far better investments than, cash, the Fawk Market, etc. So buy one, buy two, collect the whole set. :D
Definitely as a rental. I'd never buy an SFH as a rental property, at any price. I have friends with horror stories of places they own in other parts of Canada (where the mortgage vs. rental $$ makes sense on paper).
 
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Warren12
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Re: why condos aren't good investments

Fri Apr 17, 2015 2:13 pm

"Warren12"
With that said, I have a condo that I originally lived in and now rent as a cashflow investment, and it's fantastic
this statement is misleading.
Yes, condos are cashflow positive but still do not cover debt servicing.
A downtown condo 1 bedroom rents for an average of $1700/mo.
The same condo cost is $400K plus stata and taxes.
So the total debt servicing is liely around $2500-2600/month.
A cash negative of $800-900 bucks.
Of course this doesn't take into account the equity that would reduce the debt (mortgage) servicing - but, if condo
appreciation is just 9.5% in the past 5 years then this money was better off in the "fawk market" at 24% gain...in other words, still cashflow negative.
My statement is clear. Your made up analysis of my situation is numbers you're pulling out of your ass. My place is paid off.

But let's pretend. Rates are 2% today friend. $400k of mortgage is yours for less than $1750/month. $1700 is a little low for prime downtown areas, most places are in the $1800-1900 range. So yes, you are cash flow negative at 5% down when you add strata and taxes, at least for a few years.

What's your comparison? $1.2M SFH in Vancouver you are paying $4,000/month for a mortgage. Are you telling me you are renting it out? Are you telling me that you couldn't have your family living in a palace for $4k rent?

I don't think anything is a good investment at today's prices, as a rental. You should only buy if you want to live there. Long term, you'll be just fine... assuming you can afford the payments until then. Which is why many people buy condos for the $1500-$2000 monthly mortgage.

I always look at rent vs. interest + strata + taxes. Today's low rates allow you to do pretty well.
 
eyesthebye2
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Re: why condos aren't good investments

Sat Apr 18, 2015 7:31 am

"Warren12"

My statement is clear. Your made up analysis of my situation is numbers you're pulling out of your ass. My place is paid off.
great, thanks for the details...we now know it's clearly a poor financial investment.
If you like rentals so much why not take 50% equity out and buy another rental? If I loved being a landlord I'd
be wanting more of the same.
I assume you declare this rental income with CRA :wink: and you'll be forking over 50% of your capital gains to the Feds too :wink: :wink:

not comparing SFH to condo rentals. Neither cover the mortgage so it's just a matter of looking at the value gains.
 
InvestorRelations
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Re: why condos aren't good investments

Sat Apr 18, 2015 3:41 pm

Better to invest in apartment buildings:

http://www.theglobeandmail.com/life/hom ... e24012851/
 
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WhipMaster
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Re: why condos aren't good investments

Sat Apr 18, 2015 3:52 pm

holy crap! so $87,000 net after expenses. Purchase price $4,280,000. ~ 2% p.a. return.
Hmmm..... I think I wud rather have the apt bldg. than the cash in the bank. :lol:
Hoo~Cudda~Not~Nod~ed????? :-)
 
rofina
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Re: why condos aren't good investments

Sat Apr 18, 2015 4:00 pm

Better to invest in apartment buildings:

http://www.theglobeandmail.com/life/hom ... e24012851/

Holy shit. :shock:

$4,200,000, for $83,000 or about 2%.

Definitely a long term investment.

Thought, I suppose given the last owners experience, currents buyers can hope to sell for $8,000,000 in a few years? :?
 
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WhipMaster
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Re: why condos aren't good investments

Sat Apr 18, 2015 4:39 pm

Rofina:
Definitely a long term investment.
..... what isn't a long term investment?....what else are you gonna do with the $$$?
If you leave it in the bank, not only is the return bad, but I've already told you about the new "bail in" laws.

You've dun' bin' tol' so don't say that you haven't. :lol:
Hoo~Cudda~Not~Nod~ed????? :-)
 
Geyser
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Re: why condos aren't good investments

Sun Apr 19, 2015 2:39 pm

"Warren12"

My statement is clear. Your made up analysis of my situation is numbers you're pulling out of your ass. My place is paid off.
great, thanks for the details...we now know it's clearly a poor financial investment.
If you like rentals so much why not take 50% equity out and buy another rental? If I loved being a landlord I'd
be wanting more of the same.
I assume you declare this rental income with CRA :wink: and you'll be forking over 50% of your capital gains to the Feds too :wink: :wink:

not comparing SFH to condo rentals. Neither cover the mortgage so it's just a matter of looking at the value gains.
Eyes, I already gave you a local example of a typical long-term condo investor earlier in this thread but you chose to ignore it.

Here's another somewhat similar example from today's Greater Fool blog:
#36 Ray Vasquez on 04.19.15 at 4:11 pm
To Ralph Cramdown #31

My uncle lives in Hamilton living in one of his building’s unit and now saves $10,000 a month from his remaining 9 rental units.

It is now paid off completely after 18 years and a 30% down payment. The building is worth double now.

The $10,000 goes in REIT’s, preferred shares, foreign bonds and stocks, zero coupon bonds and various other ETF’s etc.

In about 10 years doing this, starting at $7,000 a month and increasing that yearly, he now has about $1,500,000.
So please explain why this was also a poor financial investment.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
eyesthebye2
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Re: why condos aren't good investments

Sun Apr 19, 2015 4:58 pm

"Geyser"

My uncle lives in Hamilton living in one of his building’s unit and now saves $10,000 a month from his remaining 9 rental units.

It is now paid off completely after 18 years and a 30% down payment. The building is worth double now.

The $10,000 goes in REIT’s, preferred shares, foreign bonds and stocks, zero coupon bonds and various other ETF’s etc.

In about 10 years doing this, starting at $7,000 a month and increasing that yearly, he now has about $1,500,000.
So please explain why this was also a poor financial investment.[/quote]

1. five years ago I was calling for a buy on Hamilton
2. the building is worth double likely because the land is worth double under it - the owner has 100% stake in the land. The land..the land...the land
(did I say it enough times for you?) LOL
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