cho
New Member
Thanks. It's so tough searching areas that I have never been to. Currently renting at Pape and Danforth and as I move further east I get worried I'm looking at houses in unsafe pockets.
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- Thread starter denfromoakvillemilton
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cornflakes
New Member
would you say that it's a smart investment to buy a condo unit in North York and rent it out? I'm thinking about that right now
but not sure exactly what else I need to consider in my decision making process.
but not sure exactly what else I need to consider in my decision making process.
BMO
Senior Member
Look at typical rent being charged in the area for a similar unit. If the amount of revenue you can make through renting can cover maintenance, mortgage, taxes and give you a decent profit (personally I'd say >$500/month) Then it makes sense to buy a unit and rent. The main thing to be worried about is the maintenance fees since those fluctuate. If you don't have to pay a mortgage and can just buy the unit straight out you'll be a bit better off.
Overall basic revenue/cost analysis
Migos
Active Member
Have you ever been a landlord? It's a lot different than owning passive investments like equities and fixed-income. That aspect alone should play a big factor in your decision.
cornflakes
New Member
Hmm, yes all good points. My parents already bought a condo unit in the Yonge/Sheppard area back in 2004. It was originally priced at $300,000 and today's value it's up to $450,00-500k ish. It seems that the area is very good and property value appreciates steadily here and will
continue to do so over the next few years, maybe decades. I don't know for sure though. Is it just a phase? Is a sign that this area is a confident place to put money into? They encouraged me to put my savings I have earned in the past few years and right now my money just sits in a bank account doing almost nothing except growing from interest rate at 2%. I don't know much about investing in condos, but I thought to myself, it does seem to make sense to take all my money and put it into something like a condo unit rather than just sit in a savings account in the bank that only earns me about a grand per year. Yes, I do need to factor in everything as mentioned: property tax, maintenance fee, rent fee, mortgage. When I roughly calculated it on paper, I'll be able to pull in definitely over $500 a month for the unit. But what else do I need to know and be prepared for? It seems like a sure lock that if I bought a unit now for 250k to 300k, that in 10 years it would appreciate to 300k-400k. Or is this a very dangerous assumption to make? As in the case of my parents unit we got in 2004, it has appreciated nearly 150k in the 10 years or so. So I'm going on that track record.
continue to do so over the next few years, maybe decades. I don't know for sure though. Is it just a phase? Is a sign that this area is a confident place to put money into? They encouraged me to put my savings I have earned in the past few years and right now my money just sits in a bank account doing almost nothing except growing from interest rate at 2%. I don't know much about investing in condos, but I thought to myself, it does seem to make sense to take all my money and put it into something like a condo unit rather than just sit in a savings account in the bank that only earns me about a grand per year. Yes, I do need to factor in everything as mentioned: property tax, maintenance fee, rent fee, mortgage. When I roughly calculated it on paper, I'll be able to pull in definitely over $500 a month for the unit. But what else do I need to know and be prepared for? It seems like a sure lock that if I bought a unit now for 250k to 300k, that in 10 years it would appreciate to 300k-400k. Or is this a very dangerous assumption to make? As in the case of my parents unit we got in 2004, it has appreciated nearly 150k in the 10 years or so. So I'm going on that track record.
Migos
Active Member
These are the type of investors that are fueling the real estate market. Tread carefully.
Just from reading this paragraph it's clear that you have at least a few months of research to do before you even consider investing in a condo. You're talking about hundreds of thousands of dollars and possibly the biggest financial decision you will make in your life.
Southcore
Active Member
I'm not sure how much you have to put down (I'm assuming 20%, so let's say you have $60K for a $300K property), but there is zero chance that you can buy any condo in TO and cover mortgage, maintenance, property taxes, insurance, etc and get $500/mo cash flow a month. It's impossible. Most condos are barely break even on 20% down, or best case $100-$200/mo cash flow). If you have found properties that can cover everything and produce $500/mo in cash flow, please post some listings, or post your calculations. And if you don't believe me, just ask other forum members like interested, cdr and KingEast, I'm sure they too would like to know more about such opportunities
Now if you are buying in straight cash then yes, it is possible, though there are much better uses of $300K cash then buying a condo outright, especially in Yonge/Sheppard
NorthYorkEd
Active Member
We like the area. But you are making an assumption based on recent history, which is never a sure bet. Especially as the rapid rise in value has been an anomaly, unprecedented in our times.
In my opinion, you are much better off looking into a diversified (and liquid) investment portfolio. With the right balance of assets, your gains will be comparable to what you would gain in equity (without the hassles and costs of operating and maintaining a home, which you can divert into your savings). Keep in mind that with real estate transactions, you immediately sacrifice thousands in purchasing costs and taxation.
See above. Your mistake is letting your savings fester in a low-interest savings account and assuming that past real estate performance is indicative of future performance. If you "don't know much about investing in condos", then you should definitely look at other options.
There are no sure locks in real estate, or any type of investing. Forget about what your parents were able to achieve. They rode a wave of unprecedented growth in real estate, which was fueled by forces outside of typical market norms. Putting all your eggs in one basket (i.e. a condo), based on assumptions, is extremely dangerous.
You do not seem to be aware of the many unexpected costs and issues that can arise with condo speculation or with being a landlord, etc. Invest your money in a diversified, well-balanced portfolio, do more research on the pros and cons of real estate investing, then revisit when you are armed with enough information to make an informed decision.
BMO
Senior Member
If you're going to invest in renting a unit the key thing to keep in mind, aside from appreciation in value of your asset, is that the tenant will essentially be paying your mortgage for you! Thus if they cover the mortgage, maintenance fees and you can make more then $500 a month you're already making more money than your bank's interest in 3 months. Keep in mind you will have to do repairs and on-going maintenance on your own to keep your unit in good order to attract better tenants who will want to spend more on rent. The asset appreciation of your unit isn't guaranteed to increase, some might even suggest it will stay the same or even decrease. But the important thing is that technically you would not have paid for your mortgage so even if your unit depreciates in value you're making profit on selling it because you never had to use your own money to pay it off (ofcourse accounting for whatever down payment you've put in, which you would have to recoup from rent as well). Overall it's not a quick turnaround for profit, but if you do your research and get a unit in a location that will likely attract people who want to pay a decent amount of money you can end up on a fairly positive end of things once it's all said and done.
I must warn, the reason you don't see everyone becoming landlords is because it is a lot of capital expenses having to purchase a unit AND having to live in your own place. I don't know how old you are but I'm in my mid 20's and I was thinking of buying a condo to rent and make money off of but after going through the numbers it meant I was likely going to end up living at home for quite a while longer which I did not want to do. I've purchased a unit for myself to live in and my plan is to keep it when I move onto something else in the future and reap the benefits of renting at that point. What I'm trying to say is that you don't have to make a return on your investment immediately but can buy a place now to live in a use it as an income stream once you decide to move onto something else with a partner, etc afterwards.
cornflakes
New Member
Thanks everyone for your input! All great points! Yes, as I said, I'm "new" to this condo investing thing. Obviously, I don't know enough to make a good decision right now. This is why I joined this forum and asked. It's nothing immediate that I need to do. I have a good 7 months or so to research, plan, and decide. I, do agree that it can be difficult with the property tax and maintenance fees. Those really take a big bite out of the cashflow. Here's my theoretical plan: Let's say I'm eyeing on a $250,000 - $300,000 condo unit and plan to put down about $100k to $150k deposit down. That leaves me with roughly 50% mortgage left so that's pretty good right? I heard that the more downpayment you put, the better mortgage or easier(?) the mortgage will be? So putting down just 20% is probably a tough stretch I leave myself with right? But if I put down a big downpayment 50%-60%, then paying off the rest of the mortgage becomes easier?
Here's the thing, the condo won't be completed in another 4 or 5 years. So if I can put down 50% now, I still have another 4 or 5 years of income to earn and save, by the time closing comes around, I can put down another 50-75K. So my grand total could be $200k downpayment on a $300k condo unit (or less). That would be really good right? Then the renter would be paying off the rest of my "small" mortgage left. Now, you ask, what about me? Where will I live? Well the thing is, I'm working overseas right now and have been for the past few years. My company here provides me with housing so I'm basically living in my place for free. You can see how this is advantageous for me right? If I were to come back to Canada, I'd have to either find my own place (more expense while trying to purchase a condo unit) OR live in my parents place (which I can't do anyways since they have no room in their condo).
There are obviously still a lot of things I need to know. But this is so far the basic structure or framework that I have in mind. How is it looking so far? Does my situation seem to be a lot more promising now? Or do you think this is still a big risk for me and maybe I should look to invest in something else? Could I invest in a startup company or become a partner in one that I like and believe has future potential? Could I start my own business? I'm really new at all of this and I'm trying to soak in as much as I can to make the best decision I can. Obviously, I know keeping my savings in a savings account is pretty much a waste as it only grows at 2% per year. In my life, I've sort of been conditioned and trained you could say, to be a "saver" and not a "spender". This also means that I've never really been encouraged to explore options, be adventurous and learn how to invest or take some risks. I've just pretty much saved whatever I could and stash it away either in my room, drawer, and later on my bank account. I know very little about the investment world and how to be smart with your money. I know that I could be prime pickins for some hawks and sharks to come swindle me or fool me with the "game", so I have to be careful about who I trust, who I listen to, and what they tell me. I've already spoken to a lot of people and they are so-called experts themselves but they both contradicted each other lol. So somebody is obviously WRONG or trying to play salesman on me. I've been told to invest precious metals (gold/silver bullion and the whole end of currency days coming and the economic collapse coming etc), and then I've been told that it's all bogus and I should invest in the stock market, mutual funds, RRSPs etc that yield more returns than precious metals have since 1920s. Now I've been thinking about the real estate option because my Dad suggested it to me. As I said, my parents condo was being rented out for the past 5 years or so. It's a 2 bedroom, 1000sq feet unit and they were getting around $1500/month combined from the 2 renters who each took a room. I don't know the exact finances and how much cashflow it was working to be for my parents, but it sounded like it was working out very well and easily for them. They said that whenever a renter went out, they immediately filled the spot with another renter. It was never a long wait because that's how in high demand and busy that area is, especially for renting out to foreigner students (which is what they did). I'm not sure if $1500 combined a month rent is a bargain or about average for a 1,000 sq foot unit with 2 bedrooms and 2 washrooms? It sounds a bit cheap. Maybe my parents raised it since I last heard so I could be mistaken.
In any case, I'm exploring the option of real estate investment (and it's also good just to pay off my own place anyways if I ever will need a place when I come back to Canada, it will be all paid off). I'm also exploring possible opportunities in how to become an investor or partner in startups or small businesses(?). I was watching some Robert Kiyosaki youtube video seminars and well, what he teaches sounds to be very reasonable and honest. Not sure what you guys think about Mr. Kiyosaki (Rich Dad Poor Dad)?? Am I following the wrong path or is he a reliable source for information?
Any more valuable input from you guys would be very helpful. I'm assuming a lot of you here probably have years and years of experience in the real estate/property/condo investment market, but of course I will take all advice with a grain of salt. Thanks again.
Here's the thing, the condo won't be completed in another 4 or 5 years. So if I can put down 50% now, I still have another 4 or 5 years of income to earn and save, by the time closing comes around, I can put down another 50-75K. So my grand total could be $200k downpayment on a $300k condo unit (or less). That would be really good right? Then the renter would be paying off the rest of my "small" mortgage left. Now, you ask, what about me? Where will I live? Well the thing is, I'm working overseas right now and have been for the past few years. My company here provides me with housing so I'm basically living in my place for free. You can see how this is advantageous for me right? If I were to come back to Canada, I'd have to either find my own place (more expense while trying to purchase a condo unit) OR live in my parents place (which I can't do anyways since they have no room in their condo).
There are obviously still a lot of things I need to know. But this is so far the basic structure or framework that I have in mind. How is it looking so far? Does my situation seem to be a lot more promising now? Or do you think this is still a big risk for me and maybe I should look to invest in something else? Could I invest in a startup company or become a partner in one that I like and believe has future potential? Could I start my own business? I'm really new at all of this and I'm trying to soak in as much as I can to make the best decision I can. Obviously, I know keeping my savings in a savings account is pretty much a waste as it only grows at 2% per year. In my life, I've sort of been conditioned and trained you could say, to be a "saver" and not a "spender". This also means that I've never really been encouraged to explore options, be adventurous and learn how to invest or take some risks. I've just pretty much saved whatever I could and stash it away either in my room, drawer, and later on my bank account. I know very little about the investment world and how to be smart with your money. I know that I could be prime pickins for some hawks and sharks to come swindle me or fool me with the "game", so I have to be careful about who I trust, who I listen to, and what they tell me. I've already spoken to a lot of people and they are so-called experts themselves but they both contradicted each other lol. So somebody is obviously WRONG or trying to play salesman on me. I've been told to invest precious metals (gold/silver bullion and the whole end of currency days coming and the economic collapse coming etc), and then I've been told that it's all bogus and I should invest in the stock market, mutual funds, RRSPs etc that yield more returns than precious metals have since 1920s. Now I've been thinking about the real estate option because my Dad suggested it to me. As I said, my parents condo was being rented out for the past 5 years or so. It's a 2 bedroom, 1000sq feet unit and they were getting around $1500/month combined from the 2 renters who each took a room. I don't know the exact finances and how much cashflow it was working to be for my parents, but it sounded like it was working out very well and easily for them. They said that whenever a renter went out, they immediately filled the spot with another renter. It was never a long wait because that's how in high demand and busy that area is, especially for renting out to foreigner students (which is what they did). I'm not sure if $1500 combined a month rent is a bargain or about average for a 1,000 sq foot unit with 2 bedrooms and 2 washrooms? It sounds a bit cheap. Maybe my parents raised it since I last heard so I could be mistaken.
In any case, I'm exploring the option of real estate investment (and it's also good just to pay off my own place anyways if I ever will need a place when I come back to Canada, it will be all paid off). I'm also exploring possible opportunities in how to become an investor or partner in startups or small businesses(?). I was watching some Robert Kiyosaki youtube video seminars and well, what he teaches sounds to be very reasonable and honest. Not sure what you guys think about Mr. Kiyosaki (Rich Dad Poor Dad)?? Am I following the wrong path or is he a reliable source for information?
Any more valuable input from you guys would be very helpful. I'm assuming a lot of you here probably have years and years of experience in the real estate/property/condo investment market, but of course I will take all advice with a grain of salt. Thanks again.
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cornflakes
New Member
Can you elaborate? Why do you like the area IF the area isn't appreciating in property value? Surely, the reason why you "like" the area is because it is a hot bed in Toronto right now for appreciating value and high demand area where a lot of development is happening, and will continue to happen. Of course recent history is not a guarantee that it will continue to repeat the trend, but recent history does give a good indication of the conditions of that area and track where it might be heading. The whole idea of investment is to 'predict' the future, and basically be the first to invest in it. So I'm not sure why the negativity and why you think investing in North York condos based on my assumptions of recent history is a bad decision.
True, but then again, I don't know much about investment portfolios either. So are you going to say to me that since I don't know much about condo investing and since I don't know much about investment portfolio investing, that I shouldn't bother and look to other options? The whole point of me asking is to try and get some information and learn about it so that I can better understand and prepare myself to make a decision. Robert Kiyosaki made the good point that our education throughout school life never taught us about how to make money, invest money, grow money and things like that. They never teach you that in school. They teach you how to be an employee and work for someone else's dreams, but they don't teach you how to be smart with money and grow your own dreams and have others work to make your dreams come true. Unless you've actually majored your studies in economics or earned a real estate agent license, I'm not really sure where people are supposed to learn these things. And that's probably how the system set it up to be, so that the majority of people learn about these things at their own expense (and at the benefit of others) and hard lesson learned (while those who knew exactly what was going on profit off the 90% unknowing and innocent public). It's the same with buying a car, or getting into show business, or anything you do in life, most people have to play the role of "sheep" and learn the hard way while the "wolves" can keep earning their living and make the profit off our lack of knowledge on the subject.
Why is it a mistake keeping my savings in a low-interest savings account? Again, you don't elaborate your statements. If the market crashed and you lost most of your money in the property you owned or the stocks you owned, then my savings account wouldn't look like a mistake anymore would it? I'm not saying it's the best thing to do with savings. Obviously, I know that I could put better use to that money than to just leave sitting there at low-interest. It's not a mistake that I'm leaving it there for the moment
so that I can figure out what would be the better thing to do with it next. That's why I started to look into the condo investment option in a hot bed area like North York, but you seem to be telling me that it's a mistake also since it's purely based on assumptions. You need to elaborate more so that I can learn what better options you are assuming are out there for me. Is there any reason why North York's past real estate performance will not continue further into the future? What reasons are making you think that condos may not appreciate much in the next 10 years or even 5 years? I don't know, but maybe these are things I'm supposed to "pay" someone to get answers for or maybe there's inside information you don't want to impart to me (assuming either you work in the field directly or you know of people who work in the field directly and sort of tip off to their buddies that North York is hitting it's peak and going to burst its bubble soon). I can see how that kind of information would be wise to keep hidden from prospective (foolish) buyers and investors, because as I said, people profit off of other people's mistakes or lack of knowledge. That's sort of how the system of life has always been set up to run. Rich people can't exist if poor people don't exist. Powerful people can't exist without powerless people, etc. Since I said that I didn't know much about investing in condos, you concluded to me that I "should definitely look at other options", doesn't really make sense because that's like telling someone, "since you don't know much about buying cars, you shouldn't buy one". Everyone needs a car or at least will need to buy one at one point or another in their life. Well, everyone needs to buy a home.
'There are no sure locks in real estate, or any type of investing'. I don't have to know about condos to know the fact there is no 'sure locks' in ANYTHING in life. Investing, business, sports, family/marriages/relationships/friendships, health, the earth, etc. I appreciate that you made all your statements, but I'm hoping that you could at least elaborate some more on what you mean, because merely making statements without giving reasons, doesn't really teach anyone anything.
- haha, what do you think I'm trying to do here? That's why I came here to ask questions and get some information, not to just get belittled and judged because of how little it might seem that I know. This is not a condo sale discussion. I'm not making a purchase right now lol. You make it sound like I'm actually here to purchase a condo off of you right now and just asking last minute questions before I sign the contract. Again, I really do appreciate the replies, but please inform me on the details if you are ABLE. If you can't or don't want to, I completely understand. Everyone has their own reasons why they may or may not want to divulge information that they may have had to earn the hard way over many years and sleepless nights, and don't want to give it away for free to someone like me who might be able to avoid all that trouble thanks to your charity.
Sorry if my tone sounds a bit confrontational. It's not personal. It's just that I've found that either people like to actually give helpful and useful advice and state the reasons why, or they like to just give you the runaround answer and tell you to do some research. Asking people, to me, is doing research. I'm doing it right now
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cornflakes
New Member
NorthYorkEd
Active Member
I never said it was a bad decision. I said to be cautious and do your due diligence. And one thing that most investors will tell you, once everyone else has piled on, it's probably time to bail out. Or as Wayne Gretzky famously said (paraphrasing), "Don't go where the puck already is, go where it's going to be."
My point was to educate yourself before making such a major decision. A condo is a single asset. An investment portfolio is a mixed bag of assets, balanced for risk and built to sustain market dips and volatility. In my opinion, keeping your cash invested in a diversified portfolio (with high liquidity) is a better strategy than gambling it all on a single asset that may or may not perform as expected.
Here's some light reading on DIY, or "couch potato" investing:
http://business.financialpost.com/i...yourself-investment-portfolio?__lsa=2e96-4aba
http://twocents.lifehacker.com/how-to-build-an-easy-beginner-set-and-forget-investm-1686878594
If you still have questions, I would urge you to speak with a financial advisor, or check out a site like Wealthsimple.com. You really do not need to understand the markets or the complexities of investing to put something like this together, and it is a far better than letting it languish in a savings account. The savings can be part of your balancing (say, 10%), with the rest working for you.
Because the banks pay you next to nothing for allowing them to use your money. You can invest your money in a balanced portfolio and gain an average of 7-10% annually, and have it ready to withdraw (liquidity) when you are ready to buy a property. "High-interest" savings accounts barely (if at all) match inflation. Your money is actually worth less than when you put it in. That's why it's a mistake.
There are many reasons why appreciation could pause or correct. If interest rates rise, if foreign speculation dries up, or if there are major disruptions to household debt, the economy, the job market, or any variety of other possibilities. It might also continue unabated. One thing is for sure, if the bubble does pop, we won't know it until it is already too late, and everyone will have seen it coming in hindsight.
No, they don't. We've had that drilled into our heads by our parents, society, and everyone who thinks renting is throwing money away. But you can rent and still be a respectable (and wealthy) member of society.
http://business.financialpost.com/p...t-that-condo-even-if-you-can-afford-to-buy-it
That's why I came here to ask questions and get some information, not to just get belittled and judged because of how little it might seem that I know.
Sorry if my tone sounds a bit confrontational. It's not personal. It's just that I've found that either people like to actually give helpful and useful advice and state the reasons why, or they like to just give you the runaround answer and tell you to do some research. Asking people, to me, is doing research. I'm doing it right now
I'm sorry if you feel "belittled". I gave you my opinion and what I thought was some useful advice. It wasn't the answer you wanted to hear, and I think you have already made your decision and are just seeking validation. Best of luck with whatever you decide to do.
cornflakes
New Member
Thanks for the response. Yes, this is the kind of detail I was looking for. You gave me some more insights I was looking for. I'll look into some of the pointers you mentioned here.
Just out of curiosity, what do you think about putting some of my money into startups? Do you think looking into trying to start a small business or say trying to become a partner or investor in a startup or small company is an option worth researching into?
Again, referring back to the "Rich Dad Poor Dad" seminars, it sounds like owning or running a business is the way to go rather than to just decide to be an employee the rest of my life. Of course, this too would require a lot of research and study to make a well thought out and planned decision. I know a lot of startups fail or small businesses fail and I could lose my money also. But it's also true that many have succeeded and the sky's the limit. I think it's a mix of timing, knowing the right people, having done good homework on the market (what is growing and in demand and what is on it's way out etc), and of course luck. But as they say, success never comes without taking risks. Risks are always involved. It's just a matter of trying to reduce the risk factors as much as possible to give yourself the best chance at success (at least financially speaking).
Eug
Senior Member
This brings back memories as to when I was looking for a home. I didn't actually like much of The Beach because the houses tend to be crammed in together, and lots of them have no private parking. Plus my friends who lived there complained about the constant traffic and lack of street parking in the summer. They eventually moved out of The Beach. The nicest part The Beach that I wanted to buy in wasn't actually part of The Beach. It's Fallingbrook, which is actually in Scarborough. Bigger lots, bigger homes, quieter, and lots of private parking.
Unfortunately, it was also very expensive, more so than most of The Beach. While we could afford parts of Fallingbrook, what we wanted in terms of lot size and home size was a little beyond what we wanted to spend, so we looked west to the Scarborough Bluffs instead, right close to where that article is talking about. Very nice, but adds 10 minutes to my commute compared to Fallingbrook.
I'm glad we got in there before the big rush. That article does validate what I had believed though, that the area was quite undervalued when we bought into it. I'm not so sure it's undervalued now though, if prices are jumping up that fast.
It's true about transit though. Transit in most of the Bluffs is terrible. For us it wasn't an issue though, since we're car dependent anyway. Even when we lived downtown, we were car dependent, since we don't actually work downtown. Ironically, we work in North York.
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