zhouyanca
New Member
the outlook seems so blue...
- Thread starter luxome
- Start date
Ric
Active Member
Sorry, but I prefer to remain anonymous. I'm like the "masked magician" of realtors. You can pm me if you require any personal information or advice.
As for anyone else who requires help with determining what is/isn't a good real estate investment you can always ask; No obligation.
zhouyanca
New Member
zhouyanca
New Member
so RIC
can you please gimme some unbiased advice, thanks a lot
can you please gimme some unbiased advice, thanks a lot
g4suaij
New Member
I am not too sure why people are doing so much granular analysis over +/- cashflow! I am assuming most people here are buying to invest or flip, in whch case we should focus on the big picture! The investors are probably looking to make at least 30% return on your investment (20% down), which averages out to 7.5% (no compounding) per year over the 4 years before final closing.
No one really knows what the market will be like in 4 years, but if it is anything like the past 10 years, where toronto real estate averaged 10% increase on a yearly basis, the 30% is guranteed to say the least (if not underestimated), then minus assignment fees and other hidden cost, that's still a pretty good investment. Whether you own a higher floor, lower floor wouldn't make too big a diff, the point is that everyone would still make money.
As an example, an $400,000 tango unit with $80,000 dollars down would just have move to $440,000 to realize 50% profit ($40,000/$80,000). That's only a 10% increase in the total price in 4 years, average of 2.5% per year (no compounding). I am no real estate guru, but I would say that's easily achieveable.
Of course you will have to take into account the cost of flipping (assignment fees, interest payment between interim and final closing, etc), but I would say that there is good money to be made as long as the market stays normal.
zhouyanca
New Member
well,
in case if the marketing is going down....you can still hold it for a longer period of time provide that there is +ve cash flow
my five cent is ....the longer period of time you hold, the less risk you have
in case if the marketing is going down....you can still hold it for a longer period of time provide that there is +ve cash flow
my five cent is ....the longer period of time you hold, the less risk you have
g4suaij
New Member
yes, I agree. For people who buy to live, 4 years is a long wait, but for investors like myself, the longer the better, because the real estate market is always up swinging in the longer run.
The developer can deliver in 10 years for all I care
.
Ric
Active Member
First rule of investing is to do proper analysis in order to eliminate as much risk as possible. Part of eliminating risk, is to purchase a property that will cover all your expenses if the market turns and does not go in the direction you wanted. Thus by having +ve cash flow from rental you increase your chances of coming out ahead if you cannot "flip" your condo in 4 yrs and have to wait out the market. "Granular analysis" as you call it, is therefore essential.
Just like the stock market, you would buy a company that has a good balance sheet, +ve revenue stream and most likely paying a dividend. The stock appreciation is icing on the cake. Why would you gamble by looking only for stock appreciation?
Please explain to me what you will do in four years if that $400K tango unit is still at $400K.
The "smart money" (insert Ric) would buy in a project that would provide +ve cash flow, that way I can wait out the market and flip when things improve (which could take up to 10 years as in the 1990's). The herd (I assume you would be in this group), would be taking money out of their own pocket to supplement expenses (since they bought a -ve cash flowing property) or selling at a lost (transaction cost of at least 5% to dispose).
The problem I have is that the "herd" sometimes causes the "smart money" to also lose as their mass exodus from the market causes a downward spiral.
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Ric
Active Member
I guess the next question is "Where in the GTA can I find a pre-construction condo that will provide me with that +ve cash flow as well as price appreciation potential?" The vast majority of pre-construction will not provide any form of +ve cash flow. There are however a few. Research and due diligence is required. Hint: look West
g4suaij
New Member
There is also something called "paralysis by analysis".
An analysis is only as good as the assumptions you make, if this condo was due in 1 years or even 2 years your analysis might make sense. However, we all know Tango would take at least 4 years, most likely longer given past experiences, there are too many unknowns to accurately predict if the cash flow is +ve or -ve.
I am actually a CFA and an equity analyst and since you talk about stocks, when was the last time you read the paper and saw someone make a prediction on +/- cash flow of a stock 4 years down the road! NO ONE!!! and why because that would be pure stupidity!
I am not going to explain what I am going to do if the 400K is still 400K. Every "investor" in this forum is assuming the market is upswinging, and 4 years down the road, the market would be higher! If I thought the 400K would still be 400K, then I wouldn't haven't gotten into this deal in the first place. And if you think there is a good chance market will be flat or lower, then you should not be particpating in this condo.
Bottom line, if the market is going to be higher in 4 years, then profit is almost guranteed, +/ve cash flow is relevant! If you are doing +/- cash analysis because you think the market might be flat or lower, then don't even bother with this project, in which case +/- analysis would still not be needed.
Concentrate on the big picture!!
g4suaij
New Member
g4suaij
New Member
Just like the stock market, you would buy a company that has a good balance sheet, +ve revenue stream and most likely paying a dividend. The stock appreciation is icing on the cake. Why would you gamble by looking only for stock appreciation?
On the contrarary, most smart investors invest in pre-construction condo for Capital Appreciation! Who cares about the +cash flow, If I wanted to earn 2%, I might as well put my money in GIC, less trouble and zero risk.
Again the "holdout" theory is for beginner investors, if for some god-forsaken reason the 400K is still 400K in 4 years, my best bet would be to sell the condo even at a little loss! That way at least I have my capital back and I can invest in something profitable!
For those of you who are thinking of "holding out", think about all the time and energy you would have to put into advertising and dealing with condo renters! and again if you are already thinking about that pessimistic scenario, why invest in the first place! Place your money in GIC!!
On the contrarary, most smart investors invest in pre-construction condo for Capital Appreciation! Who cares about the +cash flow, If I wanted to earn 2%, I might as well put my money in GIC, less trouble and zero risk.
Again the "holdout" theory is for beginner investors, if for some god-forsaken reason the 400K is still 400K in 4 years, my best bet would be to sell the condo even at a little loss! That way at least I have my capital back and I can invest in something profitable!
For those of you who are thinking of "holding out", think about all the time and energy you would have to put into advertising and dealing with condo renters! and again if you are already thinking about that pessimistic scenario, why invest in the first place! Place your money in GIC!!
Ric
Active Member
You need to go and search my posts on this project. You would see that I actually recommended tango (for those who got in at the VIP event and lower floors).
You are also right about me being a professional real estate agent for a condo development. It's called "Smart Money +ve Cash Flowing Investment Condos". It's somewhere out west, go look it up.
g4suaij
New Member
It should be obvious to everyone now that RIC is doing advertising for his CONDO!! While that's normal and okay. He needs to back it up with better reasoning.
Again, the biggest, gaping hole in your analysis is that you should not be doing any!!! For a project that 4 years down the road, no kind of analysis is meaningful, because no one knows what it would be like at that time!
aibo
New Member
I agree. The lower level units at the VIP event are good investments. The risk of losing money is much smaller than the higher floors with $$$ floor premium.
I don't think it's a smart investment if someone assumes/predicts the market will be up in 4 years (based on a guess) and he/she does not care about cash flow to hold the investment until it's the right time to sell.