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biggest worry of my life. asking for help

S

shyne07

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Hi everyone.

I just recently bought a pre sale condo about 6 days ago.
It was westlake by Onni at etobicoke waterfront.

I bought it at about $500 per sqf. Including locker and parking.
At one of the highest floors and was roughly 630sqf.

Its my first purchase and I am going through a time of hard decision.
I calculated and figured that my expenses could vary from
4-50k to even higher when I sell this unit.

I am expecting it to be higher. Meaning my unit has to appreciate
To around 630-650 psqf for me to make capital gains from this investment.

In my knowlege 650psf is too high for this area.
But I know I could be wrong and thus asking for help.

In your opinions is this a good investment?
I know its not the best because I did not buy it at a VIP price.

Please share your thoughts
Thank you in advance.
 
You should never buy real estate looking for capital appreciation. At the current market prices in Toronto is very risky to buy thinking in flipping and capital gians. What you need to do is to find out is this investment makes sense from the rental perspective. 630 sqft x $500= you paid $315000, let's say you put 20% down, your mortgage will be $252000, with a 4% interest rate your mortgage will be $1110 with 35 years amortization and $1325 with 25 years. the maintenance fee should be something around $330 and aproximately $230 in property tax, so the total expenses will be between $1670 and $1885, do you think you will get this rent to cover your expenses in that location?
 
shyne07 said:
Hi everyone.

I just recently bought a pre sale condo about 6 days ago.
It was westlake by Onni at etobicoke waterfront.

I bought it at about $500 per sqf. Including locker and parking.
At one of the highest floors and was roughly 630sqf.

Its my first purchase and I am going through a time of hard decision.
I calculated and figured that my expenses could vary from
4-50k to even higher when I sell this unit.

I am expecting it to be higher. Meaning my unit has to appreciate
To around 630-650 psqf for me to make capital gains from this investment.

In my knowlege 650psf is too high for this area.
But I know I could be wrong and thus asking for help.

In your opinions is this a good investment?
I know its not the best because I did not buy it at a VIP price.

Please share your thoughts
Thank you in advance.
Click to expand...
If you bought it to just live in it, I'd say don't worry about it.

If you bought it purely as an investment, I'd say it probably wasn't a great decision, and you're right to be worried.
 
The National reported that home prices are expected to soften 1.3% next year, but then I've heard that before. Looking at what is going on in the US there's no way I'd be buying property as an investment right now. If you have 10 days to pull out of the deal give it some thought, stress is bad for you.
 
Thanks guys,
I've been thinking for last few days and doing some calculations as well.

It is stressing me, because I don't have enough information, data or sources
to conclude my mind and see if I am doing the right thing.

Carturo15's calculation does make sense as well,
I need to see how much rent is around that area as well.

I also have thoughts of living in it, but I did not buy it purely for that.
It is an investment for me. However when I checked this place out, it had a nice view, in a nice area with parks and lake ON.
Go station, Street Car, QEW... did look like it was developing and fast growing..

more thinking to do and hope more people have more information and advices for me.
Thanks..
 
shyne07 said:
It is stressing me, because I don't have enough information, data or sources
to conclude my mind and see if I am doing the right thing.
Click to expand...

If what you wrote there is true, and you are looking at this as an investment, than you need to get out. There is no shortage of investment opportunities, real-estate or otherwise. Choose one where you know what you are getting into. Otherwise you aren't investing, you're gambling.
 
Jonny5 said:
If what you wrote there is true, and you are looking at this as an investment, than you need to get out. There is no shortage of investment opportunities, real-estate or otherwise. Choose one where you know what you are getting into. Otherwise you aren't investing, you're gambling.
Click to expand...

You are absolutely right there. However in every investment opportunities, there are experts and they know the best.
I thought R/E agents were one of those. Mine told me that this would be a good investment (he believes) and at the time there werent
many left to be bought so I hurried and purchased it. Now for past 7 days I have been researching and I am sure of nothing.
Thus asking more questions here to get better input from different people. Even if I find another area and another condominium to invest in,
I doubt I would have better information and sources other than forums, google and the RE agent.
 
Can you get out of it or is it a done deal? If it's a done deal asking for advice like this is just going to make you hate yourself.

My feeling would be at that price you're better to buy downtown where the rental demand is better.
 
shyne07 said:
You are absolutely right there. However in every investment opportunities, there are experts and they know the best.
I thought R/E agents were one of those. Mine told me that this would be a good investment (he believes) and at the time there werent
many left to be bought so I hurried and purchased it. Now for past 7 days I have been researching and I am sure of nothing.
Thus asking more questions here to get better input from different people. Even if I find another area and another condominium to invest in,
I doubt I would have better information and sources other than forums, google and the RE agent.
Click to expand...

A RE agent is a salesman, and not an investment advisor. A RE only gets paid if you buy (or sell). I don't doubt that he truly believes it is a good investment. He has to believe it. Otherwise how could he live with himself every day?

The simple answer is that you have just spent $400k (approx?) on an investment which you don't properly understand.
So you can either take a big breath, close your eyes, and hope for the best.
Or you can use the 10 day recission period to cancel this deal, and then spend the next several months properly learning about the pre-construction RE market before you decide whether you want to invest.
 
What percentage of your income will your mortgage take from you?

What percentage of your assets will be buried in the condo?

What is your comfort level when it comes to risk?

Recommendations vary per person. A condo is a highly leveraged investment, so there's a high degree of risk in the short term. If you have a secure job and the chances of you needing to cut bait early is low and you can handle an increase in mortgage rates over the next five years (by having a fixed mortgage or having sufficient income), you'll probably be fine.
 
I would suggest something else. You are clearly not comfortable with this decision as you have said.
That alone should be enough to tell you to get out of it if you can.
You have said that you bought it to live but not solely for that purpose.
I heard Phil Soper, the CEO of Royal Lepage and he said outright this is not the time to be buying to flip. This from the head of one of the largest Real Estate franchises in Canada. So plan on keeping it if you get it because as you correctly point out, when you add 5% commission + HST, legals +HST, Land transfer tax both Ontario and Toronto if it is new construction, phantom rent, soft costs, you get the picture. You have at least $50-75/sq. ft. of price increase required to just break even.
If you have the financial wherewithall to keep the investment for at least 5 years and are prepared to do so, then I think you can take the chance.
Otherwise, I would not be doing it now.
Being able to sleep at night is a very important thing and you are suggesting you may not be.
What happens if it goes up. Well you can talk about what you did not make. Are you prepared on the other hand for an actual loss because if not, I think you have your answer.
I would suggest you go over the the Baby have we got a bubble thread and look at a posting from Simuls within the last couple of days. He has done a very in depth analysis of the market and concluded that prices have actually dropped about 11% in the downtown core since about May 2010 and that the trend is that prices are going down despite the spin that you may be hearing from so called experts. You will see that I have said I don't think it is totally fair to analyze in the fashion that he has done because choosing the peak to compare to when it clearly overshot and hence some correction was to be expected (after people stopped rushing in to beat the interest rate hikes) but I do think that it is worthwhile reading for you.
Good luck, whatever your decision.
 
I'll echo the sentiment here. No investment should keep you up at night, real estate or not. If it does, you've exceeded your risk tolerance and no ethical investment advisor would suggest you proceed.
 
right..
one question, when they say 10days cooling off period,
say i signed it on the 7th.
does 10 days include the 7th? or start from the 8th.

so will the deadline be the 16th? or the 17th?
 
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