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.
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.
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.
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.
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)
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.
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.
...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.
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.
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.
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.
- 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."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"
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.
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?
Why is it a mistake keeping my savings in a low-interest savings account? Again, you don't elaborate your statements.
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?
Well, everyone needs to buy a home.
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 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
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.
Agreed. It seems inevitable that there will be migration from people priced out of the Beach who will eventually look to Birch Cliff - Cliffside for that waterfront. I remember a time when most wouldn't ever consider living in Riverdale or Leslieville.
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.But didn't those areas always have decent access to transit (in addition to downtown proximity)? I'm not so sure that's true about Birch Cliff-Cliffside. Not saying you are wrong, just that there are often factors beyond picking up the sloppy seconds and thirds from people priced out of more desirable areas that give a market legs.