Buying new condo in Burnaby for rent I'm considering buy a new condo in Burnaby for rent. The area is Lougheed and Willingdon. SOLO I'm considering the 1 bedroom and den for $269k for 748 sqft. The completion date for the condo is 2015. Can this condo be rent out for $1000 easily a month? What about $1300 or even $1500? The agent mentioned that a 2 bedroom for $379k, 935 sqft, could be rented out for $1800/month. After a few years, I may consider selling the condo and buying elsewhere (eg. downtown) for residence. |
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Why would you tie up a large deposit (probably ~20% because it's a presale) for a building that you can't even take possession of for 3 years and only to rent it out?...:seriously: If you have to put your money into real estate buy something you can take possession of now. But to answer your question you should be able to rent it out for the amount you posted but with the market the way it is right now I would be weary; strata tenants have a lot of inventory to choose from and hold a lot more power. |
I live in this neighbourhood, so here's my take. There is a lot of supply in the area and only so many drug dealers and transients who want to rent a 2-bedroom for that kind of money. $1800 may cover your mortgage, but what about property taxes? The average property tax figure for a suite in that size in that neighbourhood is close to $2500/year. The property itself is fairly huge and the larger it is, the more your maintenance fees will be. Expect to pay close to $300/month. Not only that, you'll have to have a reserve for repairs from problem tenants. Your realtor is selling you Kool-Aid. In my opinion, it's a stupid decision right now to buy in this area for investment purposes. You really should have invested in this area 7 years ago when 2 bedroom suites were in the 250K range. |
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However, at $1000 are you making money? Yes, most likely, you will be able to rent for $1200 or even more...but even at that price, unless you are dropping a HUGE downpayment, there will be no monthly income from it. Strata fees will be at least $250/month (and always increasing) Property tax will be around $100/month Insurance and other misc. cost could be around $50/month Add those numbers to your mortgage payment and from what I can guess, it will be well over $1000/month. To make it worth your while (time, repairs, annoyances from tenants) you need to at the very least pocket a couple hundred bucks a month... REALLY think about....don't let the douche sales people talk you into it....I have made that mistake ;) You will also need to confirm/get permission from the strata council to rent out your apt. Some buildings/complexs have a limit on the amount of rental units they will allow on a private property. |
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What's your view on that vs buying a condo now and have a 200k mortgage? |
^^ From what I was told(might not be accurate) usually first time owner can rent it out (not bound by starta restriction) HOwever, 2nd or 3rd time owner will be bind to it. Also to be honest I invest in that area before (Brentwood gate). I can tell you with my unit I was able to rent it out for aorund $1200/mon(a few yeears back). it didn't really cover all the fees I have to pay (mortgage, starta, property tax........) so you will have to dig a few hundred bucks each month out of your pocket. I look at the price now and it haven't gone up at all since I sold my. If I were you i would conders OMA2, or Tandem near that area. Or you can try looking at the metrotown area Sliver and I beleive concrod have project up there soon too (near nelson). From my experience I will never buy these pre-sales again. Too many unknown factors and also, with so many apartments going up near that area it might be hard for the value to go up or rent it at a decent price (That area already have OMA2,OMA1, Tandem A, Tandem B, Tandem C, Brentwood gate, Perspective, Renaissance-Fresco and list can go on and on........). |
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I want to get into the market now because I'm concerned that a condo now for 300k may be 350k in a few years in the same area. |
Yeah, I would never buy pre-sale again. And honestly, I wouldn't put my money into a condo (mine is in a townhouse). I am sure others are WAY MORE educated than I am on the market right now, so I just come at it from a very amateur background....but, I am not sure I would jump into the market right now. If you are sitting on a bit of money right now and plan to add to it over the next 3-4 years...I think it would be worth it to do something else. Who knows where mortgage rates will be 3-4 years from now. They are at an all time low currently, but if/when they jump up again you could screw yourself. You can't run the numbers for this situation right now not knowing where everything will be in 2015. |
terrible idea buy at top of market, in a time when rents do not cover ownership costs, don't even GET the condo for 3 years, at which point you will be underwater and still with negative cashflow why do people think real estate is always a buy? would you buy stocks at just 'anytime'? (i would hope teh answer is no, unless you have a weekly/monthly investment plan, in whcih case you benefits from teh downs as much as you lose from the highs) its scary how people are so uneducated re: real estate, costs, etc. but think they can make money from it becasue 'real estate always goes up' here's some REALLY good advice - don't buy here now, and when you do buy, buy a house on a plot of land, less risk, and you can always rebuild it - condos can be an absolute nightmare (not to say some ppl haven't, don't, and won't make good money from them, but they would tend to know what they're doing) |
^ was waiting for you to chime in :) Listen to this guy...he knows his shit! |
TD predicts prices to fall as well in the next couple years along with the new restrictions on mortgages in place id say TDs predictions have a good chance of holding true so not only will you be renting out to the pay mortgage/taxes/insurance/but also the depreciation |
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Basically, if there are rental restrictions they are grandfather'd bylaws and new rules against renting are rendered illegal and cannot be enforced as of now. :fullofwin: In other words, if you bought a condo with rental restrictions from yesteryear, good luck selling it. But if there isn't such a bylaw already in place, there will not be one allowed from this point on. |
^good to know. I bought my townhouse in 2008 (completed in 2009) and had to have approval from strata to rent it out. interesting. |
no good man. don't do it. |
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now, while all are pretty much now (finally) saying similar things, many will then say 'but housing will not be heavily hit, so you should keep on buying' or some BS like that just rent, invest elsewhere or later (in real estate in vancouver) |
If you don't have enough money to buy a house/dubplex in Vancouver, try coquitlam(Near North Road/Lougheed) or Coquitlam area. Edit I did make some money but the majority of it went to agents/gov leaving me a bit of money but the stress I put up with it is not worth it (Got a bad tenate who only paid 1st month rent and basically have to go through the tecancty office and went through the whole porcess go kick them out which took a few months with no rent.....). Not to mention I was scare shitness as I read onlien some really really bad tenate can just ruin your apartment and left. So you are hook for the repair bills........ in the end not wirth it. |
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I can't say whether or not if you're plan is to place a huge downpayment in hopes your rent can cover your mortgage and operatiing costs is a good idea. From a financial standpoint you are tying up a lot of money into one asset which could quickly become a liability depending on how the market and interest rates play out. While it can be easy to liquidate housing and you want that option if it is something you want to sell in the short-term, with presales you will likely be dealing with neighbours who are doing the exact same thing unloading their units to market. If you are motivated you'll really want to sit down and crunch numbers and different scenarios so you know when to bow out if the market forces your hand. |
The only way right now I would buy a condo for the purposes of renting it is a dumpy unit in a decent, older building. I can do the work myself so my labour is "free" if it has to be. I can repair tenant damage, so once again, my labour becomes "free". I still won't touch the game here because the next thing you know, you get an assessment for something that needs to be done and there goes the profit margin. The old game of buying a condo on spec and it being worth 30k more when its built is OVER. Now we're back to the old game of having to actually improve a property to improve its value. |
how do you guys feel about buying a pre-sale for the purposes of living in it? |
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Cons: -it was all very confusing...it was not as simple as handing over money, signing the papers, and getting the keys. -I don't want to say I was pressured to buy by the sales people, but that attitude was certainly in the air. -Material, colours, and fixtures inevitably change...and they don't care what you think. -Upgrading is expensive (appliances, countertops, flooring, security systems, etc). Yes, it is cheaper than buying them yourself....but when you are thinking about the purchase price...these items are never included. -The potential that the completion date will be pushed back. Mine was completed early, but I had a friend who was pushed back 4 months...they had sold their place and had to live in a basement suite for 4 months with 2 infants. -Not know what interest rate you will be at when it closes. It may be 3% today....but you don't get that a year from now. When I bought, my rate was 6.4%....when it closed, it was 3.4%. I was lucky....imagine that going the other way! -Having to wait....a lot can happen in a year...or 3! Who knows what your life will be like in 3 years. Yes, shit can happen when you buy a house within a week....but having this looming date 3 year down the road is not a great feeling (My life was flipped upside down within that 1 year of waiting). -Buying property now for an economy 3 years from now. Pros - some times you get to customize. - moving to a place that is TOTALLY new ...... ...... ...... .....ya....thats about it, IMO. These are just my thoughts....I am sure others can add more :) I should also add that it WAS my intention to live in the house. It was only at the last minute that I decide to rent it out. |
You want to rent it for a few years and then sell it for a profit? I personally don't like this type of investing; I don't think it's ethical as it adds to inflation and decreases supply for other buyers. I know everyone is entitled to make their money, so I'll just leave it at that as I know many don't share my views on this :p |
I have been through this recently... I rented my townhouse in Burnaby as I had to move for a year and I didn't want the unit to stand empty. Our unit is a 2008 build and is arguably the best placed unit in the complex... 1050 sq ft., two bedroom with den, all new stainless appliance, granite, blah blah... we rented for, I believe, $1800 a month for the year that we were gone.... We KNEW we probably could have pushed higher ($1850-$1915 a month) BUUUUUTTTTT, and this is the most important part, the higher rental income wouldn't have guaranteed a lower-maintenance tenant.... within days of our rental posting, we had a FLOOOOOODDDD of requests.... a lot of people asking to take it immediately.... we could have leveraged the demand for higher rental income but once we started meeting some of these prospective tennants we freaked out... even though they were willing to pay big dollars, they were NOT the kind of people that we wanted living in our unit... eventually we came across a a wonderful professional couple that each worked 12+ hours a day but they were looking for something in the $1750-1800 range and we were happy to rent them at that because the longterm benefits were obvious; they weren't going to destroy the place, they weren't going to be high-maintenance, they weren't going to cause issues with neighbouring units.... In the end though, it was basically a wash and we definetely didn't earn ANY income... In fact, during the first few days they were in the water heater failed so that was an unbudgeted expense of $800 gone.... Owning and renting a condo is not a cash cow... I run the strata in this building now and I will tell you this.... 90% of the stuff I deal with is related to terrible tennants in other units... and I make DAMN SURE that the OWNERS are ultimately responsible for the problems caused... and when I get down to the root cause, most of the time it's that the owners don't dig into references if the prospective tennant is willing to pay what they are asking or more.. in the end though, when the owner has finished legal proceedings, eaten all the fines from the strata, fixed all the damage in their brand new unit, they are in ugly shape... |
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