[kungpow]

I'm considering buy a new condo in Burnaby for rent. The area is Lougheed and Willingdon.

SOLO (http://www.solodistrict.com/)

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.

[nns]

:suspicious:

[Bonka]

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.

[Tapioca]

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.

[dinosaur]

I'm considering buy a new condo in Burnaby for rent. The area is Lougheed and Willingdon.

SOLO (http://www.solodistrict.com/)

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 $1?

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.

While nobody can say for certain what will happen in 2015 (wow, that is a long time to wait!) there really should be no problem renting if for $1000 or more a month.

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.

[kungpow]

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:


Say if I consider a 33% down payment, yes the 33% deposit is large and having it sit for 3yrs is a long time but I'm not paying any of my mortgage payments until the condo is built. In 3 years, I may have enough cash to cover another 33%. So in 3 years, I may only need a mortgage of 100k.

What's your view on that vs buying a condo now and have a 200k mortgage?

[Mr.HappySilp]

^^ 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........).

[kungpow]

I look at the price now and it haven't gone up at all since I sold my.


When did you buy and sell if you don't mind? Are you saying that there is a very high chance of the new condo not gong up in price by a lot in a few years?

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.

[dinosaur]

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.

[4444]

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)

[dinosaur]

^ was waiting for you to chime in :)

Listen to this guy...he knows his shit!

[StylinRed]

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

[hk20000]

While nobody can say for certain what will happen in 2015 (wow, that is a long time to wait!) there really should be no problem renting if for $1000 or more a month.

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.

Everything else aside, brand new buildings cannot impose any bylaws that limit their new owners to rent their property out.

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.

[dinosaur]

^good to know.

I bought my townhouse in 2008 (completed in 2009) and had to have approval from strata to rent it out.

interesting.

[rsx]

no good man. don't do it.

[4444]

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

just watch the banks, tehy say one thing one day, the opposite hte next

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)

[Mr.HappySilp]

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.

[Bonka]

Say if I consider a 33% down payment, yes the 33% deposit is large and having it sit for 3yrs is a long time but I'm not paying any of my mortgage payments until the condo is built. In 3 years, I may have enough cash to cover another 33%. So in 3 years, I may only need a mortgage of 100k.

What's your view on that vs buying a condo now and have a 200k mortgage?

Opportunity cost. The deposit that is sitting in the trust account is accruing interest for the developer, not you. With the market as it is and it will be softening if I had an appreciable amount of money sitting around I would bank it on something else besides real estate, and especially a presale condo.

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.

[Gridlock]

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.

[vancouverdc4]

how do you guys feel about buying a pre-sale for the purposes of living in it?

[quasi]

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

I do think that will probably happen sooner then later but lets keep in mind they have been saying the same thing for the last 5+ years.

[Mr.HappySilp]

how do you guys feel about buying a pre-sale for the purposes of living in it?

Unless is a deal. Never know what's going to happen in a few years.

[dinosaur]

how do you guys feel about buying a pre-sale for the purposes of living in it?

I bought pre-sale for my townhouse. It was phase 2 in a 3 phase development so I was able to tour the different floor plans and literally stand where my house was going to be.

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.

[Redlines_Daily]

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

[Sunfighter]

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...

[FerrariEnzo]

your thinking about renting out a place that hasnt even been completed... who knows how the economy is by then...

[iEatClams]

I have many friends working for condo developers. According to my sources, 80% of the buyers for some of these new condos coming up in Burnaby have Asian last names.

[kungpow]

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

The reason is I can have a way larger down payment in 3 years than now thus smaller mortgage and less money going to interest. For example, let's say I can put down 20% now and another 30% down in 3 years, I will also save a ton on interest (~15k over 3 years). Another upside is that I can secure it for $269k with a security deposit of $20k. I don't need to make any mortgage payments for 3 years until it is built.

My friend bought a condo in 2009 for 350k in downtown and it is hovering around 400k right now. Profit is good but my goal is to pay it off as fast as I can without incurring so much in interest.

[Tapioca]

My friend bought a condo in 2009 for 350k in downtown and it is hovering around 400k right now. Profit is good but my goal is to pay it off as fast as I can without incurring so much in interest.

50K is nothing after realtor fees and taxes that your friend had to pay when he purchased the unit. Besides, he may not be able to sell his unit for 400K because the market may still be in a slump when he wants to sell his unit.

[melloman]

Honestly you haven't done ANY research in the real estate market.

Few points:
1) HST. Your buying, and with that comes tax. HST will be dissolved by 2013 (hopefully) and the GST/PST system will come back into place. Once this happens, the tax on the purchase price of your condo will drop significantly.

2) "Experts" say that the real estate market is taking a dive. They predict in 2-3 years that it will drop 10-15%. If you buy now your taking a LOSS on your property. This can be backed up by research showing that in Burnaby alone, the apt/condo market is going stale. I am tentatively watching as I'm looking to purchase in 2-3 years for myself in Burnaby.

3) Buying in the "hype" of the moment I wouldn't suggest. A pre-sale could be nice, but as others have explained. Alot of the "little things" can change. It could also be a hassle as dependant on the builder, the quality could be below-par. (I don't know the builder for SOLO so I'm not about to judge.)


-As lots of people are saying. I also WOULD NOT recommend buying right now. There are too many signs showing that it isn't a good time. Even though a ton of buildings are going up, like Toronto, doesn't mean anybody is buying them. I'd sit donw and think about this.

[Tapioca]

SOLO is being developed by an offshoot of Bosa.

It's becoming clear that the OP is dancing to the beat of his own drum. You will be taking a huge risk if you buy a condo for investment purposes in Burnaby-Brentwood.

With that said, would you be interested in buying a unit that is available now, is in a well-run building, and has the best layout of any suite in any building in the area?

[TouringTeg]

Can't stress enough to do lots of reference and background checks on potential tenants. A quality realiable tenant is what you want even if it means settling on less income.

I forsee a rush to buy until July 9th when the maximum amortization changes to 25 years. After that prices will likely come down.

[Ferra]

how do you guys feel about buying a pre-sale for the purposes of living in it?
Given a rising or even a flat housing prices trend, people will generally pay a lot less in pre-sale vs buying the house when it is completed.
(My parent brought a pre-sale in 2003 for 440K, it was supposed to be completed by 2005, but the builder delayed the completion for almost 2 years...
by the time they got their house in 2006/2007, the house was worth 700k+)

Of course this could've gone the other way if the housing market tanked...


Definitely wouldn't recommend buying a condo for the purpose of renting it out tho ... you really wouldn't want to deal with a tenant if you don't have the time or stomach for it...
to me it is just not worth the headache...put your money into stock or other financial investment

[4444]

I have many friends working for condo developers. According to my sources, 80% of the buyers for some of these new condos coming up in Burnaby have Asian last names.

many of whom are probably citizens/born here
what a dumb comment

[SumAznGuy]

I have many friends working for condo developers. According to my sources, 80% of the buyers for some of these new condos coming up in Burnaby have Asian last names.

I've been fooled like that before. Back in high school, went to Tom's Video to rent some porn. Saw the last name was Lee and thought sweet asian chick.
Turned out it wasn't and I had to fap to some blonde chick. :okay:

[kungpow]

With that said, would you be interested in buying a unit that is available now, is in a well-run building, and has the best layout of any suite in any building in the area?

I would be interested in that as well. If I buy now, I may put down 30% for down payment on a 300k condo vs 60% down in 3 years thus I'm keen on the pre-sale condos. It doesn't have to be this condo but it can be any pre-sale condo.

I would rather put a very large down payment at 60% vs incur lots of interests at 30% down.

[too_slow]

I've been fooled like that before. Back in high school, went to Tom's Video to rent some porn. Saw the last name was Lee and thought sweet asian chick.
Turned out it wasn't and I had to fap to some blonde chick. :okay:

How did you miss the "Jones" part of Tommy Lee Jones? :fullofwin:

*hi from TCL*

[dinosaur]

I would be interested in that as well. If I buy now, I may put down 30% for down payment on a 300k condo vs 60% down in 3 years thus I'm keen on the pre-sale condos. It doesn't have to be this condo but it can be any pre-sale condo.

I would rather put a very large down payment at 60% vs incur lots of interests at 30% down.

out your money somewhere else, dude.

you wouldnt put 90k into something for 3 years to not make any money, would you?

think about it.

[Tapioca]

I would be interested in that as well. If I buy now, I may put down 30% for down payment on a 300k condo vs 60% down in 3 years thus I'm keen on the pre-sale condos. It doesn't have to be this condo but it can be any pre-sale condo.

I would rather put a very large down payment at 60% vs incur lots of interests at 30% down.

FYI: The going rate for a 1-bedroom, 650 square foot unit in my building is 350K. The going rate for a 870 square foot, 2-bedroom unit in my building is 415K. 300K for new construction is going to get you something smaller than 650 (which I consider the bare minimum as livable.) If anything, please look around Craigslist to get a sense of the rental market in the area.

If I had 200K in cash, I would not drop it on a condo today. If you can save 100K in cash in 3 years, why not save for a decade and buy a bloody detached house?

[kungpow]

out your money somewhere else, dude.

you wouldnt put 90k into something for 3 years to not make any money, would you?

think about it.

It's the other way around. It's 20k down now and then in 3 years, I may consider putting down another 40% down.

It's not 60% down now and wait 3 years.

[dinosaur]

you said 30% of 300k. that is 90k.

but whatevs...it doesnt matter....20k sitting there doing nothing for 3 year is just as wasteful a 90k.

personal (non offensive) question...how old are you?

[kungpow]

personal (non offensive) question...how old are you?

Not being defensive but how does this relate to the condo market?

[Graeme S]

Your age and your situation in life are relate to what kind of investments are best. If you're 25 and have just started pulling good money, and are killing to lock all of the money you've put aside into this, it'll be a bad move, especially if you've also got car payments payments other debts. It also depends on when you expect the payoff for this investment to be. 2020? 2040? It seems like you're looking to build equity quickly so you can flip quick for maximum cash. At 30% you're not likely to go upside down, but if you plan to cash out within the next 10 years, there's no way to know what kind of values anything will have.

[dinosaur]

Not being defensive but how does this relate to the condo market?

For the exact reason Graeme S pointed out.

Also, you could be around 18...have yet to go to university, etc. Maybe being locked into property is not the best investment. What if you travel overseas for work...would being a landlord be the best choice?

If you are in you 30s and are wanted to buy property, pre-sale is probably not the best choice either.

Are you in a relationship? Are you renting now or living at home?

None of these questions are meant to offend you....there are many people here from all different walks of life and are all different ages....it is just a way to relate to your situation so we can offer the best advice.

I am 31. I bought a pre-sale in 2008 that was completed 14 months later in 2009. I currently rent it to a small family for $1550/month. This covers mortgage, strata, and property tax...it leaves me with about 100$. If I were to sell, between realtor costs, etc., I would lose money.

Do I wish I did something else with my money? Yes. I don't really regret buying a place, but I would have done it differently.

[kungpow]

At 30% you're not likely to go upside down, but if you plan to cash out within the next 10 years, there's no way to know what kind of values anything will have.

I may consider cashing out in the next 10 years or I may consider paying this condo off fast and use it for passive income so I can get another mortgage for a 2nd condo or dwelling for passive income once paid off.

[kungpow]

If you are in you 30s and are wanted to buy property, pre-sale is probably not the best choice either.

I am 31. I bought a pre-sale in 2008 that was completed 14 months later in 2009. I currently rent it to a small family for $1550/month. This covers mortgage, strata, and property tax...it leaves me with about 100$. If I were to sell, between realtor costs, etc., I would lose money.

Do I wish I did something else with my money? Yes. I don't really regret buying a place, but I would have done it differently.

I'm in my mid twenties. I have some luxury of time of doing more overtime to build up my capital.

Why is it not a good choice to buy a pre-sale condo in your 30s?

Is your condo called Richards Living and what would you have done in hindsight?

[Tapioca]

Why is it not a good choice to buy a pre-sale condo in your 30s?


Even if you were in your 30s, I wouldn't recommend buying a pre-sale condo for investment purposes. The numbers simply don't work at today's prices - we've all laid it out for you. At best, you will be cash flow neutral and at worst, you will lose $200-500 per month. Remember, CRA only allows you to declare a loss on capital investments for 5 years. I don't think we'll see a market recovery for at least a decade, if not more.

I don't know what type of job you have, but your age is somewhat relevant because your 20s are a time to take chances. You should be mobile and you should manage your life and assets accordingly. If you're in your 20s and really want to invest your money, play the market. You're young enough to suffer losses in the short-term. At least once a stock starts to go down, you can panic sell the shares and mitigate your losses. Real estate is a completely different animal as it's a tangible asset. Moreover since real estate is a physical asset, it ties you down to a certain extent. At least with stocks, you can manage them from anywhere on the planet. Sure, you can manage real estate from abroad, but you'll likely have to hire a third-party property management company which will eat into your margin. If you're making 6-figures, then you should really just wait and buy a house because at least you'll own land.

As many have said in this thread, the days of flipping condos for a 10-20% profit margin are over in this town.

[dinosaur]

^that pretty much sums it up.

[kungpow]

Even if you were in your 30s, I wouldn't recommend buying a pre-sale condo for investment purposes. The numbers simply don't work at today's prices - we've all laid it out for you. At best, you will be cash flow neutral and at worst, you will lose $200-500 per month.


If I'm understanding you right, you are implying that even if I don't have a dwelling now, I should continue to rent until the market is not at the peak?

If this wasn't an investment and I planned to live in it, would that change the scenario to buy?

What do people do in their 30s when they have paid out their dwelling and have just cash sitting in the bank? Do they just put it into RRSP until they retire? I can see some money going into stocks but I don't see them putting 50% of their cash into stocks.

[Graeme S]

This is a discussion to have with an investment advisor, not Revscene. IANAIA; IANAIB; IAN[insert financial job here].

[kungpow]

This is a discussion to have with an investment advisor, not Revscene. IANAIA; IANAIB; IAN[insert financial job here].

I'm planning to do that as well. I just didn't know what kind of questions to ask. Now I have a few in mind.

[Lomac]

Regarding buying a unit that has yet to see development, I have a few issues with the idea, some of which have already been mentioned.

First off, you have no idea what the finished quality is going to be. The demo units may look top notch, but that's because there's been a high level of detail given to the construction in order to make it look as such. Chances are that the actual building will be done by a completely different builder are quite high, and you never know how many corners they will cut or what materials may change.

You'll have no idea who your neighbours will be, both physically sharing the walls and those within your surrounding blocks. I'm speaking in general terms here (and not about the unit the OP is interested in), but often someone will buy a west facing unit on the 10th floor because it's got a fantastic view. However, will that person think to look into whether that empty lot across the street is going to contain a two story townhouse complex or another highrise apartment block that will eventually destroy the view?

I also don't like the idea of handing someone $30,000 to hold onto for three years so they can gain the interest of it sitting in a bank account while I'm left holding an empty bag, hoping it will eventually be filled with a properly built home. Depending on your risk levels, you could at the bare minimum be gaining a bit of interest just having it sit in a savings account at the bank, or you could have it work for you by playing stocks or commodities. I just don't see the point in handing over a chunk of change to someone and not have anything to show for it.

Frankly, if you feel the need to buy an apartment as an investment or income supplement, I'd go after something a little older and already established. This way, you know what the typical renter will generally be, you'll have an idea as to what the maintenance of the entire building is, the square footage will likely be much bigger than anything new coming out, and there's always potential to upgrade an "okay" looking place and try flipping it afterwards. There's no real way to upgrade a brand new building in order to try and cash out; all you can do is hope that the desirability of living in such a complex and area drives up the asking price once all is said and done.

[MindBomber]

If I'm understanding you right, you are implying that even if I don't have a dwelling now, I should continue to rent until the market is not at the peak?

If this wasn't an investment and I planned to live in it, would that change the scenario to buy?

What do people do in their 30s when they have paid out their dwelling and have just cash sitting in the bank? Do they just put it into RRSP until they retire? I can see some money going into stocks but I don't see them putting 50% of their cash into stocks.

Buying at the peak of the market will put you in a position to take a loss, at least in the short term. Why would you not wait until the market declines, purchase at a lower price and maximize your long term profit?

A real estate purchase is always an investment, regardless of whether you intend on using it as your personal residence or a secondary income source. The sum of money involved in a real estate purchase is to significant to not consider it an investment, your current mindset is rental minded - looking at housing primarily as an expense.

As people age and approach retirement, the advisable risk tolerance they should take decreases because they have a a shorter period of time to absorb losses.

I was in the same position as you last year. I could have bought a condo, but I decided to invest what would have been the downpayment in higher return options until the market had already gone into a decline and I could purchase a free standing house that would have a better investment value. Buying a condo, then upgrading to a house would be a bad idea because you lose a significant amount of money in transaction costs.

[TRDood]

I don't know how you guys can tell whether at today's prices, the condo market is at its peak. What are we based on here? Have we seen a trend reversal in the past 12 months? Legit question as I really haven't been up to date with real estate.

Also, as for OP's situation. I am in my mid-20s as well, and have a career job that pays decent money. Not 6 figures.

I wouldn't really be looking to buy a pre-sale condo. Or any condo/high rise for that matter, either for rental or for self-living.

1. Why would you want to rent out a brand new place to another person? Is an older apartment with better location not good?
2. What if you lose your job, are you able to afford mortgage payments?
3. What if your tenant destroys your place? Or choose not to pay rent?

[AWDTurboLuvr]

If I'm understanding you right, you are implying that even if I don't have a dwelling now, I should continue to rent until the market is not at the peak?

If this wasn't an investment and I planned to live in it, would that change the scenario to buy?

What do people do in their 30s when they have paid out their dwelling and have just cash sitting in the bank? Do they just put it into RRSP until they retire? I can see some money going into stocks but I don't see them putting 50% of their cash into stocks.

The rent/price ratio in Vancouver is much more favourable to people renting and has been for awhile. Most people buy homes as investments because it's such a traditional and common method. I honestly think that most do it as well because they have no idea where else to invest their money if not in a home....that and the Lower Mainland is horny for houses.

Even if you weren't using the condo as an investment, you should stay mobile as a younger person and have your money in more liquid forms. What if a job comes about in a new city and you want to sell your home, but it's a downturn in the housing market? Do you sell as a loss or do you become a landlord?

In your 30's most of your money, depending on your risk-adversity, should be in equities. If you really want to invest in the housing market, just put your money in one of the more stable REITs (Real estate income trusts).

As for me, yeah, I'm in my early 30's and ended relocating for a better job. Some of my money is liquid but I still have to sell a place that I bought 6 years ago. The money that I put in a REIT have the same returns as my condo (in terms of market pricing), but I didn't have to pay strata fees for it or deal with shitty neighbours.

I'll never own another condo again, but hey, if you want one, I got one for sale :)

[melloman]

Lets all not forget the "Rent/Buy" topic was discussed in length in another thread. :pokerface:

Some people want to buy just so they feel like they will actually OWN something and beable to receive money back from it when they are done with it. Compared to renting where some others feel like they are throwing money into someone elses bucket.

@kungpow: Lots of people who buy condos/apt's early, then flip that up for a house in their 30's. Then you have a mortgage for a house which is 2/3x more then the previous apt/condo. If you kept the apt/condo, then I'd look into mutual funds. (Canadian IMO)

[Ferra]

Buying at the peak of the market will put you in a position to take a loss, at least in the short term. Why would you not wait until the market declines, purchase at a lower price and maximize your long term profit?
People have been saying vancouver housing price reached its peak for so many years... (i swear I started hearing people said vancouver housing reached its peak and will decline soon since back in 2005/2006!)

For most people, buying a house also has a huge "leveraged" effect compare to buying stock or other investment. (e.g. buying a house usually means people are borrowing 5-10x their equity to put on the investment, where else very few people will borrow money to invest in stocks)

[Tapioca]

If I'm understanding you right, you are implying that even if I don't have a dwelling now, I should continue to rent until the market is not at the peak?

If this wasn't an investment and I planned to live in it, would that change the scenario to buy?

What do people do in their 30s when they have paid out their dwelling and have just cash sitting in the bank? Do they just put it into RRSP until they retire? I can see some money going into stocks but I don't see them putting 50% of their cash into stocks.

I wouldn't imagine that too many people have their dwellings paid for by the end of their 30s. If they have, they either sacrificed lifestyle or they make a high income. For those people that have, they likely do have a mix of investments - cash, equities, bullion, etc. (unless they have some sort of pension plan - not many of those these days.)

The only way buying makes sense is if you plan to live in it for a period of several years - say 10. However, unless your job is absolutely secure with growth potential, there's no point in limiting your options when you're in your 20s.

Renters have it very good in this city. There's lots of supply and the laws favour tenants. The media likes to make a big deal about renovictions, but the law provides an adequate transition process.

Though this is more along the lines of life advice, I'm going to give it anyway: move downtown and live the bachelor lifestyle. If there's 1 regret I have from my 20s, it's that I didn't rent an older, character suite in the West End. Your 20s are a time for exploration and personal growth - you shouldn't spend them being tied down or hassling with shady tenants.

[LiquidTurbo]

Any thoughts on condos vs apartments in Vancouver?

[quasi]

People have been saying vancouver housing price reached its peak for so many years... (i swear I started hearing people said vancouver housing reached its peak and will decline soon since back in 2005/2006!)

For most people, buying a house also has a huge "leveraged" effect compare to buying stock or other investment. (e.g. buying a house usually means people are borrowing 5-10x their equity to put on the investment, where else very few people will borrow money to invest in stocks)

Exactly what I was trying to say on the first page. Check this 4 year old post which got somewhat heated way back when. Now I haven't been following condo pricing but I know my house has increased in value by 10% in the last 5 years after being bought at the peak. I know that's just a snapshot and things change can change in a shot but my point is the doomsayers have been saying it for at least 6 years, the markets going to tank and it hasn't yet. I was lucky enough to buy early and make 110% profit on my townhouse in 5 years and I'm in this place for the long term so I really could careless what the market does but I'm just sayin.

Anyway here the old thread, it's funny it's 4 years old but it's the same arguments.

http://www.revscene.net/forums/528401-buying-condo-downtown.html

[PornMaster]

I wouldn't pre purchase in north burnaby right now.

There are tons of condos coming out left right and center.

They all started similar times as well

[Tapioca]

^ The reason why people are saying that it's time for a correction because the sales data reflects a slowdown. I did a search on MLS and there are around 15 condos for sale in my complex. If you do a search in Burnaby-Brentwood, there are countless others for sale. The condo market is saturated.

Detached homes, however, are a different beast.

[PornMaster]

There are tons of condos on sale in that area + there are tons of development going on

solo + one beside solo + aviara couple blocks down

2 condos just finished by holdem station

[Ferra]

^ The reason why people are saying that it's time for a correction because the sales data reflects a slowdown. I did a search on MLS and there are around 15 condos for sale in my complex. If you do a search in Burnaby-Brentwood, there are countless others for sale. The condo market is saturated.

Detached homes, however, are a different beast.
Look at the sales data back in 2009...everyone said the housing market was headed for a long decline.
I remember there was some condo developer cutting their prices by 10-20% in early 2009, and people were laughing at the buyers thinking they were suckers since the price was expected to keep declining....(based on all the sales data and market sentiment at that time)

Well turned out it didn't and prices have kept on raising since..

bottom line, no one knows what's going to happen in 1-2 years...
we had a pretty gloomy outlook in 2008/2009 during the financial crisis, and take a look at where we are now...who would've thought prices would go up another 20% in just 2 years back in 2009

[AWDTurboLuvr]

Look at the sales data back in 2009...everyone said the housing market was headed for a long decline.
I remember there was some condo developer cutting their prices by 10-20% in early 2009, and people were laughing at the buyers thinking they were suckers since the price was expected to keep declining....(based on all the sales data and market sentiment at that time)

Well turned out it didn't and prices have kept on raising since..

bottom line, no one knows what's going to happen in 1-2 years...
we had a pretty gloomy outlook in 2008/2009 during the financial crisis, and take a look at where we are now...who would've thought prices would go up another 20% in just 2 years back in 2009

Well, I will say July 9th will be the tipping point when the new mortgage rules go into effect. No more 30 year mortgages, new debt-ratio laws, the million-dollar rule starts and they finally clamp down on HELOCs, which so many people have used to do renos and vacations.

It took 5 years for Canada to succumb to a recession when the DOW tanked in 1987 and it dragged the housing market to the shitshow of the early 90's. The general public might not thing there is a housing crisis or a recession looming, but Carney and Flaherty think so, hence the new rules.

[sh0n]

how do you guys feel about buying a pre-sale for the purposes of living in it?

Here's my analysis and it really depends on your situation (age, stage of life, down payment, mortgage, etc)

Pro's
- You get a brand spanking never been live in unit
- 2-5-10 Warranty from Developer in case something goes then wrong certain things are covered
- When buying pre-sale you are basically trying to predict/invest in the future hoping that future values will be more than what you agreed to pay today.
- If you are one of the first people to move-in you can enjoy the benefits of every low occupancy which is great cause you pretty much get to have the whole building to yourself for a short period time.

Con's
- Again, you are hoping that your pre-sale does not flop. Such that the amount you agree to pay today will not be less in the future when you take possession of the property. If so your property will be under water.
- You have to deal with all the issues when living in a condo. A new building will have many infancy problems (mainly security, move in's, elevators, strata)

To sum it up,
If you are a working professional single or in a relationship in the age group of 20-30 and want to move out of home then it's a good idea to purchase your first home to move into.

Just make sure to crunch all the numbers to see if you can afford your down payment, mortgage payment, strata fees, property taxes, monthly expenses.

[sh0n]

The reason is I can have a way larger down payment in 3 years than now thus smaller mortgage and less money going to interest. For example, let's say I can put down 20% now and another 30% down in 3 years, I will also save a ton on interest (~15k over 3 years). Another upside is that I can secure it for $269k with a security deposit of $20k. I don't need to make any mortgage payments for 3 years until it is built.

My friend bought a condo in 2009 for 350k in downtown and it is hovering around 400k right now. Profit is good but my goal is to pay it off as fast as I can without incurring so much in interest.

Here's the deal. I'm pretty involved in the real estate game myself in terms of condo ownership and man I fucking hate it.

Your friend's 50K paper profit looks great.

But factor all these:
- The property transfer tax and/or tax he paid to buy the place
- All his property taxes and strata fees since he owned the unit
- His own upgrades and maintenance to his unit if any
- The commission he needs to pay when he decides to sell the unit.
- Capital gains tax he needs to pay if any

In all's end he would be lucky to come out with 25K of pure profit.

[sh0n]

One more note

Regarding the Burnaby Area

There's way to much supply of new condos / projects coming up in the Lougheed & Willingdon and also the Metrotown Area.

When all these places complete in 2-3 years. I think there will be a minimum of 2000 units available for people to buy/sell/rent.

If you are thinking about buying and then renting. Good luck on trying to tap that market.

[iEatClams]

many of whom are probably citizens/born here
what a dumb comment

Yea comment was kinda irrelevant, it's just a stat, in fact it's actually a lot higher than that, and from people I know from New West land titles, they are saying its more like 90% for these new condos.

I'm basically just implying there'ts lots of demand in the area from Asians, not trying to be racist or anything like that.

I've been fooled like that before. Back in high school, went to Tom's Video to rent some porn. Saw the last name was Lee and thought sweet asian chick.
Turned out it wasn't and I had to fap to some blonde chick. :okay:

nah, they deal with the contracts, many asians dont have Legal english names, and that's how you can tell.

Plus go to any pre-sale or condo showhome and it feels like 100% of the people in there are Asian, with many developers catering to chinese developers by not having units with the number 4, or 4th floor etc.

For example one building in burnaby, sovereign? or metroplace? doesnt even have any 40th floors, the labelling goes from 39 straight to 50.

[4444]

Yea comment was kinda irrelevant, it's just a stat, in fact it's actually a lot higher than that, and from people I know from New West land titles, they are saying its more like 90% for these new condos.

I'm basically just implying there'ts lots of demand in the area from Asians, not trying to be racist or anything like that.



nah, they deal with the contracts, many asians dont have Legal english names, and that's how you can tell.

Plus go to any pre-sale or condo showhome and it feels like 100% of the people in there are Asian, with many developers catering to chinese developers by not having units with the number 4, or 4th floor etc.

For example one building in burnaby, sovereign? or metroplace? doesnt even have any 40th floors, the labelling goes from 39 straight to 50.

have you not realized that vancouver is mostly asian people? this is not anything new since the early 90's

what IS important is the fact that the majority of these "asian" buyers are locals who buy properties using mortgages - and as such they are just as open to getting f'd over by new mortgage rules, increased interest rates, etc as non-'asian' people

talking about how someone looks is irrelevant, talking about what percentage pay in cash vs. buy using 20% mortgages vs. <20% CMHC insured mortgages actually has a bearing on the market

[SumAznGuy]

One more note

Regarding the Burnaby Area

There's way to much supply of new condos / projects coming up in the Lougheed & Willingdon and also the Metrotown Area.

When all these places complete in 2-3 years. I think there will be a minimum of 2000 units available for people to buy/sell/rent.

If you are thinking about buying and then renting. Good luck on trying to tap that market.

Don't forget up on SFU. They are planning on at least 2 more buildings as well as the one low raise that is being built right now.

Oh wait, I own up on SFU. D'oh.

[sh0n]

have you not realized that vancouver is mostly asian people? this is not anything new since the early 90's

what IS important is the fact that the majority of these "asian" buyers are locals who buy properties using mortgages - and as such they are just as open to getting f'd over by new mortgage rules, increased interest rates, etc as non-'asian' people

talking about how someone looks is irrelevant, talking about what percentage pay in cash vs. buy using 20% mortgages vs. <20% CMHC insured mortgages actually has a bearing on the market

Can't forget what the product is being offered here.

It's new modern shoeboxes (condo's) in a transit orientated neighbourhood. Asians have a tendency to flock to these and are known to be condo horny.

Where as the whities like a townhouse or place nearby the mountains, trails, greeen space. I.E Coquitlam, Port Moody, Maple Ridge.

You won't find 80% asian buyers in a new condo pre sales project if it were in those areas.

[MR_BIGGS]

For the folks that live in the north BBY burbs, with all the development in the area, its giong to take so long just to get out of that area via car. So much traffic in and around brentwood during peak times.

[JKam]

For the folks that live in the north BBY burbs, with all the development in the area, its giong to take so long just to get out of that area via car. So much traffic in and around brentwood during peak times.

That's already true. I live right beside the Holdom skytrain and if I drive to work by Brentwood it takes me 10+ minutes. This is ONE skytrain station away. I've resorted to walking now haha

[MR_BIGGS]

That's already true. I live right beside the Holdom skytrain and if I drive to work by Brentwood it takes me 10+ minutes. This is ONE skytrain station away. I've resorted to walking now haha

I know, I've lived in the Hastings/Willingdon area my whole life. The added development is going to cause bigger traffic issues than there already is. Streets like Hastings and Lougheed are already main roads used by people to get to and from work, especially the people who work and live in different cities (people coming from New West, Fraser Valley, Poco, Coquitlam commuting to Bby or Vancouver). Add to that the people who cut through the burbs going above the speed limit in neighbourhoods that have small children. Sorry went off topic...