Investment Property - Downtown or University?

[alsinha]

I'm thinking of getting an investment property (probably a condo). For those of you who have experience, is it easier to rent out units in the downtown core or closer to U of C/SAIT? What about suburbs? TIA!

[A790]

University.

Suburbs are getting killed right now.

[Xtrema]

Originally posted by alsinha
I'm thinking of getting an investment property (probably a condo). For those of you who have experience, is it easier to rent out units in the downtown core or closer to U of C/SAIT? What about suburbs? TIA!

Seems like these days, only low ballers are renting. Units that used to go for $1500/mth are now being low balled to $1300/mth and renter quality is shit. This is in the suburbs.

I don't have apartments so I don't know if that market is any better.

And if you thinking of a condo, there may be a chance you will lose equity over the next couple years as well as so many new units are coming online. And I think it's harder to be cash positive. Even a $230K bachelor suite with a $180K mortgage will run you about $1100/mth. You probably won't get much more than that in rent.

I agree with A790, University seems to be a safe bet. If the Chinese ever start investing in Calgary, potential is there.

[Christian@IE]

Revenue properties that are walking distance from both the LRT and post-secondary institutions are easy to fill, however be prepared for heavy turnover. You'll likely get applicants who want it for a single semester, or max 2 but will want a reduced rent during the summer months.

There are a lot of units available downtown with high vacancy rates so it would be tougher to find a tenant unless you have a better-than-average unit that is aggressively priced or are offering an incentive.

The question you should ask is: would you rather have a unit downtown that may take a while to find the right tenant who may be long term, or rent to students with much higher turnover and the (potentially higher) risk of property damage?

[alsinha]

Thanks guys. I'd be looking at it as a long term investment and was thinking University as well. Downtown looks to be oversaturated with 40 year old rundown units that are probably already paid off that a new investor would find hard to compete with without taking a big monthly hit.

[ee2k]

Originally posted by alsinha
Thanks guys. I'd be looking at it as a long term investment and was thinking University as well. Downtown looks to be oversaturated with 40 year old rundown units that are probably already paid off that a new investor would find hard to compete with without taking a big monthly hit.

The 40 yo units are the least of your concern. I know of at least 6 brand new rental only mid to high rises that have sprung up this year and are advertising aggressively. Your new condo for rent would be competing with their marketing might - including incentives and all. Third option: maybe a rental property is not where you want to put your $ in at this time.

[Xtrema]

Originally posted by alsinha
Thanks guys. I'd be looking at it as a long term investment and was thinking University as well. Downtown looks to be oversaturated with 40 year old rundown units that are probably already paid off that a new investor would find hard to compete with without taking a big monthly hit.

When it come to condos, sometimes older has more challenges with higher condo fees, low reserves and special assessments.

And elevators, those elevators always breaks and cost a ton.

[HiTempguy1]

You're thinking wrong demographic. Places for old people are hot right now, boomers are in prime retirement age and are selling off assets and downsizing. If you are going to live somewhere in old age, might as well be somewhere that you don't have a liability on your hands.

Just sayin ;)

[alsinha]

Yeah, I'm not planning on getting anything too old. But things like elevator repairs should be covered under the condo maintenance fees, right?

[alsinha]

Originally posted by HiTempguy1
You're thinking wrong demographic. Places for old people are hot right now, boomers are in prime retirement age and are selling off assets and downsizing. If you are going to live somewhere in old age, might as well be somewhere that you don't have a liability on your hands.

Just sayin ;)

What do you do with old people that don't pay rent? I've rented while I was 18-25 so I kinda know the mindset of kids going to univ or those who have a semi-decent job...

[Rocket1k78]

Unless you've got a big down it might not be the best idea now. Take a quick look online and you'll see that vacancies are everywhere now and rent prices have/will decrease more imo.

[nobb]

No way I would rent to students. There are good ones, but keep in mind many of these will be people moving out on their own for the first time and have no experience with maintaining a dwelling (nor will they likely have previous landlord references). You also have to think about if you have to take them to court on a settlement, they likely wont have much assests to seize/garnish. Many will also not be local residents so it's easy for them to run away and not be accountable. Adult tenants can already be a headache so I can't imagine what students would be like.

Downtown condo's are also bad investments right now because it's hard to cash flow positive. It might only be good for people with a ton of cash to just park their money long term and don't care about monthly cash flow.

[lasimmon]

Not to mention university parties.

[alsinha]

Is this speaking from bad experience? Thinking back to my SAIT days, and its only going back 12-13 years, most of my friends/roommates and myself were pretty good with their apartments. Maybe because I was an out-of-country student(?) but even the local guys/gals were fairly tidy and responsible...

[Xtrema]

Originally posted by alsinha
Is this speaking from bad experience? Thinking back to my SAIT days, and its only going back 12-13 years, most of my friends/roommates and myself were pretty good with their apartments. Maybe because I was an out-of-country student(?) but even the local guys/gals were fairly tidy and responsible...

My experience is renting to student is always 50/50. But I guess I am seeing how guys treat their place. Female could be better, but I have seen some that is worse than guys, especially female students in technical fields.


Originally posted by alsinha
Yeah, I'm not planning on getting anything too old. But things like elevator repairs should be covered under the condo maintenance fees, right?

Any structures that charges a condo fees is used for maintenance. Like repair, common area cleaning, waste removal, insurance and any amenities upkeep etc. It's also used to build a healthy reserve fund in case of major disasters.

In the case where reserved funds is needed for major repairs and retrofits and is depleted, maintenance fees may go up drastically to rebuild the reserve. They could be a year or mutli year increase.

In the case that reserved fund isn't enough, a special assessment will be needed and every owner will need to come up with the money for the repair.

I like this as an example when condo ownership turned really sour:

https://www.realtor.ca/Residential/Single-Family/16877965/1633-EDENWOLD-HT-NW-Edgemont-Calgary-Alberta-T3A3V2-Edgemont

This is nice area, 26 year old condo. Given the size and location, you would think it would fetch at least $200K. Because similar units in the suburb that are new are asking at least $200K.

The problem is, the condo fee is $400 compared to $200-$300 for similar units. Yes there is a gym, pool and nice common area (with a CRT TV?) but still it's more than average.

And the fact that most owners 10 years ago had a special assessment against them for $20-$30K due to major water leak that took millions to fix. Those guys never see their money again.

Townhouse/detach has limited damages and more potential increase in equity. I'm sure there are some condos that are great investments but I found most to be risky.

[Manhattan]

House will probably see more appreciation if you're in it for the long haul. Condo stock will just keep rising. Developers can and will build a building with hundreds of units on any vacant piece of land. Condo fees also really eat into your cash flow. Your biggest risk in the long run is interest rates going up but it probably won't happen in the next 3 to 5 years with all these countries going into negative rate territory.

Why not just look at a REIT? You get immediate diversification with properties in many major cities in US, Canada, and around the world. Dividends as high as 9 to 10% and you can cash out at anytime without the hassle and selling costs.

[alsinha]

Ideally I'd like to get a house but its 100k+ compared to a condo...Still looking into it however. As far as REIT is concerned, I had no idea about it but will look into it. Having a "physical asset" however seems to have a higher emotional attachment even though if REIT gives me a higher return, I'd consider it for sure. Anything is better than sitting in a bank at virtually no interest. This is obviously some cash I have on top of my "rainy day" fund that I'd like to invest.

[Xtrema]

Originally posted by alsinha
Ideally I'd like to get a house but its 100k+ compared to a condo...Still looking into it however. As far as REIT is concerned, I had no idea about it but will look into it. Having a "physical asset" however seems to have a higher emotional attachment even though if REIT gives me a higher return, I'd consider it for sure. Anything is better than sitting in a bank at virtually no interest. This is obviously some cash I have on top of my "rainy day" fund that I'd like to invest.

I would say RE in Calgary long term is around 3%-4%/yr return. You may make more if catch the cycles right.

You just hope we get another 2004-2007 run where the the market almost doubled. Or the one Vancouver is going thru right now.

Otherwise, it's not glorious return but at least it's asset that won't vaporize overnight like other investment vehicles.

[Manhattan]

Originally posted by alsinha
Ideally I'd like to get a house but its 100k+ compared to a condo...Still looking into it however. As far as REIT is concerned, I had no idea about it but will look into it. Having a "physical asset" however seems to have a higher emotional attachment even though if REIT gives me a higher return, I'd consider it for sure. Anything is better than sitting in a bank at virtually no interest. This is obviously some cash I have on top of my "rainy day" fund that I'd like to invest.

If by emotional attachment you mean working evenings/weekends to deal with tenants or fixing things up at the rental property then yeah you'll be attached to it. Rental property and/or being a landlord is not for everyone. Make sure it's something you really want and going to be committed to because unlike an investment fund or REIT, you can't just turn around and sell it the next day and decide it's not for you.


Originally posted by Xtrema

You just hope we get another 2004-2007 run where the the market almost doubled. Or the one Vancouver is going thru right now.

Otherwise, it's not glorious return but at least it's asset that won't vaporize overnight like other investment vehicles.

If anything Calgary is still overpriced right now. I know this isn't the imminent housing crash thread but the number of million dollar homes in this city is insane. It's all built on historically low interest and highly leveraged mortgages. We're nothing like the international destination that is Vancouver and it's not going to change anytime soon.

[90_Shelby]

My vote is for University. My rental agreements did not change with the downturn and I've never had an issue finding tenants. I've had a mix of students and employed for both of my up/down suites, also close to C Train. Students are immature and they need to be walked through things like mowing the lawn, shoveling the sidewalk and cleaning the bathroom. On the other hand they always pay the rent since it's typically the parents picking up the tab. Full year lease agreements only. I've only had to evict one tenant and he was not a student.

The other advantage I see with a property near the University is, most lots are RC-2 and they'll eventually sell for lot value therefore condition of the home is virtually irrelevant. I have done minimum renos and maintenance on mine which helps keep the running costs low.

In my case, I rent out the garage separately, between the 3 spaces this rental property pretty much pays for itself and the mortgage on my primary residence. Since we bought the house 5.5 years ago its increased in value by ~40% based on current conditions. Closer to 50% at it's peak. I'm very happy with this investment.

[Zhao Kan]

I don't like either but it depends what you're looking for.

Downtown roi is shit IMO, same with university areas in relation to how much they cost. Areas like this are a long term game for an investment, banking on the property appreciating in value.... but traditionally condos are shit for long term investments. We have condos in Edmonton that have depreciated after 10 years in downtown here, and while they cost twice as much as condos in the burbs they barely rent for more.

Over simplifying this a bit but Depending on your budget I personally think you either buy cheap as hell properties (new condos in the burbs) to let them return more than you are paying out or buy houses in good locations that kinda break even and laugh your way to the bank in a decade or 2.

[KPHMPH]

I've come to the conclusion after owning investment properties for 10 years..... It's not worth it what so ever.

Granted I have made money on all but 1 property over the years it is more of a stress than a worthwhile money making idea.

Put your money with an investment firm where there is a good chance to make a lot more money over the years.

This is just my two cents though.

Other wise I've had everything from 3000+ sq ft houses down to 900 sq ft townhomes and they all had their own ups and downs of who and where to rent.

[Disoblige]

Originally posted by KPHMPH
I've come to the conclusion after owning investment properties for 10 years..... It's not worth it what so ever.

Granted I have made money on all but 1 property over the years it is more of a stress than a worthwhile money making idea.

Put your money with an investment firm where there is a good chance to make a lot more money over the years.

This is just my two cents though.

Other wise I've had everything from 3000+ sq ft houses down to 900 sq ft townhomes and they all had their own ups and downs of who and where to rent.
I think it just depends if someone is landlord material or not.
I'm in the same viewpoint as you that I see it as more of a stressful situation. If RE in Calgary goes high again, I'm probably going to sell my condos and just buy a nice house. Invest my money out of RE. Until then, I can afford to let them sit/live in them.

[ercchry]

There is no way I'd buy a condo right now. If I was to get back in the game I'd be looking for older liveable detached homes that could use some upgrades in the future. Something that's been sitting for a while, and near either transit or hospital, or business park... For the short term, rent it out to pet owners. Pet owners have a hell of a time finding rentals so filling it should be easy, retaining them should be easy too since they have no where to go unlike a single young professional that can easily pack up and move to the next cheap place they find.... Retain them for 5 years, then refresh the house and rent it out for much more to non-pet owners with a bunch of equity in it and :fingers crossed: a much hotter market

[Xtrema]

Originally posted by KPHMPH
I've come to the conclusion after owning investment properties for 10 years..... It's not worth it what so ever.

Granted I have made money on all but 1 property over the years it is more of a stress than a worthwhile money making idea.

Put your money with an investment firm where there is a good chance to make a lot more money over the years.

This is just my two cents though.

Other wise I've had everything from 3000+ sq ft houses down to 900 sq ft townhomes and they all had their own ups and downs of who and where to rent.

I will tell you that I also had been in this game for 10+ years. My only gain really is the 04-07 tear on equity bubble and the fact that I look back that this is part of a balanced strategy so I don't sink all the $ in Nortel or Blackberry stocks or some fracking company's stock and ended up with nothing.

From equity stand point, we are basically stuck on 2009. But I am at the tail end of amortization and almost mortgage free. So that's how I can get 3-5% return depends on how good/bad the tenants are.

I fail to see how anyone want to get into rental now will make any money for the next 2-3 years unless having 50-60% down.

[max_boost]

I hate it. I hate the entire process. I use to look after about a dozen properties for family/friends but now the number is down to 2. One of them is a Beyonder and he's chill/og makes my life easy. The other is going on 5th year in the property.

Agree with what Xtrema said. The marth doesn't check out and for that reason, I'm out.

[alsinha]

Damnn is it really as bad of an idea? I've never rented out a property before so I don't know if I am a landlord material or not. My logic was (a) put a downpayment on a 300k condo.....have renters pay it off over 20 years and its value then is more or less 300k.
or (b) put a downpayment on 500k house, have others pay it off over 20-25 years and its value be at 600+ by then...
in this market it would be hard to be cashflow positive but that would hopefully change over the next 2-3 years...

[max_boost]

^^

It's a bit of a crap shoot with people. We all have stories :D

Rental properties are kind of like forced savings, keep up with inflation etc. It would really help if you were handy yourself because some tenants will call you to change a light bulb. :nut:

Anyway, find the right property and crunch the numbers. All the best.

[ercchry]

There are some markets where it makes sense, places in BC where rent is on par with Calgary and houses are a fraction of the cost, with very little inventory... But those come with their own risks (lots of grow ops)

In Calgary it's more like a way to have a leveraged housing speculation play for regular people... But it's pretty tough to time the bottom. If you get in trouble though at least you have more flexibility with having a physical asset vs trading something electronic.

There are ways to make it more attractive though, but with a better return comes more risk. Risk that really doesn't need to be compounded with our current economical situation

There is better places to put your money right now than real estate... Watching BNN today was basically them predicting what kind of fallout will happen to the housing market if Toronto and Vancouver pop

[Rocket1k78]

Being a LL can be horrible because in alberta you have no rights as a home owner, they could fuck you all day long and pretty much get away with it and you will get fucked at least once. That being said though im all for it because my ultimate plan is to have these forever and cash in when im an old fart. Rentals are a long, slow and tedious process so be prepared for that.

Like i and others have said though, unless you have a massive chunk to put down this is not the best time unless you can afford to lose some money on rent for the next year at least.

[Manhattan]

Originally posted by Xtrema


I will tell you that I also had been in this game for 10+ years. My only gain really is the 04-07 tear on equity bubble and the fact that I look back that this is part of a balanced strategy so I don't sink all the $ in Nortel or Blackberry stocks or some fracking company's stock and ended up with nothing.

From equity stand point, we are basically stuck on 2009. But I am at the tail end of amortization and almost mortgage free. So that's how I can get 3-5% return depends on how good/bad the tenants are.

I fail to see how anyone want to get into rental now will make any money for the next 2-3 years unless having 50-60% down.

Borrowing costs are as cheap as it's ever been. Put 20% down on a 500K house and you'll make 8 to 9%. The higher your equity in the house the lower the return. Granted you'll be cashflow negative but you'll be paying down enough of the mortgage that your overall gain is nearly double digits. I'm still not endorsing it. Just pointing it out.

[The BMW Guy]

When calculating your ROI, do you all include the equity you build in your homes or is it only your positive cashflow above the break even point, (Break even being the mortgage/fees paid off).

Anyway, OP I was in the same boat as you. I did not go for a downtown condo and instead opted for a townhouse in the suburbs. Condo fees downtown just really scared me away. Even now, condos selling for $400k are renting for the same amount as my $300k townhouse. I'm assuming the owners of these units got in early when the condos were much cheaper but still, with $400-$500 condo fees I can't see them doing that well. To be fair though, my townhouse also has condo fees for ~$180.

Best of luck with whatever you decide.

[KappaSigma]

Originally posted by Manhattan


Borrowing costs are as cheap as it's ever been. Put 20% down on a 500K house and you'll make 8 to 9%. The higher your equity in the house the lower the return. Granted you'll be cashflow negative but you'll be paying down enough of the mortgage that your overall gain is nearly double digits. I'm still not endorsing it. Just pointing it out.

Show numbers. Spunds impossible.

[ercchry]

Originally posted by KappaSigma


Show numbers. Spunds impossible.

2.8%, $400k mortgage over 25 years is ~11k in principle paid down in the first year... So negative cashflow, but yeah potentially 8% annually could be possible if you can keep it rented full time with no gaps

But there is enough decent funds with good yield and solid track record that's waaaay less effort for that kind of return

[nobb]

Originally posted by Rocket1k78
Being a LL can be horrible because in alberta you have no rights as a home owner, they could fuck you all day long and pretty much get away with it and you will get fucked at least once.

Actually from my experience, you can get a problematic/non-paying tenant evicted quite quickly through the RTDRS as long as you have a solid case. You can get a hearing in as little as a day in extreme situations like malicious property damage, physical threats, etc. The frustrating part is collections and dealing with the bureaucrats in the courthouse with regards to serving orders and filing your paperwork, but that's to be expected anywhere.

Other areas like BC have laws and processes that are even more tenant friendly and slow for landlords.

[Xtrema]

Originally posted by ercchry


2.8%, $400k mortgage over 25 years is ~11k in principle paid down in the first year... So negative cashflow, but yeah potentially 8% annually could be possible if you can keep it rented full time with no gaps

But there is enough decent funds with good yield and solid track record that's waaaay less effort for that kind of return


Originally posted by Manhattan


Borrowing costs are as cheap as it's ever been. Put 20% down on a 500K house and you'll make 8 to 9%. The higher your equity in the house the lower the return. Granted you'll be cashflow negative but you'll be paying down enough of the mortgage that your overall gain is nearly double digits. I'm still not endorsing it. Just pointing it out.

$300K Townhouse. 20% down or $60K. $240K mortage @ 2.5%, 25 year amortization.

Monthly payment: $1075
Condo Fee: $250
Tax: $150

$1475.

Current market for this condo is around $1300-$1400 depends on location and condition.

Right off the bat, you are cash flow negative at $75/mth. If this was 2014, you would be cash flow positive for around $50-$100.

Year 1 - $7000 goes to principle. So even at -$75*12, you still earned $6100.

So your $60K down will have a return of 10% but it will be taxed as income and not as capital gain and it must be a peaceful year with no damages to your property and no gaps. 1 month vacancy will immediately knock it down to 7.5%. 2 months and it'll be 5%.


Originally posted by KappaSigma


Show numbers. Spunds impossible.

Numbers works for around $300K condo. It won't work for $600K house because you don't really get double the rent and potential damages are higher. So on a bigger house, your return is lower.


Originally posted by alsinha
Damnn is it really as bad of an idea? I've never rented out a property before so I don't know if I am a landlord material or not. My logic was (a) put a downpayment on a 300k condo.....have renters pay it off over 20 years and its value then is more or less 300k.
or (b) put a downpayment on 500k house, have others pay it off over 20-25 years and its value be at 600+ by then...
in this market it would be hard to be cashflow positive but that would hopefully change over the next 2-3 years...

Do you like to do minor renos around your home? Like fixing doors, plumbing and painting? How about cleaning? Or are you tough enough to collect rent when payments are missed?

To protect that 5-10% gain, you pretty much has to do as much of those as possible on every turnover. On a good year, I think around 20hrs is spent/house. On a bad year or reno year, it's more like 100/hr. If you outsource all those to property management companies, kiss that return goodbye.

It worked out for me but only because 04-07 where the downpayment return tripled in form of equity increases (eg. $50K on $150K turn into $300K, gain of 300% in 4 years on paper). And I can defer the gain to whenever tax bracket is more favorable (retirement).

And now unless Chinese is buying up Calgary like Vancouver, I don't think it would have worked as well. Calgary is about jobs and I think we are at least 2 years away from any form of recovery. Or ever if this climate change/green economy moves forward and reduce the importance of fossil fuel.

I had similar goal as you, basically having rental income to replace working income in 20 or so years and at 10 years out, I think it'll work out for me (unless Calgary turns into Detroit). But it's not without sacrifices in time and mobility.

[zhao]

Originally posted by Xtrema




$300K Townhouse. 20% down or $60K. $240K mortage @ 2.5%, 25 year amortization.

Monthly payment: $1075
Condo Fee: $250
Tax: $150

$1475.

Current market for this condo is around $1300-$1400 depends on location and condition.

Right off the bat, you are cash flow negative at $75/mth. If this was 2014, you would be cash flow positive for around $50-$100.

Year 1 - $7000 goes to principle. So even at -$75*12, you still earned $6100.

So your $60K down will have a return of 10% but it will be taxed as income and not as capital gain and it must be a peaceful year with no damages to your property and no gaps. 1 month vacancy will immediately knock it down to 7.5%. 2 months and it'll be 5%.



Numbers works for around $300K condo. It won't work for $600K house because you don't really get double the rent and potential damages are higher. So on a bigger house, your return is lower.

here is where my numbers are though.

Edmonton a condo I paid 169k (and sold a year later for 204xxx days before the market fell out) was able to be rented for 1300-1350 at the time I owned it (we were renting another property in a worse area that was a single bed + den for 1300). 169k with 20% down was 660ish + 250 condo fees + property tax = decent positive return.

I have a townhouse in kelowna that is currently neutral per month, but we have a property management firm taking 10%, however we kept the current tenant who is paying about $400 less other townhomes in the complex because he has been there 5 years prior to us purchasing it and barely put any wear and tear on the place, nor seemed to cause any problems for the last landlord.



now cement construction condos or downtown condos were more in the 300k range here, and rented for almost exactly the same as our "200k" condo. So the numbers really dont work for some brackets or areas, but others they do make a good return.

IMO I dont even bank on the positive return a month, or even care about that exactly. what i'm looking for is a free and clear property in 25 years and the positive cashflow a month goes towards maintenance (because there will most definitely be maintenance, especially everytime it turns over). What i'm also banking on is inflation, which means that someday a property breaking even will still be costing me roughly the same (my mortgage wont change) but rent is going to increase and increase.

You also can gamble prices may skyrocket. back in 2003ish I had a friend, who her and her husband bought a house in the university area here as a rental, and it went up a bit and found a renter easy for it, so they bought another one a couple months later, and then they found a renter for that one and prices went up a bit more, sothey bought 2 more in the next few months and tapped themselves out for buying potential (about a million worth of rental properties at that time)..... well, within a year she was laughing and was set. those 4 semi shitty homes worth 250kish doubled in value.

So the way I look at the ROI on that is she took 200k of her own money, used 800k of some other assholes money (the bank), and made a million dollars in about a year. To find a stock market solution for a return like that you're going to have a crazy amount of risk of losing every dollar you earned, whereas in realestate your risk is actually pretty low, or at least very different. Markets rarely ever crash a significant amount, and they are almost guaranteed to recover.

[Xtrema]

Originally posted by zhao
You also can gamble prices may skyrocket. back in 2003ish I had a friend, who her and her husband bought a house in the university area here as a rental, and it went up a bit and found a renter easy for it, so they bought another one a couple months later, and then they found a renter for that one and prices went up a bit more, sothey bought 2 more in the next few months and tapped themselves out for buying potential (about a million worth of rental properties at that time)..... well, within a year she was laughing and was set. those 4 semi shitty homes worth 250kish doubled in value.

So the way I look at the ROI on that is she took 200k of her own money, used 800k of some other assholes money (the bank), and made a million dollars in about a year. To find a stock market solution for a return like that you're going to have a crazy amount of risk of losing every dollar you earned, whereas in realestate your risk is actually pretty low, or at least very different. Markets rarely ever crash a significant amount, and they are almost guaranteed to recover.

Bingo. I expanded on my experience which is similar to your friend's. But being a noob with my career and single income, I don't have enough credit to pull what your friends pulled.

We have not had any explosive growth like that in Calgary since 08 crash. We had a period of 15-20% gain from 2011-2014 but gave 5% back in the last couple of years.

[alsinha]

That's how I'm looking at it. If I put 50k down now, and even if I assume negative cash flow with current market, maintenance etc to a tune of 50k over the next 20 years out of my own pocket, at the end of it it's a 300k property for which I put in 100k... That's being conservative and assuming no appreciation in values...? Am I missing something?

[Xtrema]

Originally posted by alsinha
That's how I'm looking at it. If I put 50k down now, and even if I assume negative cash flow with current market, maintenance etc to a tune of 50k over the next 20 years out of my own pocket, at the end of it it's a 300k property for which I put in 100k... That's being conservative and assuming no appreciation in values...? Am I missing something?

Just time commitment and as your life progresses, you may find it to be a grind and your time is more valuable than this low rate of return vs effort.

$300K at Universtiy City only gets you a 500 sq ft unit and rents for ~$1250.

So using my example up there, you will be looking at negative cash flow of $225+ and a return of ~5%.

Rentfaster.ca and Realtor.ca are good resources to check it out yourself.

[ercchry]

I was able to make out pretty damn well even with being too young to take advantage of the boom... But it is a lot of work and frustration. There are a lot of shitty people, and they don't take pride in something that they don't own.

For best return, I found it better to rent out something you have already lived in for a while. We did that buy, live, rent, buy thing too... Found deals, fixed them up a bit... Had roommates so we could save for another down payment, bought in up and coming neighbourhoods, etc... Like a combo rent/flip scenario. There was a point where our rental was cashflowing over $500/month, and our roommates where covering everything but the principal on our primary house... Basically $1mm worth of properties cost us nothing per month.

Timing was key, and not being afraid of the houses everyone else didn't want. ROI for the last house we sold was like 400% over the 2 years we held it.

But again, HIGH risk looking back at it. We got out of the game just over a year ago and I think timing was perfect. We were way too highly leveraged in life and a vacant house would of probably ended us.