More Real Estate talk

[sxtasy]

I am looking to purchase a house right now, but I am looking for a property that is going to increase in value a lot over the next 1 0r 2 years. Which area's in the city can I expect the most equity growth? Should I perhaps buy in a new community that is not fully developed yet? Reason being is I would like to flip a couple of properties in the next few years before I have a family, just to build some equity so eventually I can find a nice house for a family. I also heard somewhere that you can defer taxes on capital gain, if you take the equity from your house and put it into a more expensive property. Anyone with some experience in doing this?

[ZorroAMG]

If you live in the property for a year, you don't pay capital gains tax. It'll take you that long usually (if not buying new) to build enough equity to make it worthwhile.

PM MIWYFSHOT for specifics on which areas to purchase, as he is a practicing Realtor. Then PM me for the mortgage :D

[CokerRat]

Problem with property appreciation is that you have to leave town to realize your gains. IOW, as your property goes up in value, so does every other property. You can bet on the next "hot" area in town but how can you know what people will want in 2 years when they don't want it today?

OTOH, if you're totally confident that all properties will increase in value of the next 2 years by roughly the same percentage, one strategy would be to leverage what money you do have by buying the most expensive one you can afford. Of course if you're wrong and properties depreciate, you could lose your shirt. Probably not much chance of that though.

Capital gains on your primary residence are tax free. (Edit: Zorro's right about the 1 yr requirement)

[WGR4Pussies]

its a given that property in calgary will probly never depreciate.:rolleyes:

[ZorroAMG]

It's NEVER a given. Leave the Real Estate advice to those of us who know....

[t-im]

Originally posted by sxtasy
I am looking to purchase a house right now, but I am looking for a property that is going to increase in value a lot over the next 1 0r 2 years. Which area's in the city can I expect the most equity growth? Should I perhaps buy in a new community that is not fully developed yet? Reason being is I would like to flip a couple of properties in the next few years before I have a family, just to build some equity so eventually I can find a nice house for a family. I also heard somewhere that you can defer taxes on capital gain, if you take the equity from your house and put it into a more expensive property. Anyone with some experience in doing this?

I've been working for realtors for a couple of years now...and in my opinion, and theirs..the best areas to look into are definitely inner city...mount royal, elbow park, roxboro, rideau..even parkhill.....

[Vertigo]

I'd have to agree with the posts by ZorroAMG, CokerRat, and t-im. However I would suggest that if you can manage it, maintain one property in which you can reside while buying and selling others. You could live in those too, and therefore avoid paying capital gains. This way if you sell a property and make a bit of coin, you're not forced into buying another (just as expensive) property since you'll already have something.

IOW, keep a 'safe home' for when the market rises and you want to liquidate without having to fork out a ton of cash just to find another place to live.

[t-im]

More regarding areas.....and i'm not a professional so I could be sooo off, but I think i have a good general idea of real estate

to me, buying in those "new" areas won't make you as much money as fast as buying in older, established areas (as i've said). People will always (it's hard to say that about every neighborhood) have the desire to move there..but you have to keep a close eye on good "flipping" properties.

example, right now 1417 Prospect Avenue is on the market for $760,000..while 3 years ago..it was sold for ~$486,000..and there's no way the new owners pumped in ANYTHING more then $100k into it

another example is 1415 Prospect Avenue (which i looked at with my parents) Sold for ~$860,000 in late 01...and sold for 1.3m in mid 2003...and again, no way the owners put in that much $$ into reno..and it had an assumable of 700k with 200k down..haha

another possibility, if you somewhat know what you are doing..is to build infills..i know people who've made good money from building up in Parkhill...and other areas..but if you don't know what you' doing you'll be fucked over..it's not as easy as it looks..

[Vertigo]

As CokerRat stated, prices increase in percentages generally, so Prospect Ave increased (in this case) 15% per annum realizing a gain of $270k.

A house worth $100k increasing that same percentage is going to net you only $52k in the same 3 year period at that rate. Besides, 15% per year is a huge appreciation rate...something that you will see more often in the established neighborhoods as t-im indicated.

[maximus]

I agree with the others. Your return will be less in the new areas. But I would avoid trying to do this unless you have an established house/residence and buy extra properties. If you only have enough equity that you must live in the houses then you should probably reconsider.

And if you are real serious you should look into properties in California. I just came down from there couple weeks ago. I know a realtor/investor down there and in Orange County, if you know what to look for, or know the right people you can make 30%-35% a year. I've seen him double people's money in only 1.5 years.

[ZorroAMG]

The Avg rate of gain in equity in the Calgary RE market is 8%. 15% is way out of the norm.