Rental property

Discussion in 'General Open Forum' started by slaydown, Dec 2, 2019.

  1. triplenickel

    triplenickel Well-Known Member

    I would totally disagree based on rates here unless you're talking short term not lifetime. It may be different elsewhere but the numbers work here. If you rent for $1600 per month and it never goes up after 25 years you've spent $480k and have nothing to show for it. Your landlord even if kicking in $200 a month for 25 years including taxes, rent gaps, insurance, upkeep etc will have quadrupled his out of pocket and be sitting on a paid for easily half million dollar asset, and I'd bet that's conservative in 25 years. The places in the link below would get you $1700-1800 minimum per month and be rented tomorrow with a mortgage a bit over $300k, debt servicing can be under $1500 with a modest downpayment.

    This is an apartment, $1800;

    This is a 1 bedroom for $1250;

    Here's a suite for $1750;

    I don't understand the trick you talk about. @slaydown buy a rental here!
  2. tubber

    tubber Well-Known Member

    What would the out of pocket/per month cost be if interest rates double or triple during the next 30 years?
    My rates have been 9 and about 4.5 on my two mortgages over the last 30 years.
    Rates are about 3% now, but a 1 % change is a big ratio.
    I've heard so many bad renter stories, I'd be hesitant.
    Old Blue likes this.
  3. wildmanyeah

    wildmanyeah Crew Member

    Monitory policy is vastly different then it used to be. Lower for longer rates is predicted to be the norm.

    Quantitative easing was not even in the feds play book back then.
  4. slaydown

    slaydown Active Member

    Wow haven't even considered the area. Thanks for taking the time to reply!
  5. halimark

    halimark Well-Known Member

    I must say that is a wild question for SFBC. I have been a landlord for the last 34 years. I just sold my last door, some were not in Canada and I never even saw them. Last happened to be attached to my residence. I cannot even think of doing it with a net loss monthly? WHY? Tenants paid all mortgages with cash flow to me monthly. Its the ONLY way. BC and Canada has changed recently, not what I would say is a get rich plan in today Trudeau and Horgan Canada. Think stress test, rules for down payments of residences not owner lived in, vacancy tax, tax on rental income. I would suggest reading, learning and becoming money wise before making such a move. Who do you know that retired rich this way? Do you know any "rich" landlords? Learn good dept vs bad dept, talk to them and get real world knowledgeable responses. Get an accountant and explain your plan, there are lots of rules, regs and more that you need to know prior. When worldly money educated it will become very clear that Canadian banks are criminal as is the Gov. There's a reason most "rich" have their finances offshore. Hope that Trudeaus 50 % rumored capital gains tax stays a rumor. Remember 1 bad tenant can spend ALL your equity and more in 3 mins and the BC rules are all designed for the tenant, you will learn there is never reimbursement from damage and unpaid rents from bad tenants. Have you absorbed, understood and immersed in the current BC tenancy act?? I do not want to scare or put you off but buying and becoming a landlord is a very rough, tough and hard way of becoming "rich". (Investigate what that word means to you). Equity in your residence can easily be turned into good dept if you are money wise, private equity investments worked well also. PS Your spouse must be fully 100% on side with your financial plan for it to work. Good luck.

    ReelSlim and slaydown like this.
  6. halimark

    halimark Well-Known Member

    Please DO not use any other country for your data, info or business plan. Get facts on Canadian and provincial rules, regs and plan. So many things are different it may lead you astray.

  7. Wild Bill

    Wild Bill Active Member

    I don't know how people can do it when rent doesn't cover mortgage and taxes. Long term good renter but your probably doing 30 years amortization so between hopefully good valuation increase and reduction of principal could be great! Lol!!
  8. islandboy

    islandboy Active Member

    Suggest you take the course offered here: I did, found it valuable, and not having been a landlord for over 30 years was amazed by the changes. They also have a really thorough contract. Good luck.
    slaydown and fish brain like this.
  9. Sangstercraft

    Sangstercraft Well-Known Member

    How's the vacancy rate in Campbell River? Think the forestry and aquaculture downturns will affect it much?
    I'm a landlord in Parksville, Victoria, and Vancouver, and my numbers work best in Parksville.
  10. CBsqrd

    CBsqrd Well-Known Member

    Personally, I think residential real estate is great if it your house and your are living in it, but it makes a pretty poor investment for a number of reasons. First, if you already own your own house, you will doubling your exposure to the residential real estate market and unless you have a "large" portfolio ("large means different things to different people, but in this case lets say real estate is <20% of your net wealth) could end up with essentially all your eggs in one basket. If anything were to happen to lower mainland house prices (and nothing goes up for ever...), you could be out on not only your own house but also your "investment". Modern portfolio theory dictates having your capital invested in a diversified portfolio of uncorrelated assets. Don't forget about your human capital (i.e. job), if you work in the real estate sector, you are already getting lots of "exposure".

    Second, residential houses are quite an illiquid asset class - if you need to sell, it takes a long time and the costs are high. Compare to stocks/bonds/mutual funds which can be sold at the click of a button with minimal fees. If you really want to invest in real estate, you can do it via a REIT which are currently yielding 2% - 9%.

    Third, leverage. The reason people think their real estate returns are so great is that the returns are amplified via leverage (i.e. their mortgage). If you leveraged your stock / bond investments via a home equity loan, options trading, second mortgage, etc. and put that money into a stock/bond portfolio (and treated it like a mortgage by using the returns to pay down debt) you can generate similar returns with less risk. A good example pointed out by @Rain City is that Canadian banks have returned better over the medium and long term than even lower mainland real estate. The other way to think about this is if you wouldn't leverage up your stock/bond portfolio, why would you be so keen to do the same thing and take out a mortgage to buy one house?

    Fourth is the regulatory/tax issues that others have been brought up - RTA is not your friend.

    Lots of other things to consider as well. Over the long term, real estate has actually been shown to be a pretty poor investment compared to other asset classes. A good place to start as others have mentioned is talking to an accountant / investment adviser you trust. A sportfishing forum is an interesting place to come for investment advice...

    There is something to be said in investing your money in sectors/stocks that you know. The one advantage that real estate over stocks/bonds for most people is that they have (or think they have...) a better understanding of their local real estate market than other asset classes. However, this needs to be weighed against the facts above.
    tains, littlechucky, ReelSlim and 3 others like this.
  11. triplenickel

    triplenickel Well-Known Member

    Currently ridiculously low, as mentioned I’ve always had enough applications that I’ve never had to advertise for more than a couple hours. But that is a really good question regarding forestry down turn. I don’t know where people would move to, it doesn’t seem like any resource sector is currently doing that well so it’s not like they can pack up and go the Alberta or something. When I consider how many people are moving away from Van and Vic with giant nest eggs or without simply to escape the higher cost of living and the amount of new builds started by people way smarter than me I feel good about the towns futute growth rate. Jubilee heights is a prime example tons of new houses, shopping, a future school etc. It’s gonna grow, there’s gonna be a need for rentals.
    Sangstercraft likes this.
  12. halimark

    halimark Well-Known Member

    Good post with many valid points. Except bank part, never even seen or heard 30%+return from any bank. (hint=if you read to high or think scam or are scared at number you are not money educated). In Canada bank means thief, scammer or Gov. As for private equity investing 9 % ROR is minimum, infinite is what we strive for. You need a trusted team, company or people with connections. Find, these people. Many real estate investments in Florida, Texas are returning 30%+. Education is your friend, due diligence=HIRE a DD company to do for you. Much better/safer in 2019. Investing in real estate and not owning is one way forward. As your personal owned residence equity increases take out and turn to good cash flow paying more good dept. You must stay the course, no loan for welded new boat??? The all mighty end state=your accredited.


  13. halimark

    halimark Well-Known Member

    I am one who you speak of, left Vic rat race and waiting in CR now till the perfect retirement land/house comes up. Not in mini Vic (Willow Point/Jubilee). Not sure how this expected long term forestry stop will affect things. Time will tell, many area house prices are falling already. New rules are changing Vic/Van markets. Good to be retired.

    triplenickel likes this.
  14. Wild Bill

    Wild Bill Active Member

    I need Alberta going up and island going down.
  15. Aces

    Aces Well-Known Member

    Don’t see either happening
    ChinookExerciser likes this.
  16. Cuba Libre

    Cuba Libre Well-Known Member

    One of the happiest days of my life was when I sold the condo I had inherited. Nothing but a PIA when dealing with strata and renters.
    tains, halimark and Sir Reel like this.
  17. Wild Bill

    Wild Bill Active Member

    Yeah about $150000 down from 6 years ago.
  18. Aces

    Aces Well-Known Member

    That wasn’t experience too. Renters don’t give a darned about the property
  19. Aces

    Aces Well-Known Member

    And Island prices are going up ......even in Port Alberni
  20. Wild Bill

    Wild Bill Active Member

    Oh well, just bought in CR!

Share This Page