[blixtex]

Isn't negative cash flow quite normal? Like your mortgage + maintenance fees + property taxes being higher than rent collected? To me, the fact that that ratio is only 50% shows how crazy the market is (and how clueless condo renters are, to some extent).

Given how rents in the core have skyrocketed, the people that bought say 5+ years ago are probably just even now. Purchase price under 400K (maybe 350K). So mortgage about $1200. Maintenance about $400. Property taxes about $200. Insurance about $50. Rent now about $1900. Some might be positive. So given that rental collection/Cash outflows is always below 1 by a large margin, yea, there definitely are alot of clueless people out there. Definitely banking on rents going up in the future + price appreciation.

 

[Admiral Beez]

While there is always risk involved, these people did get fucked over by a sudden rule change.

And if they'd landed on the upside of the rule change would they have offered to give the government the windfall? If not, it's not fair to ask the government to bail you out when you land on the downside. And besides, we knew these changes were coming for months.

But reading the forum makes me never want to move. I'll never sell my semi. I have been thinking of buying a two bedroom condo for my teen kids, they'd have to sell it later, on the assumption they want their own place.

 

[tripwire]

I don't have too much sympathy for those crying about devaluation. I have much more sympathy for those whom bought pre-construction but then the project falls under with the great suspicion that the builder is canceling and hoping to re-launch so that they can sell at a higher price.

 

[TrickyRicky]

I don’t own or invest in condos but my wife has a unit she bought before we lived together and rents out currently.

Let’s put it this way, my wife’s condo is cash flow neutral and she has more than 50% equity in it. There are condos in the area being sold at double the cost per square foot to investors. What kind of rent do they need to charge?

A note on cash flow: generally the mortgage principal amount is considered a forced savings, not an expense. So many investments are cash flow positive on paper but they would still need a drain on their bank account every month to hold the asset.

 

[cheech10]

TrickyRicky, that investment would be income positive but cash flow negative. A cash flow positive investment should generate excess cash every month (on average), not require additional investment every month.

 

[Eug]

For the true real estate investors a friend deals with, they pay 100% up front and look for the rate of return from rent minus expenses - cash flow positive. No mortgages involved. But I guess most people can't afford that.

Anyhow, I'm proud to say I am seeing the light at the end of the tunnel for my mortgage. It will be paid off soon. I originally bought pre-con in the late 1990s and then upgraded several years later. I was one of the lucky ones, who bought in the upswing.

And to think, I was almost kicking myself for not buying earlier in the 90s. At the time I guessed that the peak might be in the early to mid 2000s. I never expected anything remotely like the above graph.

 

[greenleaf]

I recall Fortress has been discussed in this thread before.

https://www.theglobeandmail.com/bus...arch-fortress-office-in-mortgage-fraud-probe/

"RCMP officers searched the head office of Toronto-region real estate developer Fortress Real Developments Inc. on Friday morning as part of a syndicated mortgage fraud investigation.

RCMP Sgt. Penny Herman confirmed Friday that officers from the RCMP’s Integrated Market Enforcement Team carried out search warrants at six locations in the Greater Toronto Area on Friday morning related to its investigation."

 

[detroitbootybass]

I recall Fortress has been discussed in this thread before.

https://www.theglobeandmail.com/bus...arch-fortress-office-in-mortgage-fraud-probe/

"RCMP officers searched the head office of Toronto-region real estate developer Fortress Real Developments Inc. on Friday morning as part of a syndicated mortgage fraud investigation.

RCMP Sgt. Penny Herman confirmed Friday that officers from the RCMP’s Integrated Market Enforcement Team carried out search warrants at six locations in the Greater Toronto Area on Friday morning related to its investigation."

No surprise, really. Scammers scam... it's what they do.

I wonder if we'll see Ben Myers come back the defend these serial criminals like he did before. But you know what they say, 'birds of a feather flock together'.

I found this line in the Reuters reporting interesting: "In a special report in November, Reuters revealed that the Canadian province’s regulator had been investigating brokers raising funds for projects associated with Fortress since 2011 but had failed to take action despite repeated warnings that the marketing of the risky investments broke provincial laws."

 

[Admiral Beez]

Anyhow, I'm proud to say I am seeing the light at the end of the tunnel for my mortgage. It will be paid off soon. I originally bought pre-con in the late 1990s and then upgraded several years later. I was one of the lucky ones, who bought in the upswing.

Congrats! 20 years on in Cabbagetown and we’re about done too. I just wish I’d bought some investment property with the equity.

 

[Eug]

Congrats! 20 years on in Cabbagetown and we’re about done too. I just wish I’d bought some investment property with the equity.

Congrats to you too!

I made a conscious decision not to buy any investment properties though. First of all it would have made finances tighter and would have meant not being able to pay off my mortgage as quickly, but the main reason is I didn't want to play the tenant lottery. While most of our friends' rentals have been fine, they have occasionally had nightmare tenants. I just didn't want to have to deal with that. And even with non-nightmare tenants, the cost of upkeep for my friends' properties have been significant (esp. in Toronto), and any gains on the properties are tempered by the fact that the capital gains are not tax free, unlike with a primary home.

The other issue of course was the impending burst of the bubble. But then again, I'd been predicting a pullback for the last 10 years. It took some heavy-handed government intervention to finally make it happen.

 

[Admiral Beez]

but the main reason is I didn't want to play the tenant lottery. While most of our friends' rentals have been fine, they have occasionally had nightmare tenants.

That was my wife's reasoning too. Her mother owned three rental properties in Toronto and several times had nightmare tenants. Once the bad apples get in, they know and play the system, and can cause damage, not pay, and never leave.

One of my best mates is from China, and while it is illegal, he charges all his tenants key money, and a non-refundable damages deposit. And he only rents to Chinese people, saying they always pay and never cause trouble.

 

[blixtex]

That was my wife's reasoning too. Her mother owned three rental properties in Toronto and several times had nightmare tenants. Once the bad apples get in, they know and play the system, and can cause damage, not pay, and never leave.

One of my best mates is from China, and while it is illegal, he charges all his tenants key money, and a non-refundable damages deposit. And he only rents to Chinese people, saying they always pay and never cause trouble.

This helps when you are from that country and can source those tenants. My Vietnamese in-laws (wife's cousin) bought 2 detached 5+ years ago in the St. Clair West area, and rents out to other Vietnamese people as there's demand to be in that location. Great in that there's many in that group that are considered 'marginalized' (still working lower paid, factory/warehouse local restaurant type jobs) that don't speak english well, so only look at Vietnamese ad sources or landlords. As the Chinese people, they always pay on time, rarely cause trouble or complain (that's because back home, the slumlords or gov't officials are much much worse so they're often grateful to be just left alone and live a peaceful life. Tenant's rights? What's that?).

 

[KSrealtyAdvisors]

The glory days of Toronto Real Estate are long gone. A few years ago, any fool could make money with their eyes closed.
You need to be very careful & make sure you have the right people working with you.

 

[Eug]

Congrats! 20 years on in Cabbagetown and we’re about done too. I just wish I’d bought some investment property with the equity.

I just got my mortgage discharge documentation last week and in the letter from my bank they said to contact the insurance company to tell them the mortgage is discharged.

So, I did, and guess what? My insurer has a huge discount for mortgage-free owners. I got almost a 20% discount! This was with my TD Meloche Monnex Primmum group plan. I was completely unaware of this discount, but apparently it's actually a common thing... that nobody advertises. That discount alone will save me hundreds of dollars a year (which BTW, is something nobody here ever factors into the calculation when doing financial projections regarding prepayments for mortgages). Definitely check that out once your mortgage is fully paid off.

https://www.moneysense.ca/save/reduce-your-home-insurance-by-20/

Paid off your home in full? You’re entitled to more than a pat on the back. A number of the country’s top home insurance providers offer steep discounts to mortgage-free customers—in some cases as high as 20% off your premiums.

 

[slicecom]

June numbers are out: http://www.trebhome.com/market_news/market_watch/2018/mw1806.pdf