For fun. Let's say we bought a condo last March. We stuck to our "fundamentals" and paid $225,000 for a dumpy place in Central Park. We had to pay 1.5% in closing costs for $1250.
Ms. HHV gave us reason to sell this year in March with her big-time move up in her career. We won't pay rent in one town and mortgage in another, so we sell. We have no interest in being landlords and the building (as do most older buildings in Victoria) has rental restrictions, so that option is out.
The condo market did roughly 11% between March 2007 and March 2008. Our place? We'll, I painted it out at a cost of under $200 and about 4 weekends worth of my time. I got a great deal on some new cabinetry for the kitchen and single bath at a cost of about $4500. My family assisted me with the install at a cost of two dozen beers, a bottle of Crown, and 5 steaks ($200) and another two weekends. I went to The Brick and picked up all new stainless appliances and did the buy now don't pay til 2021 deal (hey, I'm selling my condo, I can't lose can I?) at a cost of $4500 for 5 appliances. I figure I'm getting at least 15% or more because I've made so many improvements.
I've paid out just over $800 in property taxes and another $2400 in condo fees this year. So before we talk about mortgage payments etc, let's add up the total. I'm out of pocket $238,850.
We list the place with a Realtor for $259,900. It's a nice place in a dumpy building in a not-so-nice neighbourhood, but there is still demand for low end properties in town and our Realtor thinks we have the nicest unit on the market within a few blocks of downtown in this price range. We're skeptical, but hey, we made a huge investment and we owe it to ourselves to get as much as the market will bear.
We get an offer after the first week. It's for $252,000. We counter with "yes" but no appliances. They counter with $254,000. We accept the offer. They go get financing. Can't get it. Deal falls through. We're bummed because there's a time pressure with our upcoming move and we were happy that we had an offer so soon.
Another week, another offer. This one from a qualified buyer. They do their homework and read the strata minutes for the past two years. They have trouble with some of the questions unanswered from the engineer's report dated November 2007. They offer $245,000. We counter $254,000. Eventually we settle with $250,000. Deal goes through. And we made only 9%. Not the market 11% and we made improvements. Man, are we jaded now.
Then we start crunching the real numbers. $250,000 less the Realtor's commission is $241,000. We "made" $2150 or approximately 0.9% on our "investment." In a market that reported 11%. Where did it all go?
Thank goodness we didn't throw that $5000 we actually built up in equity payments on the mortgage away on rent eh? We would have made over $11,000 in interest payments.
In that same period we made $9600 in rent payments and will have added $6400 to our $20,000 down payment. I know where I'd rather be right now. Do you?