Tuesday, April 21, 2015

April 21 Market Update

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.



April 2015
April
 2014
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales102
264
479
664
New Listings223561879
1521
Active Listings375838703894
4404
Sales to New Listings
46%
47%54%
44%
Sales Projection--726810

Months of Inventory
6.6


Real lack of new listings coming on out there.   Last year at this point we had somewhat fewer sales (436) but quite a few more listings (1073).    A year ago sales flagged a bit and I thought maybe it was the beginning of the end of the trend of YoY improvements, but here we are a year later with no sign of it stopping yet.

258 comments:

1 – 200 of 258   Newer›   Newest»
reasonfirst said...

Would be interesting to chart these results with the price of real estate. Vancouver, Toronto and...wait for it...drum roll...Victoria are in the bottom 10.

http://www.statcan.gc.ca/pub/11-626-x/11-626-x2015046-eng.htm

http://www.cbc.ca/news/canada/british-columbia/vancouver-ranks-lowest-in-statistics-canada-s-life-satisfaction-survey-1.3040517

reasonfirst said...

But i love it here.

reasonfirst said...

...as a renter

Phil said...

lol, so the spread between freeze*your*butt*off Saguenay @ 8.2, and Victoria @ 7.9 is not even statistically significant.

One sure has to enjoy how BS sociologists put our taxpayer money to work.

Maybe they are more satisfied because they all rent there, collect welfare at our expense with their 10 plus % unemployment rate, drink beer and play hockey, eh.

Bman said...

What's wrong with drinking beer and playing hockey? Maybe it lends to greater group cohesion in those communities, and hence people feel more satisfied. Why disparage it? Victoria and Vancouver can be pretty isolating places. Not a lot of street life. Just a lot of boxed up people watching a movie on Friday night before bed at 10:30 pm.

reasonfirst said...

Actually Phil - it is "statistically" significant. Whether it's significantly meaningful is another story.

nan said...

Everyone generally likes where they live, that's why they live there. Or they live there so they support their own ego by convincing themselves they like it. One way or the other, ask a person if they like where they live. Most will say "it's "great", "fine" or "OK" Which to me equates to about a 7-9/10. Not many people would say they hate where they live if they chose to live there and don't have plans to leave. Their human brains ensure that.

On the other hand, how happy would someone used to Victoria be living in Saguenay if they had no choice? Probably not "fine" or even "OK". I would expect the responses to be closer to the responses of criminals in jail.

So I guess my point is that choice and ego are important. If you choose to live somewhere, there are tons of personal reasons why you will say you're happy that introduces enough bias into that survey to make the results meaningless.

Victoria for me is about a 8/10, it could only be higher if it was more affordable / had better job prospects & rained a bit less in the winter. Other than that, I'm a Canadian outdoors guy who has a decent job, appreciates short commutes and good public schools. My wife is the same.

I lived in Vancouver a few years ago, and I would rate it a 2. Prohibitively expensive to own, horrible weather, commutes are ridiculous, good schools & neighborhoods are basically all ESL and living there and seeing streams of Maserati's, Ferraris, Audis, BMW's & Mercedes driven by 16-20 year old Mainlanders made me feel terribly poor.
The grouse grind was nice and the sushi & produce were cheap, but that's about it. But guess what - I don't live there anymore.

In the context of that survey, I doubt many opinions from people that don't live in a particular city anymore were counted. I bet if they were, you would find scores of ex Vancouverites who hate what the city has become and left already. (Same thing with Toronto) who would score those 2 cities closer to where I do.

LeoM said...

Just anecdotal from people I know:
People live where they live because of family.
Either to be near family, or to get away from family. Jobs are secondary for most people because skilled people can usually get a job wherever they want to live; not always, but usually.

Just Jack said...

Human nature would dictate that we don't want others to have what we have. That's the greed factor and it includes housing. Then why would we want others to move to Victoria?

Do we want to share our good fortune with the world? When did Victorians become so altruistic to our fellow man, that we graciously open our arms to them so that they may feast at our table and drink of our 59 Chateau Lafite Rothshild.

I suspect that the truth is - we really don't want half of Toronto or Calgary moving to Victoria. What we really want is their money! Or maybe we just want recognition from the rest of Canada. And that's worse than being avaricious - that's just deserving of one's pity.

So I say to the world. I like my own little part of the Earth I live in. It has its greatness and it has its faults but most of all I want the rest of the world to keep the $%^%^ away from here.

Happy Earth Day

LeoM said...

House prices never fall!!! Unless you're in the USA, or Spain, or Greece, or ...

Spanish house prices have been falling for six years, with a total decline of 40% (46% inflation-adjusted) from the values reached in Q4 2007, before the crisis. There have been 25 consecutive quarters of y-o-y declines:

In 2008, Spanish house prices fell 8.75% (-10.05% inflation-adjusted)
In 2009, house prices fell 6.57% (-7.23% inflation-adjusted)
In 2010, house prices fell 3.85% (-6.67% inflation-adjusted)
In 2011, house prices fell 8.17% (-10.28% inflation-adjusted)
In 2012, house prices fell 11.34% (-13.82% inflation-adjusted)
In 2013, house prices fell 9.19% (-9.44% inflation-adjusted)

Sounds just like Victoria in the early 1980's.

From Bloomberg: "Interest-rate increases (in Spain) brought a lot of “nasty surprises” when the 12-month Euribor rose from a 15-year average of 2.64 percent to a record of 5.39 percent in July 2008, according to Juan Villen, head of mortgage services at property website Idealista.com."

Up until 2008, Spaniards thought of their housing market in much the same way as Victorians think of Victoria; "We are unique, everyone wants to move here, our weather is superb, our RE market is strong and unlike any other place; prices will never fall!"

http://www.tradingeconomics.com/spain/housing-index

http://www.tradingeconomics.com/spain/interest-rate

caveat emptor said...

Nan - agreed. People totally rationalize the choices they make about living here or there since absolutely no-one likes the cognitive dissonance of (1) I choose to live here, (2) I hate this place. The people that are genuinely unhappy about the place they live are people forced by circumstances to move to a place they don't like or stay in a place they don't like.

Just Jack said...

Buying an affordable home today does not mean that the home will forever be affordable.

Those that bought in 2000 could have paid off their mortgage, due to the falling interest rate, in a decade just by keeping the monthly mortgage payments the same.

In contrast buying a home in a flat or increasing interest rate environment could mean that the home may never be paid off in a lifetime. Divorce alone will make half of today's home owners increase their mortgages and extend their amortization period to the maximum.

Since purchasing a home today consumes a massive percentage of your total lifetime income. After tax income that'll be spent on one asset in the form of principle, interest, taxes and maintenance. That doesn't leave much for other of life's enjoyments.

Economically speaking a buyer is giving up something in the future in order to have what they want today. And what they're giving up in the future is more than any other home buyer has had to give up before them.

That might just be enjoying a home with a paid off mortgage while you're still young enough to enjoy yourself.

Introvert said...

Gee whiz, the blog is sure buzzing today!

Here is a delightful video: How to Make an Attractive City.

mooselessness said...

I'm surprised that this Lakehill house is only $539K. Is it the 1935 building date? Maybe I am losing my perspective.

http://www.melinaboucher.ca/listing/349185-971-milner-ave-saanich-east-bc-v8x-3n5/

Leo S said...

Looks like a nice place for the price. The upper level suite probably isn't as desirable as a lower level one but overall nice place in a nice neighbourhood.

mooselessness said...

The 1935 Lakehill house sold for $14K over asking apparently.

Related question: what sort of considerations should one keep in mind with a 1935 era house?

Just Jack said...

There are several things that come to mind when I look at that property.

The home appears to have had several additions over the years that has lead to an awkward floor plan layout which may limit the demand for the property. I certainly would have the property checked by a reliable home inspector and investigate if building permits were issued and if the property has received a final occupancy permit.

When you consider the size of the home relative to other homes with similar finished area this looks like a good price. But that can fool you.

Better to look primarily at the square footage that your family would occupy and then the suite's floor area. Then you may relate that to other properties with about the same ratio of home occupation to suite area.

Typically 2 level homes with an upper floor used for bedrooms command a higher price in the market than basement homes. But in this case I would consider homes with basement suites to be a more valid comparison to this home.

I would compare homes with 1400 square feet main floor and a thousand square foot basement suite as similar in utility. Any further discount for an awkward floor plan layout is subjective and could be as little as 5 percent.

And yes it is in architectural contrast with the neighborhood. And that may limit prospective buyers too. You may adore this eclectic design but if this is the style your looking to buy - you wouldn't be looking for this style in this neighborhood.

The person buying this home will get a good price relative to the home's square footage. They'll get a lot more home for the price of say a comparable basement home with a suite.

The BC assessed value on this property is just way out. BC assessment has understated the square footage. That means the buyer will likely see an increase in property taxes when BC Assessment recalculates the property's market value.

This could possibly be a very good deal relative to today's market. It's just a little outside of what the mainstream buyer is looking to buy these days.

Definitely worth a look.

Leo S said...

Anyone know what 1728 Llandaff Place went for?

Phil said...

$763,000

Phil said...

Things to watch for with older houses-

Foundation problems
Undersized electrical service
Fuse panels, K&T wiring, lack of receptacles
Lead & asbestos
Buried oil tanks
Cast iron or galvanized pipes
Lack of insulation

CuriousCat said...

Things to watch for with older houses-

Foundation problems
Undersized electrical service
Fuse panels, K&T wiring, lack of receptacles
Lead & asbestos
Buried oil tanks
Cast iron or galvanized pipes
Lack of insulation


You really nailed it on the head there. I will add from experience, basement flooding, no floor drains in the basement (the plumbing runs above the bsmt floor), uneven/unlevel concrete floor with varying ceiling height, old water mains (had to replace mine 3 months ago), no natural gas line, old oil tank and furnace, single pane windows, small bathrooms with no bathroom exhaust, small bedroom closets, no coat closet, and lucky if you have a broom closet. Ditto on the insulation, buried oil tank and knob and tube wiring.

Some funky things you might not think of is if you have original doors with skeleton keys, does the house come WITH all the keys? Kids seem to have a really hard time with the skeleton key when it comes to locking/unlocking the bathroom door. Guests are frequently having trouble with this as well. Houses shift with age, so my backdoor deadbolt doesn't lock very easily. Those glass knobs look very pretty, but some of them don't turn well and not all doors latch properly. Like my closet door, I can't ever seem to FULLY close it. Other things that can bug a person, is that some drawers/cupboards might not close as well as others, my backdoor doorbell never worked, my living room fireplace sconces didn't work, and my floor registers were a mismatch of original and cheap metal replacements.

Plaster walls can be beautiful but difficult to hang anything on. Not uncommon to see people having painted over wallpaper, EVEN ON THE CEILING.

Wood floors are cool until you find those spots where the nails are coming up (how many pairs of socks have suffered that malaise?), the boards are loose or the deep scratches are. Thankfully we have no burn marks!

Over the years people do weird renovations so there are holes in the floor for cable and telephone wire, but not necessarily in the smartest spot. Not enough outlets. (none in the hallway, only one in the dining room in the stupidest spot, no GFCI in the bathroom or outside, and old outlet covers and switches) We've spent easily $30k in our 1940 house to address all these issues, which I'm sure NO buyer would EVER appreciate, so that's why I'm never moving lol

CuriousCat said...

I went to the open house at 2898 Murray on the weekend and it was sad how quickly my husband and I picked it apart. I wanted to like it - great curb appeal and the view of the water is fantastic, but too many things still left to tackle.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15572174

LeoM said...

The appeal of an old house is quickly lost after you buy it, move in, then discover all those issues already mentioned by others. I'll add a couple more to be wary of: powder post beetles and unlined chimneys with slaked lime mortar (this old style mortar turns to powder after several decades in our climate).

More than a couple houses in Victoria have been condemned for these two issues. Unlined old chimneys are often condemned by building inspectors and an average chimney dismantle and rebuild is $15,000++. Powder post beetles are/were common in Victoria and can cause an entire house to be condemned. I've only seen powder post beetles once on a post-1960 house, but JJ will know better than me if powder post beetles are common on newer houses. JJ?

Introvert said...

Just Jack is an entomologist.

Marko said...

Monday, April 27, 2015 8:00am

MTD April
2015 2014
Net Unconditional Sales: 689 664
New Listings: 1,198 1,521
Active Listings: 3,934 4,404

Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year

Marko said...

This would be my personal approach to buying an older home.

- Try to negotiate 8 to 10 business days for subjects if possible.

- Do the home inspection ($500) right away and this will uncover a bulk of the problems. If there is knob and tube, vermiculite asbestos, mold, etc., you may have to consult other professionals/contractors/inspectors.

- If you feel that the home is workable after the home inspection order a ground penetrating radar scan ($300) for buried oil tanks. Tanks were buried into the late 50s regularly but to be on the safe side probably scanning anything built prior to 1970 would be a smart idea. If the home has an inert tank demand it be pulled by seller as well. A solid percentage of inert tanks with all the paperwork in place we are now finding are contaminated.

- If no oil tank found do a roto rooter or video camera drain tile inspection ($200). If clay or concrete drain tiles I always recommend this.

I always suggest to my buyers to stagger the inspections to keep costs down (why spend $300 and $200 extra if the home inspection is a no go).

For the basic inspections you need at least $1,000 and then all the extra, as required inspections, such as asbestos testing ($$), etc.

I am not a huge fan of the 1930s, you get all the problems of the 1950s bungalows plus knob and tube (was used until 1946/1947 in Victoria I believe).

Butter09 said...

1728 Llandaff Place for 763k? So they made 100k in a couple years? Wonder what was done to make that happen.

Butter09 said...

I know someone buying an older home out east. The new normal out there is that sellers will not sign disclosure forms. Lawyers are telling people not to sign to protect the seller against any future problems. Has anyone seen this in Victoria?

Marko said...

Lawyers are telling people not to sign to protect the seller against any future problems. Has anyone seen this in Victoria?

Not a trend out here, yet.

Marko said...

1728 Llandaff Place for 763k? So they made 100k in a couple years? Wonder what was done to make that happen.

Market in Gordon Head has been a little crazy this year.

Just Jack said...

The only times that I've not seen signed disclosure statements are when the sellers have not lived in the property or the property is under foreclosure. Then it's strictly "as is - where is".


Real Estate is contract law. Unlike when you buy a Tea kettle there is no implied guaranty or warranty. If it isn't written in the contract - you're out of luck.

Does the disclosure statement form part of the contract? I really don't know - it has never crossed my mind to ask that question. And as a prospective purchaser how much reliance did you place on the disclosure when you made your offer?

I think it's a good thing for agents to get filled out by the owner as it shows that the agent has asked the questions of the owner and the agent (s) are not knowingly hiding information or misrepresenting the property.

In the end, it's up to the buyer to satisfy themselves as to the condition of the property. As an owner you can't guaranty anything about your home. Today the roof doesn't leak - tomorrow it does.

Marko said...

Speaking of Gordon Head/Arbutus,

3920 Scolton Rd lised Friday for $649,900 and unconditional today for $781,000.

Marko said...

As Just Jack noted, satisfy yourself. If the seller checks off, "not aware of buried underground oil tanks," are you really going to trust that?

nan said...

"3920 Scolton Rd lised Friday for $649,900 and unconditional today for $781,00"

That price is crazy for a house in that location that still needs updating...

Maybe a subdivision play or something?

Phil said...

Nice area, but $131,000 over ask for needing that much work. Maybe it's foreign buyers planning on building new.

I don't believe you could ever subdivide that lot.

Introvert said...

Market in Gordon Head has been a little crazy this year.

3920 Scolton Rd lised Friday for $649,900 and unconditional today for $781,000.

Gordon Head and Cadboro Bay, in a word: desirable.

Introvert said...

Nice area, but $131,000 over ask for needing that much work. Maybe it's foreign buyers planning on building new.

It's a bit surprising how much over asking this property sold; however, Scolton is a nice street to live on. To the Village is a five-minute walk; there is a great park at the end of the road; the beach and Gyro Park are a stone's throw away; schools are nearby; and it's a quiet road.

I'm a big fan of Caddy Bay.

Just Jack said...

Life's tough if you're a buyer these days. As the months of inventory has dropped below 3 for houses in the core once again. And it doesn't look like things are going to change in the next 90 days.

People will spend that kind of dough if they feel real estate has little to zero risk. Combined with low interest rates, the net sum differences between the hoods then becomes over exaggerated.

The problem most of us, except Introvert, seem to have is the lump sum difference. Paying $200,000 more for this street versus another street a half kilometer away. And that's because we are not "prospective" purchasers.

If we were prospective purchasers we would not think of the difference as hundreds of thousands of future income that we would have to earn but only at a little less than a thousand dollars more a month to live that fraction of distance closer to the water and UVIC.

That's how we would rationalize the difference in our minds. Prospective purchasers are buying today without any regards to what they are giving up in the future. In contrast we, except Introvert, are looking at the cost of such indulgences in the future.

So who's right?

We are - of course. Today's buyers are just so f%^&ed.

The DP said...

By far the most charm and character found in Saanich are in the former villages - Cadboro Bay and (to a lesser extent) Cordova Bay. The gorgeous beaches are just a bonus. The surprise is that they haven't been huge standouts before now.

Just Jack said...

In an area of so many stand out neighborhoods, it's difficult to know which stand out more that others.

Gyro Park after decades of neglect has finally had a badly needed face lift. I was out there earlier this month and was impressed that the park looked so nice.

Justrenter said...

Just Jack as always, you are so right!

Leo S said...

1728 Llandaff Place for 763k? So they made 100k in a couple years? Wonder what was done to make that happen.

Well they are our neighbours so I can say quite a bit of work. The biggest being perimeter drains and new concrete deck out back but I think quite w bit of work on the inside as well. I believe it previously sold for 680 so up about 83k in 2.5 years. Subtract reno expenses and realtor fees and they broke even at best.

Ryan said...

That Scolton Rd for 781 not only doesnt have sidewalks, it's a road the size of a sidewalk. From looking at the inside, I would say it was bought as a teardown.

Ryan said...

I came across this today... anybody here smart enough to explain the why this happens?

The previous four upturns in interest rates (of a year or more) and the effect on Vancouver house prices:

----- Date --- 5-year Mortgage Rate (%) --- House Price ($)
Jun 2005 -> Jan 2008 --- 5.31 -> 6.81 --- $580,000 -> $860,000
Dec 1998 -> Feb 2000 --- 6.69 -> 8.43 --- $330,000 -> $400,000
Feb 1994 -> Jan 1995 --- 7.20 -> 10.60 --- $360,000 -> $425,000
Mar 1987 -> May 1990 --- 10.20 -> 14.21 --- $140,000 -> $320,000

Source for mortgage rates:
http://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_v122497.pdf

Leo S said...

I think you need to look at times when interest rates declined as well. Also you need to get the correct lead and lag between them. Not easy, but without seeing that data I wouldn't come to the conclusion that interest rates rising lead to higher prices.

Marko said...

I believe it previously sold for 680

$663,000 actually.

mooselessness said...

Thanks for all the advice about what to consider when buying an older home! I really appreciate it.

Anton said...

^Here’s the Graph of the 5yr versus Price back to the seventies. The relationship usually breaks down at the end of a tightening cycle, hence the red bar, probably since c. bankers eventually have to intervene to cool overheating prices a la Volcker 1980.
The answer of course has something to do with how rising interest rates usually equate to a rising economy and wages.

Leo S said...

Actually I think that graph illustrates perfectly how weak the argument is. 1990 to 94 rates dropped a lot and prices rose quickly. The bump in rates in 95 seemed to have no effect at all on prices. Same with 2000-2005.

Phil said...

Interesting.
One error I noted, the bank rate and therefore floating mortgages bottomed in 2002. I know because I financed a bunch of property the spring following 9-11. It then peaked 250 basis points higher in late 2007 as per your chart.

Phil said...

Nevermind, yours was 'fixed rates. Any chance you have one versus floating mortgage rates?

Butter09 said...

Regarding interest rates...What would you guys choose?

2.1% variable rate (prime -.75)(5 years)

or

2.5% fixed (4 years)

Phil said...

Variable. Rates aren't about to start a secular shift for a couple years, and once they do it will be, oh so slow. Slower than the 1940s shift off the floor as seen here.

http://hurstcycles.com/wp-content/uploads/2015/01/Interest-Rates-1790-to-present.png

Phil said...

I mean, that's my guess.

Are you still adding ETSY dasmo? I think I'm going to hold off until it fills its gap back near the IPO of $16.

Just Jack said...

Relative to the previous three years it has been houses in the $600,000 to $800,000 that have seen the larger increase in number of sales in the core this year.

That has likely skewed the median and average prices for the first quarter as the mode has not changed much.

The last time this happened was the first quarter of 2010. When house prices in the core peaked in February at $630,000 and then drifted downwards to $562,500 by October of that year then rebounded to close in December at a median price of nearly $600,000.

Jan $625,000
Feb $630,000
Mar $613,500
Apr $613,550
May $617,500
Jun $600,000
Jul $582,000
Aug $585,000
Sep $580,000
Oct $562,500
Nov $569,000
Dec $597,450

Personally, I find the selection of houses for sale in the core to be substandard. Anything under $400K in the city isn't fit for a dog to live in. And it doesn't help saying that the property is mostly land value because land prices are what will fall the most in a correction.

It's just my opinion but some buyers are making some serious mistakes in the properties they're purchasing. Mistakes that will cost them in years to come with lower than the typical home appreciation.

There isn't any better way to %^&$ up your future than buying in this market.

Introvert said...

... Says the guy who's been pretty much wrong about pretty much everything.

Just Jack said...


There is nothing more galling to angry people than the coolness of those on whom they wish to vent their spleen.

~Alexandre Dumas

DavidL said...

@Introvert

Just to play the devil's advocate... What good deals have you seen in the core municipalities over the past few months?

caveat emptor said...

Butter - go variable and probably save money if you can handle some slight interest rate risk. That said 2.5 fixed is still an ridiculously good deal by historical standards. Variables are often cheaper to break if you have that eventuality

Just Jack said...

Variable or fixed?

Economically the answer is variable.

However, it depends on what kind of person you are.

You're walking down the street and a dog pees in the middle of the sidewalk. When you look in the puddle, you see a quarter.

Would you pick it up?

If you said no, I suspect you're more a fixed interest rate kind of person and not overly concerned with maximizing your wealth at all costs.

Supernova said...

I see that 653 Lampson is being relisted AGAIN. How many times has this house been on the market in the last three years? Still looking for almost $50k over assessed value too, that is confidence! Anybody have access to most recent sale price?

PS: Looking forward to Introvert's reply to DavidL...

Introvert said...

@Introvert

Just to play the devil's advocate... What good deals have you seen in the core municipalities over the past few months?


I commented recently how I don't think there are any deals in the core, especially in Saanich East, Oak Bay, and Victoria. How can there be deals when there is strong demand and short supply?

Why has Just Jack had to rent for his entire life? Because he's waiting for a deal.

Introvert said...

Prospective buyers, if buying a home in the core interests you, I don't recommend waiting for a deal to come along. Instead buy something that you love and that you can afford.

You usually get what you pay for. For example, in exchange for a less expensive house in the West Shore you get the pleasure of pissing away weeks (maybe even months) of your life sitting in stop-and-go traffic.

The relationship between price and proximity is not a coincidence.

DavidL said...

@Introvert
You usually get what you pay for.

I have to disagree with this. What you pay is what someone else is willing to sell for. The amount you pay has no bearing on whether a purchase is a good deal or not.

Sometimes good deals can be had - but in my opinion most people overpay for most things that they purchase, including real estate.

The DP said...

So any last guesses for April sales totals? Marko will likely report the monthly tally tomorrow morning.

My guess:
804

Marko said...

Will be over 800 sales for the first time since July 2009.

Just Jack said...
This comment has been removed by the author.
Marko said...

Wow....

Fri May 1, 2015 8:25am:

Apr 2015 2014
Net Unconditional Sales: 840 664
New Listings: 1,413 1,521
Active Listings: 3,945 4,404

Please Note
Left Column: stats for the entire month from this year
Right Column: stats for the entire month from last year

The DP said...

Ah, I put the zero in the wrong spot...

News said...

Apr 2015 2014
Net Unconditional Sales: 840 664


Looks like panic buying. We know how that always ends.

Interesting article in the Huff today on condos.

http://www.huffingtonpost.ca/dan-s-barnabic/condos-versus-apartments_b_7182910.html

"During 1990 crash, the values of condominiums in congested urban areas, like Toronto and Vancouver, plummeted downward by 50 per cent or more. Many condo owners experienced a great loss of equity -- in fact, many lost their condo units to foreclosure."

Al + TOH said...

"I know someone buying an older home out east. The new normal out there is that sellers will not sign disclosure forms. Lawyers are telling people not to sign to protect the seller against any future problems. Has anyone seen this in Victoria?"

Actually, if the buyers come with a buyers' agent, normally (not in bidding war) there would be three conditions:
1. mortgage approval
2. house inspection
3. filled an signed disclosure sheet

The disclosure sheet is never legally required, but sell/buy agents like it to reduce their own liability.

Not sure how useful the sheet is though, thinking of the example of recent oil leak from a ghost buried oil tank in a Saanich house. Didn't the court order the current owner (who bought house less then two years ago), and the two previous owners all share the cost of removal and soil clean-up, regardless any disclosure sheets (the sheets probably said "to my best knowledge, there is no underground oil tank"). The news said they couldn't track down the earlier owners, otherwise every one ever owned that house could get a share of the cost.

SJ said...

@news

The apartment plummet of 2010 to 2013 is ancient news. Units in my neighbourhood are now in bidding wars. An old apartment at 801-630 Montreal Street listed in the 620's went for 651.5 a couple days ago and it needed new kitchen and bathrooms.

See last page of
http://www.vreb.org/pdf/VREBNewsReleaseFull.pdf
Condo median price up 9.6% since last April

I'm not sure things will change much for at least ten years when we have millions of house-rich boomers and foreigners wanting to live here, but we'll have to wait and see.

bman said...

Oh yes, the sea of baby boomers and wealthy foreigners seeking to retire to a mediocre region of a mediocre country, in a mediocre city. That will not happen. I wish these civic-booster Victorians would pull their heads out of their asses and realize that not everyone wants to live/retire in a small seaside town with alright weather. I've been hearing this since I've heard this crap since I was a kid about Victoria being some kind of "paradise" that everyone wants to move to. Bullshit. Now we have idiots calling this place "world class," as empty and meaningless a term as any.

The DP said...

BMan -

Arguing over whether or not people will choose to retire/move to this area in disproportionate numbers is pointless. The only thing that matters is what the data is showing.

Right now, the data is showing (at least in the core) a hot market favoring sellers with few listings and rising prices. Things are not quite so rosy in the western communities, but overall the funk from 2010-2014 or so seems to have passed. We don't need to care whether these people are 18 or 80 or whether they come from Alberta, Toronto or Mars - places are changing hands fast for the time being. To argue otherwise is to ignore the facts.

bman said...
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bman said...

I'm not arguing about whether the market is hot right now - it clearly is. I do, however, take issue with the notion that a sea of aging boomers and foreigners will drive up prices here, and that it is somehow a good thing. My guess (yes, it is a guess), is that most boomers, like their predecessors, will stay close to family in their old age. That seems to be what people do. Plus, aging in place is trendy. Boomers are all about trends. Sure, they have a reputation for wanton selfishness, but when they get old, they'll feel as vulnerable as anyone. As for foreigners, Victoria is a small town, on an island, with a bad airport, and an expensive and poorly run ferry system. Can't see any broad appeal - my guess is they'll continue investing and moving to large urban centers with good amenities and infrastructure, just as they always have. Some people will emigrate here because they like the quiet isolation and laid-back lifestyle, just like they always have.

Now for some more value-laden statements. Is a price run up really a desirable thing? I like mixed-income neighbourhoods. Victoria has them. Vancouver used to. Kerrisdale is a good example, but Kerrisdale ain't what it used to be. These people wishing for a foreign/baby-boomer invasion seem only to care about their own personal wealth, at the expense of the general well-being of the city. Cities that people can afford to live in are a good thing. Victoria is still affordable. I hope it stays that way personally. I would hate to see even more families pushed out to the Westshore, while boring retirees buy up the core housing stock and kill what little vibrancy we have here. Do you really want to live in a homogenous enclave for the upper-middle class? Sounds like a bunch of shit to me.

dasmo said...

It won't be homogenous... At least half the places being bought have suites meaning working class buying renting to students and working poor...

DavidL said...

I suspect that many of the people who retire and move here buy their house/condo outright. However, I think that Marko has posted some numbers before showing that the vast majority of purchasers are local - not people who are moving here.

bman said...

Sounds about right. I hope, and suspect it will remain that way.

News said...

"At least half the places being bought have suites meaning working class buying renting to students and working poor."

Which is another reason the market bubble can pop. If you have to have a renter to pay for the place, then you're in over your head or it's an overvalued market, especially with all time low interest rates. Looking at the bubble from the inside is a recipe for disaster.

Bman, I have known many people who have come here with hopes of a long retirement or for job changes and didn't like it for similar reasons and wound up leaving. As much as we may like it, Victoria isn't everyone's cup of tea.

Just Jack said...

How hot is our market?

If you took Hillside Mall as the center of our Universe and went in any direction for 8 kilometers (radius) then you will have seen 50% of all the sales that have occurred last month in the entire Greater Victoria area.

Half of all the sales for the entire Greater Victoria area, including Sooke and Sidney, occurred within about one hour walk of Hillside Mall.

And you can pay as little as $100,000 for a single wide manufactured home off of Craigflower to 2.7 million for a home in Ten Mile Point.

Just Jack said...

And how about the millionaires club.

35 homes over $1,000,000 sold last month in Greater Victoria.

Half of them sold between $1,000,000 to $1,225,000.

And of the top 5 highest sales last month - none were in Oak Bay.

Introvert said...

Another paradisiacal spring day in Victoria!

Phil said...

Did anyone just see on CHEK how the 4400 foot Shaughnessy house that was appraised at 5m, then listed for 6m, just sold for 8m?

I honestly believe Vic can catch up to Van with the Chinese now having discovered us.

http://www.cheknews.ca/greater-victorias-real-estate-market-heats-up-with-overseas-buyers-88067

nan said...

Victorians should discourage everything that has to do with why Vancouver prices are where they are. Great old Vancouver neighborhoods have been turned into vacant landholdings for no residents. I would hate to see that happen anywhere in Victoria. Encouraging Victoria to catch up to Vancouver is like being drunk and saying - man I really need to catch up to that guy passed out and covered in puke laying on the bathroom floor.

vicre said...

I know of a lot of overseas Chinese families that have just bought in Victoria in the last few years. These are industrialist families that have loads of cash and they are only buying high end RE. Maybe some Gordon Head homes priced above 700k.

vicre said...

Wait till the Chinese gov cracks down on some of these wealthy people like they did in Australia where the gov is working in cooperation with the Chinese officials.

vicre said...

One family just bought a large estate in oak Bay for 3 mil and its been sitting empty for months as the new owners continue with bus operations in China. Gardens are getting a bit overgrown.

Marko and Jack what do you guys think?

vicre said...

Its hard for the Chinese to conduct business in Victoria as it is a very small market but they just want their citizenship so they try hard to show immigration.

dasmo said...

The only meaningful impact the Chinese have on our real estate market is fear fodder to stoke the flames of the buy now before the HAM moves in meme...

Marko said...

We've lost where the buyer has moved from on our survey for some reasons...this is what I have for March...

What was the primary motive of the buyer(s)?

To enter the housing market (First time buyer) 93 21.3%
Wanted a larger home 53 12.1%
Wanted a smaller home 42 9.6%
Wanted to move to a different neighbourhood 57 13.0%
Wanted to be closer to family 26 5.9%
Due to a family reconfiguration 20 4.6%
It was a work-related move 16 3.7%
Buying a second home for use by family member(s) 17 3.9%
Buying a second home for future retirement 14 3.2%
Buying a second home for vacation use 7 1.6%
Buying a revenue property as an investment 17 3.9%
Relocation 54 12.4%
Other 21 4.8%
Total Responses 437 100.0%

Marko said...

If you have to have a renter to pay for the place, then you're in over your head or it's an overvalued market, especially with all time low interest rates.

I know a lot of people renting suites that absolutely do not have to rent to pay for the place.

redpill said...
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News said...

"I know a lot of people renting suites that absolutely do not have to rent to pay for the place."

I'm sure there are, but I would assume those people are still doing it for for financial reasons, or are just plain lonely. I would bet if you took a poll, most people renting out their basement would rather have a man cave, work shop or family entertainment room than having a stranger down there.


As per the Chinese HAM thing, is this not an annual event now going back 5 years to Global BC and the yellow helicopter flying in from Vancouver that never amounted to nothing like they tried to portray ? Tell me the Chinese agent on CHEK didn't call them up begging them to do the story on a couple of HAM (probably relatives) buying up some expensive property. Came across as very self serving and not reality, like she said "prices only going up, up, up !! ". Good grief !

redpill said...
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Al + TOH said...

One thing about having a rental suite is that on a standard lot size, small houses normall don't make financial sense, especially on resale.

But do we really need that much space, man cave or not? For a couple without or with just one kid, 1500 sqft is plenty, remember that regardless of your house size, one bed is all one needs to sleep on at night.

So it is probably a good thing to share your big house with others, to avoid urban sprawl into the ocean :-), if you have the space and if the suite is well insulated (sounds proof) and with separate entrance. Isn't that the reason why city of Victoria gives people grant to build a suite? Isn't that also the reason why city of Saanich expended suite allowance area?

Just Jack said...
This comment has been removed by the author.
redpill said...
This comment has been removed by the author.
redpill said...

Marko, is there survey data on the primary motive of the seller? Also what about where the seller is moving to?

Phil said...

"Tell me the Chinese agent on CHEK didn't call them up begging them to do the story on a couple of HAM (probably relatives) buying up some expensive property."

It's a realtor conspiracy! lol

http://globalnews.ca/news/1975009/group-of-new-investors-heating-up-the-central-okanagan/

"What we’re seeing new in this market that we’ve never seen before, we’re actually selling to Chinese buyers from mainland China and Chinese buyers from Vancouver,"

News said...

Guess the Asian money washers have to park their cash in new spots now that the strings are tightening up in Vancouver.


"In Vancouver, one can’t look at money laundering without considering property investment, Marsh said. And a more active market means more opportunity for funds to be washed."

http://www.theprovince.com/business/Vancouver+critical+money+laundering+transnational/11015083/story.html

Not to mention the suspect characters and the name changes with political connections.

http://www.theprovince.com/news/Alleged+financial+fugitive+Michael+Ching+denies+Chinese/11024534/story.html

Introvert said...

If you have to have a renter to pay for the place, then you're in over your head or it's an overvalued market...

Yes, I think it could mean that it's an overvalued market. But the first possibility--that you're in over your head--is not necessarily true.

That would be like saying, If you have to have a job to pay for your house, then you're in over your head.

Some people, like me, choose to buy a property that costs a bit more with the intention of renting out part of it to help pay for that higher cost.

Introvert said...

I would bet if you took a poll, most people renting out their basement would rather have a man cave, work shop or family entertainment room than having a stranger down there.

You're implying that the situation is permanent. I'll have that man cave one day; for now, I'm taking that unused and currently unneeded space and converting it into cash to, among other things, aggressively pay down my mortgage.

Phil said...

Is it possible China's stock market as a wealth indicator is signalling by about 6 months where Vic RE prices are heading?

CSM tops out Fall ‘07, VicRE tops Spring’08
CSM bottoms Fall ’08, Vic bottoms Spring ‘09;
CSM tops Summer ‘09, Vic tops early ‘10
CSM bottoms mid ‘13, Vic bottoms late ‘13
CSM has been flying for over 6 months (more than doubled), now Vic RE is starting to fly

http://static.incrediblecharts.com/images/2015/2015-04-30-ssec.png

News said...

"You're implying that the situation is permanent. I'll have that man cave one day; for now, I'm taking that unused and currently unneeded space and converting it into cash to, among other things, aggressively pay down my mortgage."


So you're still doing it for financial gain, not for the pleasure of having your own castle without the risk of strangers who can bring high risk to your investment of a life time, such as fire, theft, damage, etc. You never truly know who you are renting to unless it's immediate family. Sounds like you'll be without your man cave for another decade at least. To me the risk isn't worth the gain but to each their own.

The job example is pretty weak, everyone needs a job to pay the rent/ mortgage and bills. You do have to have a "good" paying job to afford or qualify for a house, not just any old job.

News said...

Phil,

Interesting but coincidental unless you have the numbers to back up HAM investors buying here in droves. Only reason the CSM has doubled the last while is because of government clampdown on corruption/money laundering in the gambling casinos, so they shifted to the stock markets for a new washing machine.

totoro victoria said...

I personally would rather retire 15 years early and have tenants.

Plus the added bonus of having the ability to generate easy income in early retirement - or not.

I'd much rather be financially independent at a relatively young age than have a man-cave. I've owned a number of homes with two floors. Even without a suite I ended up using one floor almost exclusively.

Also, I like my work, but I do it for the benefits not for pure pleasure. I see no reason why I would not maximize the ROI without greatly impacting quality of life on the biggest single investment I have so that I can buy my time back.

The sacrifice on present quality of life is much less than your average job takes and the payoff is well worth it for me.

Introvert said...

So you're still doing it for financial gain, not for the pleasure of having your own castle without the risk of strangers who can bring high risk to your investment of a life time, such as fire, theft, damage, etc.

Insurance covers some of those risks. Landlords can't eliminate all risk, but neither can non-landlords.

You never truly know who you are renting to unless it's immediate family.

Even then, one can't know for certain how things will turn out.

I've done my due diligence and thankfully have found and retained an excellent long-term tenant.

Sounds like you'll be without your man cave for another decade at least. To me the risk isn't worth the gain but to each their own.

That's correct: I don't intend to stop renting out my suite for at least a few more years.

Introvert said...

Langford is so awesome that even the Hells Angels want to live there: Bikers gather in Langford for opening of new clubhouse.

Just Jack said...

From the comments on this blogg I see that it isn't a matter of need but a matter of greed when it comes to basement suites.

Therefore, landlords renting out any portion of their home should not be allowed the home owner's grant portion on their property tax. And that new found money should be set aside for affordable housing.

This could add another $6,000,000 annually, just from the City of Victoria, towards affordable housing.

Leo S said...

I personally would rather retire 15 years early and have tenants.

Renting out the bottom suite of a normal 2000sqft Gordon Head box might net you about $750/month or $9000/year.
Let's say you bought the place at 30. Normal retirement age maybe 65, so you're saying the suite buys you retirement at 50. So start investing that $9000/year from age 30 to age 50 at 5% and you will have $300,000 to last you 15 years.

Or in other words, bullshit to the idea that your suite buys you 15 years freedom from work.

totoro victoria said...

Except, as I've posted previously, I don't own a Gordon Head box. I do own 7 rental units plus my primary residence.

I am already living the equivalent of a mortgage-free lifestyle and paying for part of the remainder of our cost of living from net rental income - even after a 50% tax hit on net profits.

Even if you only gain $750 a month from your suite, which seems unlikely unless it is a bachelor, it ends up being virtually tax free in the beginning because of the floor space deductions.

$750 a month in after tax dollars is nothing to dismiss if you want to retire earlier.

You can contribute that amount to your RRSP and up the value of each of those dollars by 30% immediately if you plan to take it out before 65 and are going to be in a lower tax bracket.

LeoM said...

I think Totoro sold her Gordon Head box years ago when the teenage gangs started roaming the streets at 7pm on school nights...

News said...

I think you're in a different league totoro and assume you don't have kids. Most families with a couple of kids need the extra space downstairs just to keep their sanity versus maximizing their ROI trying to play landlord.

Introvert said...

Renting out the bottom suite of a normal 2000sqft Gordon Head box might net you about $750/month or $9000/year.

Netting $750 a month? Jeepers, what would I have to do as landlord in order to only net $750 a month? Maybe replace the suite's dishwasher monthly? Paint the entire suite every three months? Replace the washer and dryer every six weeks?

But you go with $750 if that's what makes you feel good.

totoro victoria said...

We have four kids.

Being a landlord is not for everyone.

Marko said...

Most families with a couple of kids need the extra space downstairs

Most families also work a 37.5 hour work week, the vast majority of families also pay 6%100k+3%balance commission to sell their home, most families also don't have their TSFA/RRSPs maxed out, some don't even know the difference between the two, what da??? That is why the majority live in the 400k-800k sfh range which is great, nothing wrong with that, I am all in support of a middle class.

However, if you happen to want to get ahead financially (into the multi-million+ net worth) you probably work more than 50 hours a week, you probably rent out a suit you don't have to rent out, you might consider mere posting your home when you have to sell, you probably take some calculated investment/business risks, you don't invest with Bob's Investment Mutual Fund Group, but you probably own shares in their publically traded stock, and you probably know the difference between TSFAs and RRSPs.

I am not saying that working 50 hours+ per week and being better off financially is better than working 37.5 hours and spending more time with family. Just saying, in terms of financial success have to give up some things such as the basement in exchange for $1,000-$1,200 in rent.

And for the 5th million time, since when do kids need a downstairs and a private back yard? Growing up in Croatia, in a communist era built condo, I would just play with my friends in the park next to the condo? I don't feel like I was deprived.

Downstairs and yard are very nice to haves, but not a necessity, in my opinion.

Leo S said...

I do own 7 rental units plus my primary residence.

The topic is suites, not being a career landlord.

If you're saying that having 7 rental units leads to 15 years of earlier retirement that makes the whole statement meaningless.
Having a job leads to retirement. Having two jobs leads to earlier retirement. Oh wait, I forgot that managing 7 rentals is not a job.

Leo S said...

you probably rent out a suit you don't have to rent out

A suite makes sense if you want to get ahead financially. Say if you want to move up a half notch from lower middle class to lower middle, or middle to upper middle. But the people who really want to get into the multi-millions will have to find more profitable things to spend their time on than repairing the downstairs toilet on a Sunday night.

totoro victoria said...

I don't know. I think how you do one thing is indicative of how you do everything.

Multi-millions are usually amassed a dollar at a time in the beginning if you start from nothing.

You'd better be willing to put sweat equity in if real estate is part of your portfolio and you are looking to maximize returns.

You'd better be willing to do what it takes to get the income you need to invest or make your business successful when you are starting out.

There are lots of books on traits of those who build fortunes - like the wealthy barber or the millionaire next door.

The power of compound interest/ appreciation/ leverage makes making money easier once you already have a significant amount. The habits that got these folks to that point don't tend to change in my experience.

That said, the goal is happiness and not everyone wants to push things. There is something to be said for a low stress lifestyle.

As for being a career landlord: I am not. In no way shape or form is this a full-time job or a career.

You can choose to call bullshit on anything. It is the internet.

On the other hand, it is quite possible that one of us is speaking from experience.

DavidL said...

@totoro

Just curious... How many hours do you estimate that you spend each month - marketing, managing and maintaining your seven rental units?

dasmo said...

My suite I used for my family is going to be handy now. Relocating to the Netherlands so now I will rent the top and keep the suite as a crash pad. I am not looking forward to now being a landlord to two properties from afar. Being a landlord to the one property for a few years now o can attest to the fact it is not a lot of labour but rather a lot of responsibility. My stock portfolio doesn't suddenly demand 5k from me. I have friends that bought a big house years ago with two suits because it was more affordable to do that then. They don't have many issues. I also have friends who just bought in Gordon Head and now have two suites and are renting their first house. They still have time and money to relax and have fun. On this side of the sea housing costs more it's just that rents are higher.... I know, I'm renting for the first time in years!

Leo S said...

As for being a career landlord: I am not. In no way shape or form is this a full-time job or a career

Call it what you want, but you're not going to convince anyone that managing 7 rentals is not a job like any other. Great if it works for you, but why try to pretend it is a passive money machine?

You can choose to call bullshit on anything. It is the internet. .

You made a statement about having tenants in your suite buying you 15 years of earlier retirement. That isn't true except in the extreme cases (maybe if you live in an RV for those 15 years).
If you want to change the argument now that's fine but it doesn't change the facts.

Leo S said...

@dasmo better start biking everywhere now! No more excuses!

n.y.k. said...

"And for the 5th million time, since when do kids need a downstairs and a private back yard? Growing up in Croatia, in a communist era built condo, I would just play with my friends in the park next to the condo? I don't feel like I was deprived."

Try looking at it from your parent's point of view. You might have fond memories of living in a communist-era Croatian apartment but that's because you were a little kid and didn't know any better.

Did your parents move to Canada and spend the rest of their lives raising you in a condo? It doesn't really work that great if you have more than one kid, don't have a park nearby, kids are too little to go out alone, too dark or rainy outside, they have all their friends over etc.

Parents want space for their kids but also need it for themselves just to keep their sanity!

dasmo said...

Bikes, trams, trains and foots. Going to sell the Westy I think..... It wouldn't be the daily driver/camper here...

totoro victoria said...

We have had tenants that have stayed for two years, two and half years and three years in three of the units.

For the one set of tenants all we had to do was change their light bulbs (seriously - they were from overseas and so nice just did it when they asked - we put it down to cultural differences).

We also just replaced the tile in the shower but hired someone - so maybe an hour in two years plus the initial posting and showing and leasing process took two hours.

We've had to replace a dishwasher in the unit occupied for three years - but hired someone. Tenants locked themselves out so we opened the suite once but we live on the property too. Initial posting and showing took two hours. So, maybe 3 hours in three years.

The unit occupied for two and half years had a slow drain but our tenants called the plumbers and had it fixed and we paid for it. They maintain the yard. No other maintenance or time. Four hours of my time to list and show.

Most recently there was a leak in the deck. I still haven't dealt with that properly because our handy man has not been available. That might take more of my time.

Three other units are rented out for ten months of the year to long-term tenants and are operated as weekly vacation rentals in the summer. The same tenants returned for the long-term winter rentals.

The short-term summer rentals are a lot more work for organizing and deep cleaning at the start. I hire people, but I still put in about four hours making sure everything is properly set up.

On an ongoing basis each rental takes about a half hour of my time and we hire cleaners. So maybe 7 hours of my time over a summer.

The last unit takes has had more turnover - it is small and rented to university students. I've spent about five hours a year showing and responding to tenant matters.


I did have a complaint from one elderly tenant with dementia to the residential tenancy board two years ago. That took probably 15 hours of my time. I was successful, but it was a PITA and, more importantly to me, not a feel good experience.

If you rent to good long-term tenants and your places are well maintained the time is minimal. You still have to be prepared to act professionally and deal with issues promptly though.

There is also the accounting aspect. You need to keep records.

My taxes took a couple of hours longer as I needed make sure I'd accounted for everything properly - like getting the proper mortgage interest figures. Insurance coverage also takes more time.

This year my insurer for the vacation rental is no longer covering short-term rentals. It is with my broker but I might have to shop it around.

My average time spent is probably three hours a month. This ranges from zero a year for some units up to 18 hours a year for the year that I had a residential tenancy complaint.



Al + TOH said...

I am not a professional landlord, but a member of BC landlord association, as we had a rental house before, and I need to help a (moved away) friend managing his Gordon Head box house which has two suites, up and down, rented to seven students.

From my 5 years managing this house, as long as you spend a bit time to choose good tenants, the work afterwards is really minimum. I never need to post any ad, and always have leases for Sept signed before end of April, the kids are all wonderful, most stay for at lease two years, and I never need to take one cent from their deposits when they move out. My friend come visit twice in 5 years time, they are happy too.

If you spend lots time on it and not enjoy being a landlord, you could join the landlord association to get some help, you also can hire professional to manage it for you, the management fee is tax deductible.

totoro is right when she said that not everyone can be a landlord, especially for people who complain about it here. Nothing wrong with complaining, of course, people are just different. like any other living thing in this world.

Leo S said...

^^. I could go on about the time you are not accounting for but we've had enough arguments on this that I know you would never back down from a point or even give an inch so that's pointless.

Anyway, great if it works out for you. Most landlords I've known both amateur and professional don't share your experience and it's not that they're incompetent.
However maybe a future career path is lecturing other landlords and property management companies on how to manage properties without it being any work.

Al + TOH said...

Hi Leo,

I take that your post above is for totoro.

freedom_2008 said...

Name change announcement
========================

We have changed our net name here from "Al+TOH" to "freedom_2008", to be consistent with other blog sites we do posting on.

The name came from the fact that we took back our freedom and left high tech rat race in 2008, at age 48/52. And yes, we moved back to Victoria right after that, driving over 7000 km and spent 36 wonderful days on the road. :-)

totoro victoria said...

You likely could retire 15 years earlier if you buy the right multi-family and live in one unit vs. a SFH with no rental income.

By my calculations we are approx. $475,000 ahead (with 5% return estimate) by buying a triplex vs. buying a fancy SFH without rental income assuming you invest the difference over a ten-year period.

$475,000 has a safe rate of withdrawal of 4%(capital will not be depleted)of $19,000 a year.

Plus you would have income from the suites to support early retirement. This income will grow over the years as rents rise and the mortgage is paid down - or you HELOC and invest the proceeds to create more monthly revenue.

Eventually the income should be $3000 a month in today's dollars. We can live on $3000 a month with no mortgage to pay.

Add the $19,000/year from the invested capital and you are at $49,000 a year with no mortgage and no need to work that you would not have if you went with the SFH.

Run the numbers yourself based on $800,000 triplex or $800,000 house (assuming you buy at the top of your affordability) with 20% down. Triplex brings in $3000 a month, house brings in zero.

We have four bedrooms, two bathrooms and a family room plus a nice south-facing yard and patio. We don't have a separate laundry room, man cave, office or formal dining room. We don't have a basement at all.

The quality of life differential is not going to be worth it to a lot of people. For us it is because we plan to stop work early, likely coinciding with our youngest turning nineteen.

Too many of our relatives and friends have experienced ill health later in life that prevented them from realizing their plans for retirement. I'd rather have my time back at an early age than a SFH now.

And, as you can see from my previous post Leo managing rentals is taking 3 hours a month. If you want to call that a job then go ahead.

I'd agree it is not passive, but neither is it a career or a real job or in any way onerous imo. Many people spend more time than this managing and reviewing their portfolio - ask dasmo. Or posting on this board for that matter.

News said...

The comparison to communist Croatia is a bit ridiculous. I grew up in Canada and didn't have a downstairs either and did just fine too but as others said, it's different world out there. Parents don't want their kids running to the park by themselves and with the weather crappy half the year it only makes sense to have a family/kids room if possible. Most people desire the space and plan for it financially before having kids. I know I did. If you like living in each others face 24/7 with a stranger in your basement then good on ya.

totoro victoria said...

Leo - you are right in one aspect of not accounting for time.

It took considerable time and effort to fix the places up properly at the start.

A lot of work was hired out, but it is still work to find and manage contractors, make design decisions, shop, transport materials, dispose of debris - not to mention the constant cleaning.

I don't; however, understand why you are so adamant that it takes more time than I have posted to manage long-term rentals.

You now have two other people on this thread who have real life experience managing long-term rentals. They concur and it appears they spend less time than I do at it.

Perhaps rather than actual time spent you are reacting to the sense of responsibility and need to be a service provider that comes with managing properties?

That is real and not everyone wants that. Many would hate it. You might be one of them.

Chris said...

Totes, I used to also foolishly manage some of my rentals when I was an amateur. I’ve noticed other rookie giveaways too that you’re not clear how to maximise your business. Heck you were going to sell out a few months ago right before the market took off. I’m probably the one who bought some of your houses. At least now they will be professionally managed.

Chris said...

And the reason I turned over the 6 properties I was managing to the professionals is because it was turning into a full time job.

totoro victoria said...

I was not going to "sell out" if it is me you are referring to.

I was interested in selling one property which I haven't done.

The ROI is acceptable at this point and the profits will be reinvested.

We go back and forth on it. Mainly we would like to buy something that we know is going to be for sale next door instead. For the convenience factor and perhaps one of our children might want to live there one day.

If you want to use a property manager and it makes sense for you that is a good decision.

We get by with me spending the time I do and a few good people to clean and repair as needed. One of our properties is in an entirely different area of the province and it still works okay.

With the ROI on the time invested I'm fine to keep being an amateur.

nan said...

air BnB
http://www.ebaumsworld.com/pictures/view/84570356/

dasmo said...

Here is some perspective. In Rotterdam, to buy a decent townhouse it will cost you 280k EUR. A teacher takes home 1200/month. It would rent for 1800 EUR. Pot costs twice as much, parking three times and eating out is more expensive even without tips. But hey cheese and milk are cheap....

Marko said...

Monday, May 4, 2015 8:00am

MTD May
2015 2014
Net Unconditional Sales: 82 714
New Listings: 128 1,509
Active Listings: 3,848 4,672

Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year

Leo S said...

A teacher takes home 1200/month. It would rent for 1800 EUR

Where do the teachers live? Under a bridge?

n.y.k. said...

Yeah, holy crap I was wondering that myself. How do they live on less than 15000 a year?

dasmo said...

Well my wife's sister owns which is much cheaper. One paycheque goes to the mortgage. Husband works too, no car. She is also running a restaurant. I don't get it either.... Will let y'all know if I figure it out. A lot of people live assisted I think.

dasmo said...

Sorry, 1300 in rent. Was thinking CAN on that...

CS said...

Re Netherlands Teachers' salaries:"

$60,174 for a mid-career lower secondary school teacher, [which] far outpaces the OECD average of $41,701 ...

Source

patriotz said...

You likely could retire 15 years earlier if you buy the right multi-family and live in one unit vs. a SFH with no rental income.

You are taking your past returns and using them as an argument to buy now.

I know becoming a landlord in the past was a good idea. I used to be one. I would not consider becoming a landlord today.

Leo S said...

Run the numbers yourself based on $800,000 triplex or $800,000 house (assuming you buy at the top of your affordability) with 20% down.

That comparison makes no sense. If you're going for early retirement and don't need the space of course you wouldn't buy an $800,000 SFH. You'd buy a $450k rancher instead.

It took considerable time and effort to fix the places up properly at the start.
...
I don't; however, understand why you are so adamant that it takes more time than I have posted to manage long-term rentals.


I think you answered that yourself. The only meaningful figure is lifecycle effort. Talking about time to manage after the places are purchased and fixed up and ignoring future maintenance is like saying a house only costs as much as the mortgage and ignoring the down payment and any future maintenance.

CuriousCat said...

SALES HISTORY (IN THE LAST 3 YEARS)
12/Dec/2013 $323,000

totoro victoria said...

"The only meaningful figure is lifecycle effort. Talking about time to manage after the places are purchased and fixed up and ignoring future maintenance is like saying a house only costs as much as the mortgage and ignoring the down payment and any future maintenance."

Except the specific question I was asked was how much time do I currently spend. I could have contracted out all initial fixing up.

I didn't because I'm a fan of doing what it takes to have what you want. I'd rather do work that has ROI than sit in front of the TV.

As far as future maintenance goes, I will be contracting that out as I currently do as I probably don't have the skill set for it.

And I've never ignored any aspect of the cost. That would be foolish and result in a tax bill that doesn't have to be paid.

I account for maintenance, sewer/water, property taxes and repairs at approx. $600/month for each property.

If I didn't want to retire early I would most certainly buy a million dollar home. If I wanted to keep working that would easily be worth it for me.

Given that I do want to retire early a $450,000 rancher would be the worst choice. I'd be in an area my family would dislike away from schools and friends and walkability, have relatively poor appreciation, and no rental income to support retirement.

Do the math with your rancher in the outskirts and see what I mean. Totally not worth it imo.

totoro victoria said...

"You are taking your past returns and using them as an argument to buy now."

No. I bought in 2008, 2010 and 2012. Market height and just now experiencing appreciation.

Leo S said...

Except the specific question I was asked was how much time do I currently spend.

The topic is effort to manage the properties. The question about current monthly work was someone else's. Anyway, we agree that it's a bunch of work.

I didn't because I'm a fan of doing what it takes to have what you want. I'd rather do work that has ROI than sit in front of the TV.

You don't say.

totoro victoria said...

Yes, and the effort to manage rentals is minimal.

Renovating is a different story as any homeowner engaged in them will tell you.

freedom_2008 said...

It is always interesting to watch one sport fan explaining the sport to someone who has no interest in it. Besides wasting each other's time, What is the point? Just agree that you don't agree, and move on. You do what you like and enjoy, no need to expect others like it, too.

totoro victoria said...

Well, I can agree with that.

freedom_2008 said...
This comment has been removed by the author.
freedom_2008 said...

I also have a good friend who loves play stocks, and always wanted to teach me how to do it. I tried and didn't find any enjoyment at all. So I just do buy and hold for dividend, but am happy to see that he enjoys it; He stays away from teaching me ever. We both accept and are happy with each other, and still be good friends 20 years after.

Introvert said...

But the people who really want to get into the multi-millions will have to find more profitable things to spend their time on than repairing the downstairs toilet on a Sunday night.

Does your toilet break often, Leo? Go easy on that thing.

Also, hypothetically, a toilet fix would work out to a rate of thousands of dollars per hour for me. (My only work done in the previous two years: a three-hour faucet replacement, which would have taken an hour and a half for a handyman with more skillz.)

From my 5 years managing this house, as long as you spend a bit time to choose good tenants, the work afterwards is really minimum.

It could be that all the landlords on this blog are complete liars, or it could be that Leo S is wrong. We'll leave it for the readers to decide.

totoro is right when she said that not everyone can be a landlord, especially for people who complain about it here. Nothing wrong with complaining, of course, people are just different. like any other living thing in this world.

Agreed.

And for the 5th million time, since when do kids need a downstairs and a private back yard? Growing up in Croatia, in a communist era built condo, I would just play with my friends in the park next to the condo? I don't feel like I was deprived.

I'm with you, Marko. I once spoke with someone who was a little shocked that I didn't have four bathrooms.

dasmo said...

Here is some current data for you CS. Average for an elementary school teacher is 32,200 EUR...before tax. So net monthly is 1,900....
Source: http://www.payscale.com/research/NL/Job=Elementary_School_Teacher/Salary

Just Jack said...

What's hot and what's not

The percentage change in this year's median price for houses compared to the same period last year. Broken down by core districts.

District Median 2014 Median 2015 Change


Oak Bay $790,625 $815,000 3.1 %

Saanich East $604,500 $634,500 5.0 %

Victoria $557,500 $582,500 4.5 %

Esquimalt $493,000 $549,000 11.4 %

View Royal $520,565 $537,950 3.3 %

Saanich West $510,000 $515,000 1.0 %

Victoria West $440,000 $432,500 -1.7 %

Just Jack said...

Although the market is generally in favor of sellers these days, there are still some good prices for homes. The trick seems to be to find the unwanted orphans in the market. The properties not wanted by mainstream buyers.

The orphans in condos tend to be the older complexes constructed in the 1970's and 1980's. Throw in an age restriction and it's time to make a deal.

A 900 square foot, 2-bedroom, top floor condo on Morrison near the Jubilee Hospital sold at $160,000. No restrictions.

800 sq.ft on Cedar Hill X Road at $156,000. No one younger than 18 please.

870 sq. ft. along Quadra in the Maplewood area at $132,000. No restrictions.

Go bigger at 1,000 sq. ft and live in Esquimalt at $175,000

Hillside area at $159,000 for 800 sq. ft.

Some of the condos have age restrictions - but not all.

If it's just you and your snuggle bunny, living in Introvert's or Totoro's basement suite, maybe it's time to give notice and flip the "land tycoons" the bird.

...and don't forget to have that epic house party before you leave.


https://youtu.be/HfFPMlvLSHU

dasmo said...

How are you breaking out VicWest from Victoria JJ? It is just a neighbourhood of Victoria. Or maybe I should ask why you are breaking it out?

Just Jack said...

I don't break it out. That's how the data is presented. Ask Marko to confirm.

reasonfirst said...

working for ROI or watching TV...

that's a pretty sad choice in my books.

Chris said...

JJ, your examples have issues...
eg. Morrison is fine if you like getting high off gas fumes from the Esso station across the street.

Just Jack said...

I wouldn't rely too heavily on these numbers as the medians are subject to sample variability. More than likely there just hasn't been enough sales in Vic West.

Low house sales in Vic West could be that prospective buyers are choosing a new or newer condo rather than a house in Vic West?

That buyers are capable of choosing alternatives in the core districts relates to demand being low for types and areas. You wouldn't see this occurring if there was pent up demand for all types of housing in all areas.

Demand while marginally up this spring is relatively flat. I would guess that the market is being driven predominantly by supply shortages these days. Possibly why prices have not risen as much as previous markets that had low months of inventory.

Low price elasticity of demand?

Whatever the cause, this is not a symptom of a healthy robust marketplace. The market is made up of small pockets of housing that are doing very well and others that are wallowing.

If you were lucky to choose the right property, in the right hood at the right time the housing market appears to be still popping champagne corks. However most of us are not in those areas or types of homes. Those areas and homes would be the top 5 or 10 percent of buyers and sellers these days.

Just Jack said...

Being located near a gas station is considered another form of depreciation or external obsolescence.

Houses in the area would suffer a loss in value as would condominiums. However, this is one of those high priced hot hoods for houses.

Price is suppose to be a measure of worth. The more you pay the more you are suppose to get. At $160,000 you may have to learn to keep your patio doors closed.

Just Jack said...

Leasehold and Co-Operative condominiums are located in some of the best locations of Victoria and Oak Bay. However they have not had the same increase over the years as houses and strata titled homes.

Mostly because they are difficult to finance. When you own a share in the entire complex the bank finds it difficult to seize the property as the condo does not have a separate title. Therefore you can't get a conventional mortgage but have to buy with cash or a chattel mortgage which is usually at a slightly higher interest rate.

This does underscore the link between price appreciation and the ease of financing.

A leasehold condo along Cook Street in Victoria that sold for $70,000 in April 2000, now re-sales for just $130,000 or an increase of 86% or nearly doubling of the value in 15 years.

Compare that to the median price of a home in the first quarter of 2000 which was $237,000 to today's median at $630,000 or an increase of 166% or nearly tripling of the value.

Food for thought for when the interest rate goes up just a few percent anytime in the future.

Bman said...

"A leasehold condo along Cook Street in Victoria that sold for $70,000 in April 2000, now re-sales for just $130,000 or an increase of 86% or nearly doubling of the value in 15 years."

Wouldn't the 15 fewer years on the life of the lease account for the low(er) appreciation? Leasehold properties aren't really equity-builders...

Introvert said...

Therefore, landlords renting out any portion of their home should not be allowed the home owner's grant portion on their property tax. And that new found money should be set aside for affordable housing.

Why shouldn't I be offered the Home Owner Grant? I'm helping increase densification in my city, which is viewed as a worthy priority by most.

That I can make good money while doing a service to the city seems to cause you distress. I recommend yoga.

The trick seems to be to find the unwanted orphans in the market.

Unlike real orphans, market orphans are usually orphans for a reason. Maybe one in a hundred people has the will, cash and expertise to transform an orphan into the kind of house Leo S would buy, so I recommend the vast majority of people steer clear of them.

JJ, not only are your powers of prognostication uncommonly poor but also many of your tips for prospective home-buyers.

CuriousCat said...

This listing at 492 Vincent is asking for 42% above assessment. It's listings like these that make me feel sorry for realtors with clients that obviously have unrealistic expectations!
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15563712

Also interesting is that the listing says the build date is 1953 while BC assessment says 1930. That's quite a big difference.

CuriousCat said...

Here's another one I think will sit on the market for a long time listed at 37% above assessment...(BC assessed at $436k)

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15482926

Just Jack said...

The lease on the Cook Street condo ends December 2073. So there seems to be a lot of time left.

Generally lenders want to see the remaining lease to be 25 plus 5 years. Any less and the mortgage amortization would be shortened accordingly.

With 58 years remaining in the lease, the present value of the leasehold interest discounted by today's low rate, there shouldn't be a significant difference between a freehold and a leasehold property.

CuriousCat said...

For $509,000 you would think they would post more interior photos than just a picture of the kitchen and close-ups of two light fixtures. Having a picture of a street sign is even more pathetic.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15515043

And by saying "The building date of the house is approximate." does that mean they can say whatever year they want?? BC Assessment has it as 1915, so shouldn't the estimate be at least within, I dunno, 10 years?

CuriousCat said...

Speaking of difficult clients and unrealistic expectations, I just started watching this show on Slice called "Million Dollar Listing New York". Yes, yes, I know, probably fake, etc etc etc, but pretty entertaining. Anywhooo, on this show they seem to price units a lot by the square foot and say things like "a unit in this building has never sold for more than $2000/sq ft" etc. So on the last episode, this client wanted to sell her 3500+sq ft unit on the 57th and 58th floor of an 80 story building for $50mil. Realtor dude said no way, let's go for $10,000 sq ft at $35mil. She of course looks pissed but says fine. They have an open house, everyone says the price is too high so he goes back to his client and before he can say anything about lowering the price she says she wants to RAISE the price to $42mil. She doesn't care that he already showed it, etc. Again, yes I know this show is most likely fake, but what I want to ask of people in the biz, is whether or not you've ever heard of a client wanting to RAISE the asking price after it's already been showed. Just to satisfy my own curiosity lol

Death said...

I find the writing and acting is pretty bad on those "reality based" shows so I don't watch but yeah I've seen prices raised on listings.

News said...

"JJ, not only are your powers of prognostication uncommonly poor but also many of your tips for prospective home-buyers."



JJ is the only one on this blog with credibility, an independent unbiased opinion with a shot of good humor. His research and details are exemplary versus the happy landlords and their suspect tenant stories.

DavidL said...

@Curious Cat

In some cases, sellers have delusions of grandeur - in others they ask the amount needed to pay off all their debts. (I know a few people whose debts match or exceed the resale value of their house.)

I guess that the "market will decide" what those properties are worth when they sell.

Leo S said...

It could be that all the landlords on this blog are complete liars, or it could be that Leo S is wrong. We'll leave it for the readers to decide.

Or it could be there is a luck factor and a healthy dose of confirmation bias at play here.
Like I said, I know landlords both amateur and professional and a very common story is problem tenants and unexpected maintenance requirements. I'm sure everyone who knows a landlord hears this.

Look at any forum for landlords. The topics are maintenance, problem tenants, and legal issues. It's not like this is some rare event that I've suddenly invented.

Leo S said...

The big issue is complete failure to account for one time costs. We had the same conversation about home maintenance where Totoro estimated that since little had broken in the last 5 or 10 years maintenance was cheap, completely disregarding the amortized cost of high value replacement items and depreciation due to wear and tear.

There are industry accepted methods to calculate this and take into account full costs for things like suite ownership, but apparently the landlords here have evolved beyond that.

And like I've said a million times, I'm not saying suites are bad, just that you have to be honest with yourself when weighing the pros and cons.

totoro victoria said...

Well, now you are just making stuff up Leo. There is no failure to account for one-time costs. I inspect for them at the start, plan to sell before they need replacing or budget for them.

What I said exactly was:

"A repairs and maintenance budget of $833 a month seems high.

If you are including a lot of wants (ie. renos and upgrades) instead of musts, then you could easily spend this amount.

The thing with renos and upgrades is that you can often save money by using second-hand stuff and recoup the costs or more when you sell if you are strategic about the reno.

I have paid a fair bit for renos. This has, in the past, been recovered in the sale price.

We buy places with newer roofs, get the drain system checked, and avoid big trees in the yard. We buy newish appliances second-hand.

We average $100/month in repairs and maintenance per SFH. This year I expect this number to be the same. It might increase in the future as we have three hot water tanks that will need to be replaced in the same year."

and:

Here is what I do:

1. I don't buy homes older than 1950. I'm just not prepared to pay the cost to reno and maintain. If you want an older home up your budget a bit.

2. I carefully check the biggies: roof, kitchen, bath, perimeter drains, big trees, previous flooding, siding, furnace... We got the sellers to replace the roof on one home as a condition of the sale. I either reduce the offer or skip on properties that need expensive work within the next five-ten years.

3. I do major renos that make economic sense ie pay for themselves through rental income within five years or will do so through resale and have a current high return for space utility. My view is the following makes sense: adding a suite or putting up walls to add bedrooms that are needed. I do some minor cosmetic stuff like painting and changing ugly light fixtures as well."

and

"As far as house maintenance and repair costs go, you need an emergency fund, but I'm not going to budget specifically for components that will need replacing after the time I plan to sell.

When I buy something I evaluate the remaining lifespan and consider whether I will ever need to replace it:

1. Appliances - gas ranges: 15 years; dryers and refrigerators: 13 years; dishwashers (9 years) and microwave ovens (9 years).

2. Cabinets - last fifty years or more.

3. Countertops - last a lifetime.

4. Decks - twenty years.

5. Exterior doors - twenty-forty years.

6. Electrical - lifetime.

7. Sinks/tubs/toilets - fifty years. Faucet - fifteen years.

8. Carpet - eight-ten years; wood - lifetime; high end laminate - 30 years; vinyl - 10 years.

9. Furnace - twenty-five years; hot water tank - ten years.

10. Paint - fifteen years.

11. Windows - twenty years."

Leo S said...

I inspect for them at the start, plan to sell before they need replacing or budget for them.

You realize that selling the house before a large ticket item need replacing doesn't avoid the costs. It just means you get less at resale.

Either you reno the kitchen/roof/furnace before you sell and get more, or sell with a worn out kitchen/roof/furnace and get less.

Leo S said...

We average $100/month in repairs and maintenance per SFH. This year I expect this number to be the same. It might increase in the future as we have three hot water tanks that will need to be replaced in the same year."

Exactly my point. Hence the correct answer to "How much is maintenance?" is not $100/month, but rather the result of the averaged out depreciation/repair schedule.

Similarly the answer to "How much work is a suite?" is not the average time spent with good tenants, but rather:
Time to acquire rentals + renovation time + time to acquire tenants + (probability of good tenants)*(time spent on good tenants) + (probability of bad tenants)*(time spent on bad tenants) + (probability of disastrous tenants)*(time spent on mitigation/repair/legal issues).
Of course no one has to actually calculate this formula. But it certainly doesn't make sense to pretend like those things don't exist.

totoro victoria said...

Selling before large ticket items need replacing does save you a significant amount of money.

Most renos simply don't recover their full cost on resale. Things like perimeter drains and interior plumbing/electrical can't even be seen.

For a new roof you will only recoup 75% of a new roof less the lost investment income on the amount you paid prior to the time you sell.

Maybe Marko has a better handle on the specifics but most renos simply are not worth it for ROI prior to a sale. Paint often is.

And maintenance costs are not the reason we are selling, it is just what our timeline is for other reasons.

I'm not pretending that anything doesn't exist. I'm letting you know my experience.

You can control for many of the variables fairly well. There are definitely more good than bad folks out there and when you price slightly below market you have lots of choice.

This doesn't mean that you won't have a bad tenant. There is risk in most things. What you do in the situation to mitigate is key.

The part you neglected to quote in the $100 a month figure is what followed this sentence:

"we don't worry about setting aside money for repairs specifically as we have a general emergency fund"

We factor this into the calculation based on the useful lifespan as previously posted.

You should do the calculations for yourself based on your home not counting non-necessary renovations assuming it was in good shape to start with.

Leo S said...

Selling before large ticket items need replacing does save you a significant amount of money.


Impossible to ascertain. Some buyers might not even make an offer on a house that needs a new roof. How to quantify that?

Things like perimeter drains and interior plumbing/electrical can't even be seen.

Actually those are precisely the things that get pointed out on real estate descriptions. New perimeter drains if they've been done are always mentioned. Same with upgraded electrical service. Obviously they wouldn't be mentioned if they don't have a positive effect on the sale price.
Will the cost of the upgrade be recouped? Perhaps. Electrical upgrade isn't that expensive but mentioning 200amp service is probably worth a couple thousand extra in the price. New perimeter drains is more dubious because they are expensive to replace. Only the people that know the disaster of a backed up drain will put the appropriate value on that upgrade.
We backed out of the first house we had an offer on after the inspection showed drainage problems, so in that case deferring the fix cost them the sale.

Leo S said...

Some renos definitely are more worthwhile from a resale perspective than others. But if it's worth it to sell rather than make a routine repair then clearly the rental wasn't a good business anyway.

PS: Why is google so intent on me identifying soups today?

totoro victoria said...

The ROI on renovation and remodelling is pretty well-studied.

http://www.remodeling.hw.net/cost-vs-value/2014/

In Canada there is the annual BMO renovation report which has similar findings.

I'm not sure where you are getting your data but it appears more of a subjective response.

JJ probably knows more about it.

totoro victoria said...

Who ever said it was worth it to sell rather than make a routine repairs? I did not. I stated I look at lifecycle costs and prefer to buy in good condition. Seems reasonable as I'm getting a discount on the cost of the repair/replacement.

If we are looking at lifecycle costs as you earlier identified it makes sense to sell prior to needing to replace a roof or other big ticket item if market conditions are good.

Tren said...

mark

Marko said...

whether or not you've ever heard of a client wanting to RAISE the asking price after it's already been showed.

In really hot markets it can happen, but you don't see the listing price going up very often.

A bit different, but I've had four listings this year where the first accepted offer collapsed and the property ended up selling for a higher price to a subsequent buyer.

Marko said...

The power of compound interest/ appreciation/ leverage makes making money easier once you already have a significant amount.

Starting young really helps. One of my long term financial goals/plans is to get to 10 rental condos by 40 years old. I have three now and I can see the momentum slowly building, more absolute positive cash flow each month, greater absolute principal pay down every year, etc. I figure based on my projections by 40 years old I can lighten my work load and switch over to a management company (10% of gross revenue) and still be able to amortize all mortgages renewals starting at that point to be paid off by the time I am 50 years old. Assuming limited appreciation that will be around $2.5 million in paid off assets plus annual revenue. Best part is from the day I moved out of my first condo and rented it out everything has been cash flow positive.

Finding tenants, cleaning in-between tenants, dealing with paperwork and keys, fobs, etc., is annoying for the time being but still not annoying enough that I feel to need to pay 10% for management. I am sure as I get closer to 10 units the want for management will increase.

That all being said, I think priority should be maxed out RRSPs and TSFA, beyond that real estate not a bad option.

dasmo said...

And now you get 10k a year in your TFSA!

Marko said...

do the teachers live? Under a bridge?

In Europe in many countries a lot more wealth is transferred from generation to generation.

The statistics don't paint an accurate picture. In Croatia home ownership is 90% and barely anyone has a mortgage. Sounds pretty good?

I have an uncle in Nancy France that owns a car dealership and given how much he pays his employees and rents/prices in Nancy life for the average Joe in terms of real estate isn't too promising.

I have family (dual doctor incomes) in Germany and a dual nurse income can afford a bigger/better house here in Victoria.

Despite the appreciation in prices in Victoria from 2002-2007 a dual income couple with some bread and butter professions (teaching, nursing, tradesperson, etc.) can still afford an approximately 600k home and the specs on the 600k home in Victoria in terms of land size and finished sq/ft are pretty impressive on a global scale.

dasmo said...

You can spend way less on vehicles here. Don't need one... We won't buy one that's for sure. Also all medical is included in public insurance including dental etc...

Marko said...

You can spend way less on vehicles here. Don't need one

But if you want a vehicle cars are more expensive and so is gas.

Just Jack said...

Fortunately, the real estate market comprises only sellers and prospective buyers. Those that own real estate or are satisfied renters have no impact on prices.

95 to 97 percent of the total inventory of housing in Victoria will not be offered for sale at any given time.

Yet that small fraction provides the benchmark price for all of the home equity lines of credit for the remaining 95 to 97%. Sounds absurd that conservative lenders would consider allowing every home owner immediate access at cheap rates based on such a tiny fraction. And it is, home equity loans should have been at much higher interest rates to reflect risk and the home owners should have had to re-qualify when they wanted more money.

And this is where the poo hits the fan. Home owners that blend and extend their mortgages to the point that they can no longer meet their monthly payments. If Canada did not have such an easy credit policy relating to home equity loans we wouldn't have such a high personal debt level and our home prices would not be absurd.

Only in the last few years has CMHC and OSFI tried to close the barn doors on equity loans and most recently by reducing the number of individually titled rental properties through CMHC to a maximum of 5.

Marko, that's going to make the last 5 properties you want to buy very difficult or impossible before you reach 40. You'll need conventional financing of 20 percent down on each of those 5 now. That dream of having 10 condo rentals likely ended when CMHC changed its rules last month.

News said...

"If Canada did not have such an easy credit policy relating to home equity loans we wouldn't have such a high personal debt level and our home prices would not be absurd."


Which is why the housing machine will grind to a halt when the credit policies take a drastic turn as they always have when the cyclical downturns kick in. The largest US bankers have even stated a crash will happen again and could be even nastier this time. Playing condo king in an overvalued market based on record low interest rates is not the safe game some people make it out to be.


http://www.businessinsider.com/jamie-dimon-letter-to-jpmorgan-shareholders-2015-4

dasmo said...

True cars and gas are more expensive. Parking is very expensive!

Leo S said...

Who ever said it was worth it to sell rather than make a routine repairs?

Hmm lets see. "I inspect for them at the start, plan to sell before they need replacing or budget for them"

And "Selling before large ticket items need replacing does save you a significant amount of money."

It saves money if you are getting rid of a rental anyway, but it's definitely not a good strategy if the rental is worth keeping.

totoro victoria said...

I stated "or budget for them."

We will sell two units at or before retirement. We have other plans and some things will be nearing the end of their useful lifespan.

And you'd need to do the math on when it makes sense to sell.

It is a combination of market timing, tax bracket (better to not have other income), life goals and where expensive components are on the replacement/repair lifespan.

It doesn't always make sense to keep a rental even if you are cash flow positive.

If you have enough maybe it is okay to take the money and put it to good use.

Phil said...
This comment has been removed by the author.
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