tag:blogger.com,1999:blog-7123542260692860177.post3851619250355078886..comments2023-12-02T00:38:46.467-08:00Comments on House Hunt Victoria: 26 years agoHouseHuntVictoriahttp://www.blogger.com/profile/07456914359088891317noreply@blogger.comBlogger91125tag:blogger.com,1999:blog-7123542260692860177.post-8392641839124606172008-11-22T13:53:00.000-08:002008-11-22T13:53:00.000-08:00[url=http://www.moviecodec.com/]MovieCodec Forums/...[url=http://www.moviecodec.com/]MovieCodec Forums/Downloads[/url]Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-31790944045047759982008-10-25T07:25:00.000-07:002008-10-25T07:25:00.000-07:00The HEL is basically the premise behind the smith ...The HEL is basically the premise behind the smith manouvre. Probably not a good idea in these times.<BR/><BR/>I like the idea of drawing down RRSPs rather than taking funds from your company (incorporated) as you can later potentially sell the company and claim a capital gains exemption on the sale - tax free. Provides much more flexibility overall.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-54739960252151798242008-10-24T14:42:00.000-07:002008-10-24T14:42:00.000-07:00You also may want to set up a home equity line of ...You also may want to set up a home equity line of credit. So, when your mortgage drops below 80 percent of the home value, you can use this money for non RRSP investments. The interest portion being tax deductible.<BR/><BR/>Furthermore, if you own your own company you may wish not to draw an income from the company in the years prior to your retirement, but draw down your RRSP instead.<BR/><BR/>In this way the company might have a large retained earnings which you could draw upon as a dividend when you retire. Sort of like your own pension plan.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-28934078712562269562008-10-24T14:36:00.000-07:002008-10-24T14:36:00.000-07:00Just Jack,The 8% only sets the rate of payments in...Just Jack,<BR/><BR/>The 8% only sets the rate of payments into the RRSP. You still need to invest the money that comes into the RRSP every month in order to get that $3M. I chose a pretty conservative, minimum risk 5%.<BR/><BR/>I don't know about you but I would rather not have to pay any tax on 850K of the $3M (TFSA route)<BR/><BR/>BTW - 35 year mortgage was your example. How many 36 year olds have 375K in their RRSP? A more realistic case would be a 25 year mortgage (46 year old).Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-70970470435969654892008-10-24T14:28:00.000-07:002008-10-24T14:28:00.000-07:00There is a joke making the rounds today....What is...There is a joke making the rounds today....<BR/><BR/>What is the difference between a BC real estate agent and a pigeon?<BR/><BR/>A pigeon can still make a deposit on a BMW!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-64262242141880652422008-10-24T14:25:00.000-07:002008-10-24T14:25:00.000-07:00What I like about the RRSP mortgage is that 8% is ...What I like about the RRSP mortgage is that 8% is guaranteed. Then if the bond and equity markets average 5% then you just build wealth faster.<BR/><BR/>So you reach 72 with a paid off home and 3 million in the bank and you have to make withdrawals and pay tax on them. <BR/><BR/>Let's see, suppose I don't smoke, reduce my carbohydrates, drink in moderation, jog 30 to 60 Kilometers per week, have regular medical and dental check ups and play bridge. I can probably squeek out to age 92. <BR/><BR/>So, can I live on $300,000 (before taxes) a year for the remaining 20 years of my life. How much do you think Alpo dog food will be by the middle of the 21st century?<BR/><BR/>Oh, I forgot to add in CPP, thats gotta be an extra $600 per month better buy the Presidents Choice brand.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-24268659119201661052008-10-24T14:09:00.000-07:002008-10-24T14:09:00.000-07:00OOPS!Pasted wrong mortgage payment graphic. Corre...OOPS!<BR/><BR/>Pasted wrong mortgage payment graphic. Correct graphic showing 5% and 8% rates <A HREF="http://img98.imageshack.us/img98/3162/morty2ci5.png" REL="nofollow">here</A>Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-15709810884004881052008-10-24T14:01:00.000-07:002008-10-24T14:01:00.000-07:00Just Jack said:Having too much money in your RRSP ...Just Jack said:<BR/><BR/><I>Having too much money in your RRSP is definitely something we all have to avoid. So lets say you gave yourself a $375,000 mortgage at 8% over 35 years. Well now you really have problems because your RRSP will grow to well over a million dollars in that time and your house will be paid off.</I><BR/><BR/>Lets take a look at your example. A 375 K mortgage at 8% results in payments of <A HREF="http://img407.imageshack.us/img407/6485/mortox7.png" REL="nofollow">$2628 per month</A> into the RRSP. If those payments are invested at 5%, compounded monthly, (long term bonds, GICs etc.) at the end of 35 years the RRSP is worth $2.99M <A HREF="http://img117.imageshack.us/img117/7728/anngi5.png" REL="nofollow">(see annuity calc)</A><BR/><BR/>Now lets say we pay 5% mortgage interest on the mortgage and set up a TFSA for the difference in payments. Monthly payments are <A HREF="http://img407.imageshack.us/img407/6485/mortox7.png" REL="nofollow">$1880 per month</A> and the RRSP at end of 35 years worth $2.14M (at 5%) <A HREF="http://img117.imageshack.us/img117/7728/anngi5.png" REL="nofollow">(see annuity calc)</A>. The difference of 2628-1880 = 748 or 8976 per year which is under the 10K allowed for a married couple's TFSA. At the end of 35 years the TFSA is worth 850K. <A HREF="http://img117.imageshack.us/img117/7728/anngi5.png" REL="nofollow">(see annuity calc)</A><BR/><BR/>So with 8% mortgage payments at the end of 35 years the couple owns the house and has an RRSP worth 2.99 Million and tax to pay on every withdrawal. With 5% mortgage payments the couple owns the house and has a net worth of 2.99 Million but 850K of it can be withdrawn tax free.<BR/><BR/>This TFSA is a great saving tool and for younger Canadians can be of considerable benefit.<BR/><BR/>BTW - The value of an RRSP containing 375K, with no further contributions, compounded monthly @5% will grow to <A HREF="http://img407.imageshack.us/img407/6835/compybt4.png" REL="nofollow">$2.15M in 35 years</A>Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-78638056282096958582008-10-24T13:40:00.000-07:002008-10-24T13:40:00.000-07:00But here is my favorite.That hot bed of retirement...But here is my favorite.<BR/><BR/>That hot bed of retirement communities beautiful downtown Sidney. The blue hair rinse capital of Canada.<BR/><BR/>Of the 90 condominiums available for sale, two(2) sold in the first three weeks of October. Hold onto your stroller, those septagenarians are beating down the doors of the developers. Well, maybe just bumping the door lightly with their oxygen tanks.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-39645925229013195482008-10-24T13:31:00.000-07:002008-10-24T13:31:00.000-07:00Listings just crested 5150 - a new record high. A...Listings just crested 5150 - a new record high. After the slow start to the month I wondered if we had finally started to see a seasonal decline... but listings have been piling in for the last few days.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-44290994690370609912008-10-24T13:11:00.000-07:002008-10-24T13:11:00.000-07:00Some happy or not so happy numbers to ponder over ...Some happy or not so happy numbers to ponder over the weekend.<BR/><BR/>For the core capital area of Victoria there have been 33 condominium sales in the first 21 days of October or on average 1.57 condominiums selling per day. The bad new is that there were 844 condominiums listed for sale.<BR/><BR/><BR/>Or how about single family homes. 69 homes sold in the first 21 days in the core municipalities of Victoria or 3.29 homes per day. But, there were 793 listed for sale.<BR/><BR/><BR/>The Edmund Fitz Gerald has collided with the Titanic.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-81622791012131937332008-10-24T12:34:00.000-07:002008-10-24T12:34:00.000-07:00"We own two houses plus other RE and I can tell yo..."We own two houses plus other RE and I can tell you 1st hand if prices drop anywhere near rent levels I'll be snappin' up another two - and so will most everyone I know."<BR/><BR/><BR/>I don't seem to get your math here. You say you are paying down mortgages on multiple properties so then you would lose all or most of your equity in a 30% downturn so you would thus lose a major amount of borrowing leverage. <BR/><BR/>Wheras if you sold now and bought back in 2 years at 30% off but you don't seem to want increase your leverage,you want to reduce it and put yourself in an even tighter situation should Victoria flatline for 7-10 years afterwards. <BR/><BR/>If I was trying to be a Donald Trump thats what I would be doing,increase leverage not reduce it,thats how you increase your wealth. Carrying more debt is like your Superman movie.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-11676751454497224802008-10-24T11:51:00.000-07:002008-10-24T11:51:00.000-07:00but you sound like you missed out the last 2 years...<I>but you sound like you missed out the last 2 years</I><BR/><BR/>Not to worry, the last 2 years (and most likely a couple more) in the RE market are going to replay in reverse.<BR/><BR/>Kind of like in the first Superman movie.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-88106156924581887982008-10-24T11:37:00.000-07:002008-10-24T11:37:00.000-07:00Having too much money in your RRSP is definitely s...Having too much money in your RRSP is definitely something we all have to avoid. So lets say you gave yourself a $375,000 mortgage at 8% over 35 years. Well now you really have problems because your RRSP will grow to well over a million dollars in that time and your house will be paid off.<BR/><BR/>You certainly don't want to be in this position at age 72. Perhaps you should retire earlier and draw down that RRSP. <BR/><BR/>The self directed mortgage may not be right for everyone and not everyone can save enough into the RRSP to do this kind of thing. But it sure is nice to have the option.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-88203369873816884722008-10-24T10:47:00.000-07:002008-10-24T10:47:00.000-07:00Just Jack said:Since you are paying the mortgage b...Just Jack said:<BR/><BR/><I>Since you are paying the mortgage back into your RRSP, you want the WORST terms possible.</I><BR/><BR/>This is not necessarily true. That is why I suggested that a financial planner should be consulted prior to setting one of these up.<BR/><BR/>When you withdraw funds from an RRSP you are taxed at your marginal rate. This rate may be quite high depending on your other sources of income and the amount withdrawn. Having a pile of cash in your RRSP that you are forced to withdraw after conversion to a RIF may not be a good idea.<BR/><BR/>Some folks try to do the opposite of what you suggest. They try to get the most money (starting now) out of their RRSP with the least tax payable over the long term. Using a self-directed mortgage and paying the least interest may work for some people. One needs to remember that mortgage interest is payable with after tax dollars. The less you pay the more you have for other purposes like the new TFSA account. Paying high mortgage interest with after tax dollars is in effect making a contribution to your RRSP with no tax deduction benefit. Sure the money grows but you pay tax on it when you withdraw.<BR/><BR/>It is hard to give you actual examples on this blog because of the limited text format. One really needs a spreadsheet or retirement planning tool in order to see what works in a particular situation. Age, current income, expected retirement income, asset mix, current RRSP holdings and many other factors are needed prior to making any decision.Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-6297198834508383032008-10-24T10:46:00.000-07:002008-10-24T10:46:00.000-07:00Thanks Just Jack and Rogers.Thanks Just Jack and Rogers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-80652270010830923262008-10-24T10:39:00.000-07:002008-10-24T10:39:00.000-07:00"We own two houses plus other RE and I can tell yo..."We own two houses plus other RE and I can tell you 1st hand if prices drop anywhere near rent levels I'll be snappin' up another two - and so will most everyone I know."<BR/><BR/>If this actually happened, it would create a second credit and housing bubble bigger than the biggest in history, which is now unwinding in rapid and ugly fashion. But let's get real - the dream of everybody in Victoria getting fabulously rich by owning 4houses is deader than a doornail.<BR/><BR/>Have you read the news? The real news, like the FT, Economist, etc? Try putting down the T-C. This is a real crisis and you will not solve it by buying more overpriced crap houses in Victoria.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-32498209118091352882008-10-24T10:15:00.000-07:002008-10-24T10:15:00.000-07:00VG said: "We may revisit the abyss over the next f...VG said: "We may revisit the abyss over the next few months as far as the markets go but you sound like you missed out the last 2 years,some of the greatest gains in ages were made during this time up til the summer."<BR/><BR/>Quite right VG I watched friends and family "making"(paper of course) good returns in the past couple years while I paid towards my mortgage, but it's hard to be everywhere at all times. Quite frankly I looked at the stock market as bubbled as well with no clear indication of when it would pop. Those claiming to be experiencing the stock gains were clearly sitting on a time bomb. <BR/><BR/>The problem with getting in during that time (just as in RE) is we don't know where the top is, now the only concern for both markets is finding the bottom.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-40160376932780748682008-10-24T09:50:00.000-07:002008-10-24T09:50:00.000-07:00Remember that your RRSP is the source of your fund...Remember that your RRSP is the source of your funds. You have to think like a banker not the loan applicant. Since you are paying the mortgage back into your RRSP, you want the WORST terms possible.<BR/><BR/>You want a 35 year mortgage, paid monthly at the highest possible interest rate allowed. Because, your monthly payment is going back into your RRSP, you will be able to rebuild your RRSP quickly over the next 15 years.<BR/><BR/>Take a look at the mortgage calculators that show how much of your payment is interest that would be paid to the bank. When you use your RRSP savings that interest is flowing into your retirement account.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-28417853551426413292008-10-24T09:29:00.000-07:002008-10-24T09:29:00.000-07:00Anon 8:59 asked about setting up a mortgage using ...Anon 8:59 asked about setting up a mortgage using their RRSP.<BR/><BR/>CRA permits holders of self-directed RRSPs to setup a mortgage using the funds in their RRSP. Here are some of the key points involved in doing this:<BR/><BR/>- mortgage must be administered by a financial entity. For example TD bank can set up a mortgage using funds in a TD Waterhouse self-directed account.<BR/><BR/>- interest rate charged must be at current market rates. It is possible to have a variable rate but some institutions will only set up fixed rate mortgages.<BR/><BR/>- there is an initial set up fee which might be around 1K and an annual fee around $300 (those figures are from memory and may be off a bit)<BR/><BR/>- loan must be CMHC insured regardless of amount or loan ratio. This can be a little as .5% up to several percent depending on ratio of mortgage amount to appraised value.<BR/><BR/>Is a self-directed mortgage a good idea?? It depends on your financial goals and personal circumstances. A financial planner can help you evaluate the trade offs. One thing to note is that the mortgage should be over 100K due to the setup and annual fees.<BR/><BR/>If you are in Victoria you can drop into the Douglas St. branch of TD and they will give you all the details. Other banks may be able to help you as well but as a customer of TD I know for a fact this branch has staff that is familiar with this type of mortgage.Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-79640715600558175332008-10-24T09:22:00.000-07:002008-10-24T09:22:00.000-07:00"This is not financial collapse it's reoganization..."This is not financial collapse it's reoganization of wealth."<BR/><BR/><BR/>Time will tell,I am not saying it will happen but we were staring into the abyss a couple weeks back like no other time in history. We may revisit the abyss over the next few months as far as the markets go but you sound like you missed out the last 2 years,some of the greatest gains in ages were made during this time up til the summer.<BR/><BR/>There are many more dangers to get past first before stepping back in, corporate bonds and massive hedge fund selling at end of Novemeber plus more foreclosure coming in the US may sink us much further than we could ever imagine. Like I said, this is so beyond 1982.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-56848964453997240072008-10-24T08:59:00.000-07:002008-10-24T08:59:00.000-07:00Just Jack or Rogers, Could you explain the followi...Just Jack or Rogers, Could you explain the following, financially, a little bite? seems it is a very good thing, how does it works? Thanks inadvance.<BR/><BR/><BR/>"a LOC through my RRSP that will self fund back to my mortgage<BR/><BR/>to own my own mortgage through RRSP's.<BR/><BR/>a self directed mortgage through my RRSP."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-73304527871293590922008-10-24T08:43:00.000-07:002008-10-24T08:43:00.000-07:00This is not financial collapse it's reoganization ...This is not financial collapse it's reoganization of wealth. Lots and lots of opportunity in the coming months.<BR/><BR/>It's all perspective and if you've been smart and stayed out of debt and out of the markets in the past year or two you will enjoy lots of financial growth in the years to come.<BR/><BR/>Life is great.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-5221945371530242842008-10-24T08:00:00.000-07:002008-10-24T08:00:00.000-07:00A few buying bears won't save the market from a -5...A few buying bears won't save the market from a -50% scenario. <BR/><BR/>In fact considering the once in a lifetime downturn we are now seeing -50% is almost looking bullish.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-78743141865473409962008-10-24T07:51:00.000-07:002008-10-24T07:51:00.000-07:00"Will most bears buy if they get 30% off the April..."Will most bears buy if they get 30% off the April 2008 peak? I suspect they will. A house that sold for 500K earlier this year with a new reality price tag of 350K sounds good to me. "<BR/><BR/><BR/>This current scenario is far worse than 1982 so you will see 50% deals out there I am sure. The world wasn't on the brink of financial collapse back then, this time it is,then watch the rates climb back up next year as well. I'll be waiting for 50 %,I'm a patient guy.Anonymousnoreply@blogger.com