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Stay small: a guide to buying an investment condo in Victoria


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#1 Mike K.

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Posted 23 July 2015 - 08:20 AM

Stay small: a guide to buying an investment condo in Victoria

MARKO JURAS, CITIFIED.CA

http://victoria.citi...do-in-victoria/

 

An investment condo can be a rewarding opportunity provided investors follow a basic rule that helps ensure the purchase is cash positive and not a drain on personal finances.

 

Despite the emotional urge to buy a larger unit with better views and a prime layout, in terms of an investment I practice and preach this single most important rule: buy a small, lower priced unit in a quality concrete building within walking distance of downtown Victoria.

 

As an investor with multiple units purchased for investment purposes and as a Realtor having represented a multitude of clients purchasing pre-sale and new-build condos both as primary residences and as investment properties, I've had the opportunity to see the good, the bad and the ugly as far as investment condos are concerned. If you're thinking of making that leap into the real-estate investment world and a condo is on your list, the following five points relating to my single most important rule noted above will help ensure you make the right decision at the right price and add an income generating asset to your portfolio instead of a financial burden. [Full article]

 

 


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Citified.ca is Victoria's most comprehensive research resource for new-build homes and commercial spaces.


#2 lanforod

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Posted 23 July 2015 - 09:49 AM

Question: if you could pay 100% cash for a small condo for this purpose, would you do so? Assuming you have $220k sitting around, whats the best use for it?



#3 Mike K.

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Posted 23 July 2015 - 10:49 AM

I'd weigh how low of a rate I can get for a mortgage versus how high of a rate I can get for a GIC. Right now you can get a 2YR GIC at 2.3% while a variable mortgage can be secured for well under 2%. Might as well just plunk down the minimum downpayment or close to it.


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Citified.ca is Victoria's most comprehensive research resource for new-build homes and commercial spaces.


#4 lanforod

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Posted 23 July 2015 - 10:55 AM

^ key word there being 'right now'



#5 Mike K.

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Posted 23 July 2015 - 11:00 AM

Anything related to real-estate is a 'right now' sort of scenario unless you're buying a family home that you don't expect to vacate for several decades, if that.

 

Right now vacancy rates are low so condo investors are not having problems renting their units. But what happens when vacancy rates creep up as purpose built rentals start hitting the market in a big way? In downtown alone there are 1,000 on the way.

 

Personally speaking I'd much rather have $150k of that $220k earning a guaranteed 2.3% per annum in a GIC while variable mortgage rates are well below 2%, which makes a low downpayment feasible. Once mortgage rates start creeping up GIC rates will too, but this stuff happens so slowly that you have plenty of time to adjust if you find yourself feeling the need to re-mortgage with a higher down payment.

 

My 0.02 of course, and I'm no expert, just offering an opinion on what I'd do.


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Citified.ca is Victoria's most comprehensive research resource for new-build homes and commercial spaces.


#6 lanforod

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Posted 23 July 2015 - 11:02 AM

Fair enough. Alternatively, perhaps leverage the 220k into 3 or 4 condos...



#7 Mike K.

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Posted 23 July 2015 - 11:05 AM

Yes, absolutely. I was actually going to add that if I had $220k sitting around I'd probably buy 2-3 $200k condos with minimum down and the rest would go into a short term (2yr) GIC. While equity builds on the condos the rest of the cash is safe but still liquid at a moments notice if hard pressed.


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Citified.ca is Victoria's most comprehensive research resource for new-build homes and commercial spaces.


#8 Szeven

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Posted 23 July 2015 - 11:14 AM

I'd get some of everything. Stocks, Bonds, Real Estate, GIC's. The only way I know of to grow wealth over time other than creating your own income in business/job is to bet on rising asset prices. Its work for 100 years and if it stops working, who cares everyone's screwed.



#9 gumgum

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Posted 23 July 2015 - 11:49 AM

If your already in the market I would never suggest that anyone should buy a second investment property here. Szeven's right. Diversification is key!



#10 lanforod

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Posted 23 July 2015 - 12:21 PM

If your already in the market I would never suggest that anyone should buy a second investment property here. Szeven's right. Diversification is key!

The one advantage to buying here: I'm also here! So I can manage it myself.



#11 MarkoJ

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Posted 23 July 2015 - 04:17 PM

The one advantage to buying here: I'm also here! So I can manage it myself.

 

I've kept wanting to diversify to Vancouver with pre-sales but the numbers are just so much worse in terms of purchase price to rent compared to Victoria then throw in management cost as well.

 

Diversifications is wise but the numbers have to work.


Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

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Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#12 lanforod

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Posted 24 July 2015 - 09:38 AM

downtown Vancouver, the numbers don't work. But further out, they can. Anywhere close to a new Evergreen line station is probably a good investment right now. If you know Coquitlam well at all, you'll be shocked how much it has changed in the past 2 years.



 



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