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Where would you buy your money-making condo(s)


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#1 ovovov

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Posted 01 April 2016 - 07:48 AM

I have been reading a lot recently and have been thinking  about investing in the condo market/property market

 

besides ERA, are there any great value to buy into?

 great value to me means: positive cash flow and potential to appreciated over time

 

 

 

 

thank you in advance

 

 

 

 

 



#2 dasmo

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Posted 01 April 2016 - 09:06 AM

Positive cash flow in Victoria RE buying now? Inconceivable! Wait.... Air BnB maybe as long as the strata allows it....

#3 3isenough

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Posted 01 April 2016 - 10:01 AM

Sidney seems to be growing and developing more and more. Lots of tearing down older oceanfront properties and rebuilding multi unit. It's not just for the nearly dead anymore. Brewpubs, cafes, Sidney Market, easy commute for those from the mainland...

#4 SamCB

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Posted 01 April 2016 - 02:35 PM

If you can find a unit in an older wood frame condo that allows rentals you might do ok as long as it's decently renovated.

#5 Mike K.

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Posted 01 April 2016 - 02:42 PM

Any condo can be a money-maker. It all depends on how much you're mortgaging.


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#6 LeoVictoria

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Posted 01 April 2016 - 04:36 PM

Any condo can be a money-maker. It all depends on how much you're mortgaging.

 

Wut?



#7 Mike K.

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Posted 01 April 2016 - 07:32 PM

If you're up to your eyeballs in a monthly mortgage payment it's pretty hard to turn a profit. If you can plunk down $200k for a $300k condo you're going to fare alright regardless of what you buy.

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#8 LeoVictoria

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Posted 01 April 2016 - 08:12 PM

If you're up to your eyeballs in a monthly mortgage payment it's pretty hard to turn a profit. If you can plunk down $200k for a $300k condo you're going to fare alright regardless of what you buy.


Doesn't make any difference since you have to consider the opportunity cost of that money. With these rates you are better off with the bigger mortgage.

#9 Mike K.

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Posted 01 April 2016 - 08:59 PM

If the individual were concerned about opportunity cost he or she wouldn't be asking about investment condos.

Opportunity cost comes with risk whereas a smart move in this market is a safe and profitable investment not only due to a low vacancy situation but appreciating real-estate values over the short and medium term.

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#10 dasmo

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Posted 01 April 2016 - 10:05 PM

Condos are full of risk.... To not accept that is a fools move. It's just as risky if not more so than the stock market it's just easier to understand and potential gains are increased through easy to get leverage. If this potential investor has gobs of cash buy a SFH not a condo....

#11 MarkoJ

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Posted 01 April 2016 - 10:51 PM

I have been reading a lot recently and have been thinking  about investing in the condo market/property market

 

besides ERA, are there any great value to buy into?

 great value to me means: positive cash flow and potential to appreciated over time

 

 

 

 

thank you in advance

 

This was my strategy for years -> http://victoria.citi...do-in-victoria/

 

However, this strategy is now difficult to employ due to the rapid increase in prices and very few pre-sales around.  Encore sold out of one bedrooms, Escher and Legato have very limited selection left and have jacked up prices.

 

Maybe a pre-sale junior one bedroom at the Black and White project?

 

Nothing is going to be great anymore.  The time to buy investment condos was 2009-2015....not now when everyone and their mom is buying one :)


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

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

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

 

 


#12 LeoVictoria

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Posted 02 April 2016 - 06:11 AM

If the individual were concerned about opportunity cost he or she wouldn't be asking about investment condos.

Opportunity cost comes with risk whereas a smart move in this market is a safe and profitable investment not only due to a low vacancy situation but appreciating real-estate values over the short and medium term.


Ok lets dissect.
1. Because someone is interested in investment condos they are supposed to have thrown all common investment sense out the window? not considering the alternative investment is a good way to lose money.
2. "Opportunity cost comes with risk". This sentence makes zero sense, although I suppose you mean investing the money in equities comes with risk. Well sure, every investment comes with risk.
3. "smart move in this market is a safe and profitable investment" A real estate investment has risk just like any other. It may not be a terrible time to buy but as Marko said you've already missed the really good deals. Risk is always there and if the cash flow isn't there you're betting on increases in value which is just speculation.

#13 Mike K.

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Posted 02 April 2016 - 06:28 AM

I get the sense some of you are here only for the sake of having arguments.
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#14 dasmo

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Posted 02 April 2016 - 06:53 AM

Isn't the nature of a forum to gather opinions from different view points? Condos have only appreciated by 2% yoy. I average 7% with my equity investments and I don't have any strata fees, risk of bad tenants, special assessments etc. Realesate is also a liability and one should take this into account. Plus rental income is taxed at the full rate and you can't shelter income or capital gains in a TFSA.
Just because your focus is on Realestate doesn't mean bringing this perspective into this discussion is frivolous. I have done well with Realestate but by buying when no one else is and buying what others don't want at the time. I see its benefits, but I am also diversified and understand its risks. Heck, the owners of the house we just rented had their rental up island turn into a crack shack and burn to the ground! We had some renters that did a lot of damage to our place in a few short four months. Thank goodness they had to vacate early...what a mess cleaning up after them.... Plus, what happens when rates do start to climb? Buying your own home is a no brainer if you can afford it. Buying investment condos requires some consideration of the opportunity cost and the financial/emotional risk.

#15 LeoVictoria

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Posted 02 April 2016 - 07:13 AM

I get the sense some of you are here only for the sake of having arguments.


When I see someone giving dangerous advice like implying there is no risk in buying investment condos, and saying that the way to solve cash flow is to put more money down, then yes I'm here for the argument.

#16 Mike K.

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Posted 02 April 2016 - 07:15 AM

I'm not saying that, but when somone is here to ask about something specific and we deviate for the sake of deviating then what's the point of raising an issue or asking for advice in the first place?

If someone wants an investment condo, and they're asking us for advice, arguing about opportunity costs and citing instances of other investments is completely off-topic and unnecessary.

There's a fool-proof way of going about condo investments in this market but we can't have that conversation if it keeps getting interrupted.

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#17 MarkoJ

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Posted 02 April 2016 - 07:17 AM

Every year I max out my RRSPs, TSFA, etc. and I invest it on my own through TD Waterhouse.

 

Biggest difference with real estate that I've personally obsereved is you can leverage big time.

 

For example, my 834 condo....In my 5 years of ownership the condo has appreciated from $198,900 to approximately $240,000 (maybe $250,000 given how screwed up and nuts the real estate market is) and the mortgage principal has dropped from $158,900 (initial down payment of $40,000 on the $198,900 purchase price) to approximately $139,000. During this time the condo has been cash flow positive every single month.

 

It hasn't been a knock out return on the $198,900 purchase price but 60k in equity + cash flow every month on a 40k investment is not too bad over 5 years.

 

Problem is you can't buy a condo for $198,900 but I can't replicate some of my 11-12% book dividends either.


Edited by MarkoJ, 02 April 2016 - 07:17 AM.

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

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

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

 

 


#18 LeoVictoria

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Posted 02 April 2016 - 07:26 AM

I'm not saying that, but when somone is here to ask about something specific and we deviate for the sake of deviating then what's the point of raising an issue or asking for advice in the first place?

 

The question was about where are opportunities in investment condos specifically citing cash flow and potential for appreciation as factors.   All discussion is on topic so far.

 

If someone wants an investment condo, and they're asking us for advice, arguing about opportunity costs and citing instances of other investments is completely off-topic and unnecessary.

 

No one wants an investment condo.  People want investment returns, and real estate is one way to get those returns.   Making a decision on a real estate investment without considering the opportunity cost of your down payment would be very naive.  Doubly so when the immediately following advice is to just dump money into the place until it cashflows.

 

 

There's a fool-proof way of going about condo investments in this market but we can't have that conversation if it keeps getting interrupted.

 

 

OK shoot.  No more interruptions.  Let's hear the fool proof method.  



#19 Mike K.

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Posted 02 April 2016 - 07:52 AM

Every year I max out my RRSPs, TSFA, etc. and I invest it on my own through TD Waterhouse.

Biggest difference with real estate that I've personally obsereved is you can leverage big time.

For example, my 834 condo....In my 5 years of ownership the condo has appreciated from $198,900 to approximately $240,000 (maybe $250,000 given how screwed up and nuts the real estate market is) and the mortgage principal has dropped from $158,900 (initial down payment of $40,000 on the $198,900 purchase price) to approximately $139,000. During this time the condo has been cash flow positive every single month.

It hasn't been a knock out return on the $198,900 purchase price but 60k in equity + cash flow every month on a 40k investment is not too bad over 5 years.

Problem is you can't buy a condo for $198,900 but I can't replicate some of my 11-12% book dividends either.


You nailed your entry point, Marko, that's for sure.

With the rental vacancy rate as low as it is, landlords have the enviable opportunity to pick and choose tenants from long lists of applicants, and even charge a premium for desirable locations. I never thought that 1BR 500 sq ft units could rent for $1,500+ in the downtown core but here we are.

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#20 LeoVictoria

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Posted 03 April 2016 - 07:40 AM

Thank's for sharing your foolproof method Mike.  That is really great and super helpful.  

 

 

 

 

Anyway, ovovov.   You have the right idea as far as positive cash flow being the most important.   That is a calculation that you can make yourself pretty easily.  Marko has the right idea that the way to go is small condos.  You're not going to make any money buying a penthouse to rent out.   Stay small and stay cheap.   Find a dozen condos and do the calculations which is pretty easy.   Look on usedvic, craigslist, and padmapper to get a guage of rents for equivalent places.  

Then Rent * 0.95 (to account for vacancies) - Mortgage - strata - homeowners insurance - maintenance allowance.

The standard way to compare real estate investments is via the cap rate.  http://www.investope...izationrate.asp

 

As others have said, the best time to jump in was a couple years ago, but that doesn't mean there is no opportunity.   Appreciation on condos has been about zero for 8 years now.  We are still not back to levels of 2008.   That is good news for potential future appreciation, because condos have gone nowhere, and lost some 10-20% once you factor in inflation.   Another factor is that a number of new builds are rentals, so not quite the flood of new condos about to hit the market like we have had.

 

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Detached houses have picked up hugely in the last couple months, but condos haven't yet been swept up.   I suspect that once some people get priced out of detached homes they will move to condos.    It was similar in our last correction, where detached houses started appreciating about a year before condos.   However I think that window is closing.   My guess is you have a couple months before condo prices start moving up more quickly.

 

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Edited by LeoVictoria, 03 April 2016 - 07:42 AM.


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