Quote:
Originally Posted by photon
You have only 5,000 down, are you using money from an existing line of credit to come up with the 195K?
If not, then you have to either put another $45,000 down or you'll have CHMC fees in there as well. EDIT: And then you have to either get a mortgage, or a line of credit.
If you are going to hold for 3-4 months your cost of interest is going to be $3-4000, not $2000.
So that brings the profit down to $6500 to $5500.
The big issue is you're assuming a 4% gain per month. That was last year, I would NOT count on that repeating. I suspect that we might be at 30-40% increase by year's end and you're in prime buying season then, but you have to ask yourself what's the worst case scenario. What if the price only went up $10,000 in that time, you're down to making $2-3000, plus all the time. That's VERY thin and if for some reason it takes an extra few months to sell you've eaten your profit totally and are now in a loss position.
What area is this condo in? How big, how many bedrooms? If the selling part doesn't pan out, renting it would be a good backup plan, depending on what rent you could get and what the monthly payments are.
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Edmonton rental rates are the best in Canada. Rental revenue are currently outpacing cost of financing.
My parents just bought a whack of condos (12) going up by Heritage Mall and they fully own 3 (2h 1c) and have mortgages on 8 (3h 5c) and on the 8 with payments, they are making about 8%/month in straight before tax profit and that includes rental fees etc (all of those places are near the university which is the hottest part in Edmonton).
They are moving their LRT down to Southgate mall and then to Heritage which is likely where the OP's condo is located near. There might be room for 4% growth in that area but it would be seriously risky. There should be no problem finding renters if you are ok with Uni students.
WestEd area is the next best bet but there is no way there is 4% growth there. NE Edmonton is the second worst only to Mill Woods. NW Edmonton (north West Ed) is mostly industrial and then you hit the satelite leach communities. Centre East likely wont keep up with inflation.
MYK