Buying a Condo (yes another thread)

[Wookie]

Sooo..

I've got a place to live rent free for the next year or so. But I'm hesitant about not having somewhere to live if something changes.

I'm comfortable where I am, I've got a decent job, which should only get better (pay wise) yet am on the cusp of being able to affoard a small condo.

I've found one that I really like the location, close to LRT, a block from where I live now, currently being rented, the tennants want to stay, so, I'm debating buying the condo, leaving the tennants in until I need to move 12 - 18 months, and then either moving in there, or selling and buying something that would be more suitable based on a higher income (assuming my pay increases).

Now I'd be viewing buying this place as taking a protectionary stance in the market. If things take another run this year, or in the next 12 - 18 months I'm going to be a lot worse off. At the rates prices were rising I'm worse off saving money. If things stagnate, well I'm subsidizing my mortgage with rental income, if they go down, I would have been better off doing nothing. I'm more comfortable with the first two.

Now this place is a great location, in a nice quadrant, 15 minute drive to downtown, and beside the train. I think location wise it's great. It jsut needs some work.

Any opinions?

I'd assume renters in Calgary at this time would be content to get to stay where they are and would welcome the chance to not have to get up and move. Which means I'm not going to have to do any work to rent the place, I just get them to sign the lease and thigns continue how they were?

Any documentation to familerize myself with that anyone knows of?

[troutman]

If you buy the condo as an investment, you can write off your mortgage interest, legal fees, mtce. costs etc. There will be capital gains taxes on the property if it goes up in value, if this is not your principle residence.

Your equity may not grow much initially from the mortage being paid down (most of the payment will be going to interest). Maybe Nabber can predict for you how the market value could increase.

[ken0042]

My un-professional opinion is that if this is a long term investment that in the long run you will be fine. Make sure you do your homework, and see what comperable properties are going for.

Get yourself a realtor- and get a good one. Meaning if the first one you call takes you out for beer, but you really don't feel comfortable with him, drop him like a sack of potatoes. Don't feel that you owe him something; especially with this being the biggest purchase of your life.

The guy I went with in the end worked out good for me. And I got the right house at the right price.

[V]

My personal unprofessional opinion is that I see a lot of people get burned from playing this game. I remember a couple of years ago, I had a friend who owned a nice acreage, worth a fair bit of money. He was convinced prices were going to go down, so he sold his acreage and rented. He realized pretty quickly that he'll never own anything like what he once had.

In the end, if you view this as a long term investment, something you're going to do anyways, I'd do it. Waiting for the perfect point in the market almost never works.

If you buy the condo, and prices rise, you obviously get ahead in the game.

If you buy the condo and prices stagnate (which they should for a few more months, but who knows) at least you have someone paying your mortgage for you.

If you buy the condo and prices drop, at least you've bought a place, and all fees and costs involved with the buying process are tax deductible. And you have someone paying off your mortgage. You might have been better off doing nothing. Risk/reward. Figure out the worst that can happen, and the best that can happen, and the likelihood of each possibility. I think it's a no-brainer, myself.

[Nabber]

All these posters make good points Wookie, it's a tough decision as the market was insane at the beginning of this year, prices going up 10,000 a month makes everyone who didn't buy earlier a little upset including myself. As a real estate agent I don't see that happening next year, people just can't afford to spend that kind of money and it's starting to show in the market right now with there being over 6,000 current listings where there were only 1,200 at some times during the beginning of this year.

That being said I still think you should buy this property, if you have the means too, you may as well take that risk. If there were a perfect time to buy IMO I would say it's right now. The rental market is extremely strong and you'd have no trouble finding renters as well you say you can continue with the current renters, you may have to bump up there rent a bit if they've been at that current place for a while to cover your mortgage payment. Calgary is still booming and the prediction is that prices with go back to normal 10-12% gains per year which on 180,000 place is still around 20,000 a year, who can save that a year? Others say that come January it will get hot again, and in a growing city like Calgary is right now the real estate market is not going to go down.

[pepper24]

If you're looking at staying in this condo for a while whether yourself or renters, buy when you're ready. I wouldn't worry too much where the market is heading as Dominic's acreage post above proves that it's tough timing the markets but it's easy knowing if you're ready to buy.

[Wookie]

Thanks for all the responses (Nabber I've PM'd you)

I think this part may have confused some people

Now I'd be viewing buying this place as taking a protectionary stance in the market. If things take another run this year, or in the next 12 - 18 months I'm going to be a lot worse off. At the rates prices were rising I'm worse off saving money. If things stagnate, well I'm subsidizing my mortgage with rental income, if they go down, I would have been better off doing nothing. I'm more comfortable with the first two.

What I meant was if I "don't buy" and things take another run I'm going to be worse off... Even if they increase moderetly, I'm still not going to be saving the same amount and having enough of a downpayment to make a substantial difference for it to have been better. Like Nabber said, who can save 20,000 a year.

I also am not buying this to flip it, or anything, I'm buying it as a place to live, in an attractive area (to me). I just would rent it for 12-18 months while I'm still able to live (for the moment) free of charge and use the renters to subsidize my mortgage (or a percentage of it).

So thanks again, the info has been helpful.

If anyone has any tips on becoming a landlord, what things to watch out for, what to do to cover my a$$, etc. It'd also be appreciated!

Thanks

[troutman]

Originally Posted by Wookie

If anyone has any tips on becoming a landlord, what things to watch out for, what to do to cover my a$$, etc. It'd also be appreciated!

Thanks

I could fax or e-mail you some sample leases.

http://governmentservices.gov.ab.ca/...TATipsheet.pdf

[Sylvanfan]

I say do it. Right now you're living rent free so you'd basically be buying a property and have someone else make the payments on it for a year. Seeing as you don't own any other property you can totally make it look like you live there and not report the rent as income and pay all that capital gains taxes and the like. I honestly don't see a way in hell that real estate in Calgary will be worth less in 12 months than what it currently is. So at the worst you owned a piece of property for a year that someone else paid for, and than you can move in.

[V]

Hey Nabber, is it normal for this time of year to be seeing over 6,000 houses listed in Calgary? Seems like a lot of people right now that are still trying to cash in on the big spike.

[algernon]

Originally Posted by troutman

I could fax or e-mail you some sample leases.

http://governmentservices.gov.ab.ca/...TATipsheet.pdf

As a soon-to-be landlord, thanks.

[Wookie]

Originally Posted by algernon

As a soon-to-be landlord, thanks.

Yeah, that definitely had some interesting/helpful information

I'll probably ask for a fax in the next week or two.

Thanks!

[Nabber]

Originally Posted by Dominicwasalreadytaken

Hey Nabber, is it normal for this time of year to be seeing over 6,000 houses listed in Calgary? Seems like a lot of people right now that are still trying to cash in on the big spike.

A normal market is about 5,000 listings so it's not that far off. The extra 1,000 listings is most likely due to people wanting to cash in, as well as over priced homes because of the huge spike.