I can't wait until this real-estate market collapses.......

[photon]

Originally Posted by 4X4

Photon, my crystal ball tells me that you're going to be well off by the time you retire (and that'll probably be younger than guys like housejunk).

Heh, well that's the plan anyway.. and I feel better now after 2-3 years of at least doing something to try and make that dream reality rather than just working a day job hoping something happens to me.

[SeeGeeWhy]

Originally Posted by fredr123

Okay, rather than just bitching about how I've missed out on the real estate boom maybe I should do something about it.

How does a mid-20's guy with a wife and a baby on the way with about $50k in combined student loans, 3.5 years left on a car loan, living in a basement suite, making a combined yearly income of about $75k (until maternity leave at least) turn things around and get on board in today's hot real estate market in Calgary?

Oh, and please don't say work hard, save money, invest wisely and be patient. I want a solution now, dammit!

Financing for your house is the biggest issue. Your debt is going to hurt your ability to generate a mortgage if you don't have any other assets. So the first place to start is to think of ways to reduce/eliminate your debts and/or increase your assets in order to put you in the best position when going in to request a mortgage.

Can you sell your car, or are you restricted by the terms of the loan? Do you absolutely need it for work? Can you find a place to rent that will allow you to go to work without driving? Will the value of the car pay off the loan and leave you with enough cash to pick up a beater you can use for day to day transport if not?

The student loans are something that you will not be able to eliminate quickly. Just keep making your payments on time to keep your credit rating in check.

Chop up your credit cards, or put them in the freezer in a tub of water. Make sure their balance is $0 as soon as you can.

Run a credit report with the credit houses (i.e. equifax, etc) to make sure there are no outstanding issues that is hurting your ability to take a loan out. For example - a payment on a credit card may have defaulted due to a clerical error at some point, which may have been sorted out, but those sorts of things will stay on your report unless you dispute them.

Now, work out what you think your monthly cashflow (Income minus expenses) is going to be when your wife is on maternity leave as this will be the least amount of money you will have to work with. If you can make it work then, you will be able to make it work when she is back earning a paycheque. Include everything except for 'mortgage payments'... Even include a little something for savings, entertainment, clothes. The baby is going to be expensive at first, so make sure you account for all of the increased monthly bills (diapers, food, furniture, etc). What you are then left with is what you can afford on a month to month basis for a mortgage payment.

Beg your parents for help with a down payment. This will help immesurably. Have them fill out a gift letter for the bank if you need to.

Take this information, along with anything you have available as a down payment, to a mortgage specialist at your bank. They will be able to come up with a maximum mortgage that you can sustain.

Now it's time to go house hunting.

Try to find something close to work and other amenities (esp a school) so you can minimize transportation costs.

Sacrifice and do what makes sense for your lifestyle rather than buying into the mentality of needing a big house and a yard with hardwood floors and all the trimmings just 40 minutes from the Rockies.

Area is the most important thing. Get a general feel for what will work for you logistically, then start to look at the average cost in each area. Obviously, you shouldn't even look at an area that has an average price that is higher than what the bank will be able to loan you.

Once you get down to an area, look at the individual house level. Try your best to get into an area that is turning over (i.e. renovations, tear-downs, road construction, new school, etc) so the potential for an increase in value is there. Get a house that you can do a bit of renovating on to improve your property value. Better yet, get your hands on a lot with zoning that would lend itself to future development (i.e. and "R2" lot with one house can be developed to have two narrower houses, which will both sell for the price of the original house). All of these factors are attractive to investors and increase the potential value of your property in the future.

You should probably be ready at this point to make on offer on a house.

Oh... and make sure you have a good real estate agent that understands your needs and what you are looking for. They will help your search immensely.

Do be prepared to take time. Yes, there is a housing boom, and there is a feeling of "GET IN NOW!!!" but your credit rating needs to be shined up before you think about taking on a mortgage. You need to have a budget established or else you will be finding yourself in deeper and deeper debt. There will always be a house that works well for your situation, so don't rush it.

Consider that if all that you are going to be able to afford is rent plus paying your loans off on top of all the new baby costs, that is okay. Being able to live like that on your paycheque rather than taking out loan after loan after loan to acquire what you need is a much better situation for you in the long run.

[photon]

Originally Posted by fredr123

Are you involved with this program? No offence, but the website looks like a scam. Or possibly a scammola. You sure I wouldn't be better off just sending one dollar to Happy Guy?

Lol I know, their site looks quite bad in that respect. However I can also attest that they aren't a scam. They aren't free, but they are legit. Don Campbell has a couple of books out that are worth a read to get an idea of what it's about.

The nice part about them is they actually do the financial analysis on different cities and provinces and give the real info. They bring in the provincial economists to give the straight goods. They say when the market in an area is good, and they tell you when they think you should get out.

They are a little heavy on the motivational stuff for me (they'll bring in Lester Hewitt to speak for example), but there's enough meat about the economy, technical and legal info on how to do deals, etc, that I find value in it.

Originally Posted by JiriHrdina

My main concern right now is that if I do this now, I will leave myself with little to no margin of error. I work in an industry that is highly unstable and I could find myself out of work without much notice (and I realize that job stability is very uncommon now so this is nothing particulary unique) - that concerns me, when I will have to basically take my nest egg down to virtually nothing to make this happen.

If I choose instead to rent for a year, I can add to my savings and then sometime down the road in the next couple of years take that savings and take it to another market where I can get way more house for my buck.

Decisions decisions.

I agree with another poster, I think in this market your risk is mitigated a bit as worst case scenario you can sell the property and make a bit of money.

You could also maybe look into getting something with a suited basement to rent out to help with the mortgage payments, I've seen zero down deals in the past few months where after renting the basement suite out for a reasonable amount the mortgage payment is quite reasonable.

Not the ideal situation (not everyone wants to be a landlord), but still gets you into the market.

[I-Hate-Hulse]

Originally Posted by Slava

But the fact is that there are a lot of people my age or younger who think that they should have a nice home with all of the toys and be able to take a vacation every year and not have to put in the time to get there.

Isn't this the truth? I seem to know a lot of young (mid 20's) 1st time buyers that are going after all the bells and whistles....

• Granite
• Stainless Steel appliances
• 2,000+ sq ft of innercity living, detached
• Infill so it's brand new.
• Nice new luxury import car/SUV for the garage

Whatever happened to starting small and working your way up? Have the newer generations really succumed to "I want it all, and I want it now"?

[Sylvanfan]

Originally Posted by Cowperson

I'd have more sympathy for that argument if my father hadn't started at absolutely zero - our family once lived in a small shack that later became our one (1) car garage - and if I hadn't started at absolutely zero myself.

My father built a duplex in a small Alberta town in 1962 for the seemingly outrageous price of $13,000 . . . . he needed a long, long mortgage for that one.

It's all relative.

And no, if I have wealth today in my hilltop aerie southwest of the city, I don't feel that its an "illusion" since its certainly real and certainly more than zero . . . and I certainly remember what zero looks like. It's also worth more than the house I originally owned in Wildwood in Calgary in the 1990's just as that was certainly worth more than the house I owned in Grande Prairie in the 1980's.

Scratch and claw, make your priorities, put in the time . . . . I also remember the early 80's when it seemed like everyone around me was getting rich when I wasn't. I know all about that feeling.

Sorry, I'll acknowledge its a tight market right now but I really don't have much sympathy for this at all.

Put in the time.

Cowperson

The thing is did you start with zero....or zero dollars?

My dad didn't exactly start with a lot himself, but he spoke English and had a highschool education when he was 18. Also having grown up on a farm around machinery and the like he had the chance to learn a lot of other skills. He had a lot more going for him at that age than his dad did at the age of 25 when he came to Canada with no education and not knowing a word of English and having been farm workers in Europe. Now that we're onto the 3rd generation of Canadian born people on both sides of my family we have it far better today than our parents ever did. The longer that my lineage has been in the country the better established we've become, and it's easier for the people from my generation to own property than it was for previous generations. I fully admit that I received a lot from my parents that they never had to become a home owner. If I ever have kids, I'll be sure to try and pass on even more to that generation. Thats something that I attribute to time and establishment in the country. Making life better for future generations.

[GreenTeaFrapp]

Originally Posted by photon

Just to give some perspective.. Demographia International does a study where they find out how many years of salary an average home costs. Regina was the cheapest in Canada where it took 2 years of the average salery to buy the average home. Edmonton was 3.5, Calgary and Toronto were 4.4. Vancouver led the country at 7.7!

Internationally, Regina was one of the world's most affordable cities at 2.0, and Canada overall was one of the most affordable countries with a median of 3.2, compared to other countries such as Australia at 6.6, Ireland at 5.7, and the UK at 5.5. The US was 3.7.

For individual cities Calgary still compares favorably at 4.4 vs major cities in the above countries at high multiples like 7 to the highest of 11.4 in Orange County in LA.

So while I agree that for individuals trying to buy their first home it is very difficult right now, big picture Calgary and Canada are still relatively affordable when compared to a lot of the world, which means people are still going to move here.

You can't really compare US prices with Canadian prices since Americans get tax breaks, like writing off mortgage interest, that Canadians don't get which allows them to spend more on a house. Because they can spend more, their housing prices are inflated compared to Canadian prices.

The other countries you've listed differ from Canada because they have a lot less usable land for housing then Canadians do.

[Sylvanfan]

Originally Posted by I-Hate-Hulse

way up? Have the newer generations really succumed to "I want it all, and I want it now"?

That or they maybe aren't willing to look back a few years or think back to what they used to have.

My wife is bad for this because her sister and husband are extremely wealthy and she can spend whatever she wants whenever she wants. She'll come home and cry how it's not fair that her sister can spend that type of money and she can't. What my wife doesn't realize is that 10 years ago when her sister was her age she couldn't spend like that either because they didn't have much wealth than either. People tend to dwell too much on not being like the Joneses as opposed to finding out what the Joneses did to get where they are.

[SeeGeeWhy]

Real estate is an interesting subject and certainly method to create wealth. But in order to get very rich, you need to be playing the game at a very high level, and it is demanding.

At this point in time, I am more concerned about building cashflow in my portfolio right now (aggressive growth) though business acquistion, and will add a conservative touch to my holdings with things such as real estate as my wealth grows and my need for cashflow decreases.

At any rate, it is all about keeping as much of what you acquire in assets that can be transferred from generation to generation - this is true wealth in my eyes. Oh, and there is that little gem about paying as little taxes as possible, that always helps.

[fredr123]

Originally Posted by SeeGeeWhy

Financing for your house is the biggest issue. Your debt is going to hurt your ability to generate a mortgage if you don't have any other assets. So the first place to start is to think of ways to reduce/eliminate your debts and/or increase your assets in order to put you in the best position when going in to request a mortgage.

Can you sell your car, or are you restricted by the terms of the loan? Do you absolutely need it for work? Can you find a place to rent that will allow you to go to work without driving? Will the value of the car pay off the loan and leave you with enough cash to pick up a beater you can use for day to day transport if not?

The student loans are something that you will not be able to eliminate quickly. Just keep making your payments on time to keep your credit rating in check.

Chop up your credit cards, or put them in the freezer in a tub of water. Make sure their balance is $0 as soon as you can.

Run a credit report with the credit houses (i.e. equifax, etc) to make sure there are no outstanding issues that is hurting your ability to take a loan out. For example - a payment on a credit card may have defaulted due to a clerical error at some point, which may have been sorted out, but those sorts of things will stay on your report unless you dispute them.

Now, work out what you think your monthly cashflow (Income minus expenses) is going to be when your wife is on maternity leave as this will be the least amount of money you will have to work with. If you can make it work then, you will be able to make it work when she is back earning a paycheque. Include everything except for 'mortgage payments'... Even include a little something for savings, entertainment, clothes. The baby is going to be expensive at first, so make sure you account for all of the increased monthly bills (diapers, food, furniture, etc). What you are then left with is what you can afford on a month to month basis for a mortgage payment.

Beg your parents for help with a down payment. This will help immesurably. Have them fill out a gift letter for the bank if you need to.

Take this information, along with anything you have available as a down payment, to a mortgage specialist at your bank. They will be able to come up with a maximum mortgage that you can sustain.

Now it's time to go house hunting.

Try to find something close to work and other amenities (esp a school) so you can minimize transportation costs.

Sacrifice and do what makes sense for your lifestyle rather than buying into the mentality of needing a big house and a yard with hardwood floors and all the trimmings just 40 minutes from the Rockies.

Area is the most important thing. Get a general feel for what will work for you logistically, then start to look at the average cost in each area. Obviously, you shouldn't even look at an area that has an average price that is higher than what the bank will be able to loan you.

Once you get down to an area, look at the individual house level. Try your best to get into an area that is turning over (i.e. renovations, tear-downs, road construction, new school, etc) so the potential for an increase in value is there. Get a house that you can do a bit of renovating on to improve your property value. Better yet, get your hands on a lot with zoning that would lend itself to future development (i.e. and "R2" lot with one house can be developed to have two narrower houses, which will both sell for the price of the original house). All of these factors are attractive to investors and increase the potential value of your property in the future.

You should probably be ready at this point to make on offer on a house.

Oh... and make sure you have a good real estate agent that understands your needs and what you are looking for. They will help your search immensely.

Do be prepared to take time. Yes, there is a housing boom, and there is a feeling of "GET IN NOW!!!" but your credit rating needs to be shined up before you think about taking on a mortgage. You need to have a budget established or else you will be finding yourself in deeper and deeper debt. There will always be a house that works well for your situation, so don't rush it.

Consider that if all that you are going to be able to afford is rent plus paying your loans off on top of all the new baby costs, that is okay. Being able to live like that on your paycheque rather than taking out loan after loan after loan to acquire what you need is a much better situation for you in the long run.

Thanks for all the tips. There's some gold there, for sure.

FWIW we just got rid of our beater about a year ago and got a new Mazda3. I wanted the wife and kid to have something reliable to drive in. The old beater was going to be the death of someone. She needed it to get to work (shift work, buses didn't run late/early enough). I can take the bus to work from where I am. I suppose we could get rid of the car but I don't think that would make the Boss happy. Plus the payments are pretty reasonable.

I went to university for 7 years. My wife went to college in an accelerated program for 13 months. She's paid off all her student loans with the exception of abut $2300 from the government. I've still got about $50k to go. Most of it was from a student line of credit (since my parents wouldn't help out my education expenses and I couldn't get a government student loan).

Anything extra we have each month goes towards those loans. Zero to nothing has been going to savings. Credit card use is minimal and balances are paid off every month in full.

Rent is rediculously cheap (~$600/mo plus utilities). Don't tell the landlord!

I'm due for a raise this summer (or a different job entirely) so at that time I think we'll speak to a mortgage professional and see where they think we stand.

It seems really sucky to have to put so much time and effort into getting these things we want out of life. I take pride in knowing that pretty much everything we have, we earned ourselves.

[Sample00]

Originally Posted by SeeGeeWhy

Take this information, along with anything you have available as a down payment, to a mortgage specialist at your bank. They will be able to come up with a maximum mortgage that you can sustain.

the only thing I would change is this.
take this information to a Mortgage Broker. they work for you, not the bank!

[Mr.Coffee]

Originally Posted by I-Hate-Hulse

Isn't this the truth? I seem to know a lot of young (mid 20's) 1st time buyers that are going after all the bells and whistles....

• Granite
• Stainless Steel appliances
• 2,000+ sq ft of innercity living, detached
• Infill so it's brand new.
• Nice new luxury import car/SUV for the garage

Whatever happened to starting small and working your way up? Have the newer generations really succumed to "I want it all, and I want it now"?

Let's be realistic here. If the newer generations are "I want it all, and I want it now" its in large part thanks to the baby boomers who taught us that. And not to derail the thread into a old vs. young whine fest, the fact of the matter is that most young people fully realise that they can't afford those types of luxuries out the gate and will absolutely have to build from the ground up. I just find it amazing that some of the very people who have created the most consumptuous population in world history look condescendingly at young people for "wanting it all" when they were the ones who started that trend to begin with! Remember that because many people are living longer, and the large majority of Canadians haven't saved enough for retirement and are going to need even more social assistance, our young generation is going to keep many old Canadians afloat.

As for the theme of the thread, I perceive housejunk's frustration as more developed out of ignorance and materialistic values of his neighbours then of true frustration about the type of real estate market Calgary is. I agree with him... there's just so many people that have there priorities ****ed up. Money > Family, Friends, Health....anything.

[SeeGeeWhy]

Originally Posted by Sample00

the only thing I would change is this.
take this information to a Mortgage Broker. they work for you, not the bank!

ha! Well, that's what I mean. I speak with a mortgage broker that sets up shop at my bank. Your bank likes your business, so if you are a good customer they are usually willing to give you small breaks if you ask for them.

[Claeren]

Originally Posted by housejunk

Again, thank you for your long-winded diatribe relating to the inherent infalliability of the municipal property tax system. There is no logical fallacy involved with my initial post. You, for some reason chose to take an out of context throw-away comment to launch into some sort of doctoral dissertation that was not, and is not needed. Unfortunately, after attending engineering, masters and law school I have had far too many encounters with the type of indivdiual that you are; the unlikeable know-it-all who never fails to attempt to assert their percieved knowledge over the percieved ignorance of the unwashed masses.

Let a fella complain about his taxes if he wants.

If you didn't want a response why post on an internet website? You are making fun of me for being a geek but at least i know what i am in for. You go and post something that is ######ed and backward - essentially complaining about an extra few dollars in taxes you now owe thanks to your (unfortunate?) rise in home values that have likely left you with an additional $200k-$500 in equity and do so based on flawed logic and we are supposed to 'just let a guy complain'? Guess what, when you do something so unbelievably insulting to all of us without such good fortune you are going to get called on it. If you want to complain, go beak off to your little elitist friends and leave us alone then.

Second, if you have a Law degree and a Masters AND a B.Eng and whatever else behind your name what the hell are you doing here looking for validation? IS it because when you complain like this with your own educated friends they too point out the error in your logic? Maybe you just like finding people you see as below you to talk down to?

What kind of clown has ~8 years of education (more?), is likely looking at at LEAST $120k in yearly earnings (and that is if he is a moron) with earning potential basically unlimited, living in a home that has gained hundreds of thousands in value for him, and looking at a life of relative ease and luxury then comes on an internet forum and complains about $40 in extra taxes based on flawed logic - and THEN gets upset when someone points out the lack of validity of his complaint?! Do you really need that outlet? Do you REALLY need us here for you? Do you really need our ear and our pity?

EDIT: I was wondering why you insisted on coming across like such a wanker, and then I remembered! You're that anti-pet insurance/good christian guy I was telling my friends about a few weeks ago. Yowza.

http://forum.calgarypuck.com/showthread.php?t=35823

Funny you would bring that up, since i was railing against pets (out of boredom) in much the same way you are now doing so against taxes. (Although i didn't complain when people disagreed with me; that is what makes this place interesting.) I am certainly not Christian (good reading comprehension though!) and i certainly do not take anything here as seriously as you*... except maybe what line Yelle plays on...

(You seem to think that because i am bored at work and come here to post, and then spend the time to back what i post up, it means i take it seriously. But i am WELL aware of the fact this is just the internet, and that this is not reality. I would never go spouting off about what degrees i have, telling people what find of person they are because of what they post or go on about how i make fun of people on here with my friends in the 'real world' - because i know EVERYTHING here has to be taken with a grain of salt and is just a small window into the world.)

It seems you want to be the know-it-all as much as i do > You just ****ed up right off the bat and now you are on the defensive. Why should we sit here and 'just let you vent' when you are venting about something that doesn't make sense?

"Oh boo-hoo, i just won the lottery but now i am earning SOOOOoooo much interest on my winnings that the government wants more taxes then they got before!! Stupid government - all they do is raise taxes!! boo hoo hoo!!!"



Claeren.

[Sample00]

Originally Posted by SeeGeeWhy

ha! Well, that's what I mean. I speak with a mortgage broker that sets up shop at my bank. Your bank likes your business, so if you are a good customer they are usually willing to give you small breaks if you ask for them.

ya I gotcha!
Mortgage Brokers deal with many financial institutions and are willing to go the extra mile cause they get paid commission on the deal. Banks that are dealing with mortgage brokers know they are competing for business and are more inclined to give bigger breaks.
They are hoping to attract your other business as well, which is why they are will to provide your mortgage as a loss leader

[FireFly]

This thread has made me want to get out there and really search for a new job. Perhaps not one that makes me a tonne more money, but one with the opportunity for more money. I need something I can advance in if I'm going to be able to afford a house at any point in the future. I'm working on debt reduction... the trip to Pittsburg won't help though! I really just need to get my ass in gear!

[Sample00]

Originally Posted by FireFly

. I'm working on debt reduction... the trip to Pittsburg won't help though! I really just need to get my ass in gear!

no, no, the Pittsburgh trip is a really good idea!!!

while on the trip you might actually sit next to a real estate investment guru who will give you a good idea on how to become incredibly wealthy!!!

[Tron_fdc]

Out of curiousity, what's the rental market like right now? Still pretty tight? I'm considering buying another house and renting it, but I want to be sure I can cover the mortgage payments.

[Claeren]

Originally Posted by I-Hate-Hulse

Isn't this the truth? I seem to know a lot of young (mid 20's) 1st time buyers that are going after all the bells and whistles....

• Granite
• Stainless Steel appliances
• 2,000+ sq ft of innercity living, detached
• Infill so it's brand new.
• Nice new luxury import car/SUV for the garage

Whatever happened to starting small and working your way up? Have the newer generations really succumed to "I want it all, and I want it now"?

I somewhat agree but often it is just a matter of getting more for your money. (Want of value v. want of luxury.)

EVERY condo/home out there is expensive right now, so if you can get all of those luxury items for only a fraction of the home price more - and in turn insure high resale values compared to less optioned neighbours, it is a pretty good bet.

Further, most condo builders (in particular) are targeting only that market. Even if you want a 'no option' condo it is pretty hard to find and even if you do you don't save much in the buy-in (but as said earlier) potentially lose out big on the resale.

Lastly, having been in a number of those downtown condos many of the options they sell pre-sale turn out to be not that nice really (IMO). The upgraded cabinets are often just a nicer veneer over the same sort of particle board as the entry cabinets, the appliances are stainless steel but still standard models, etc.



Claeren.

[Sylvanfan]

Originally Posted by Sample00

ya I gotcha!
Mortgage Brokers deal with many financial institutions and are willing to go the extra mile cause they get paid commission on the deal. Banks that are dealing with mortgage brokers know they are competing for business and are more inclined to give bigger breaks.
They are hoping to attract your other business as well, which is why they are will to provide your mortgage as a loss leader

One thing about Mortgage brokers though is that they're not always the best choice if you have an existing mortgage and want to change houses. I made that mistake the first time I moved going back to the mortgage broker again who got me the same mortgage but I had to pay the 3 months interest payout on that mortgage to move to the next one.

The last time I moved I went directly to the institution that I had my mortgage with and was able to get the new mortgage and had the three months interest credited back to me. A friend of mine was looking to upgrade his house recently and his mortgage broker told him he'd have to pay out the penalty on his mortgage and get a new one. I told him to go talk to the loans manager at the institution and try to negotiate it so they could get out of that and he was able to do so. Now the key is to get that and still get the best mortgage product out there for you. If you're switching the type of mortgage you have than probably no dice.

[FireFly]

Originally Posted by Sample00

no, no, the Pittsburgh trip is a really good idea!!!

while on the trip you might actually sit next to a real estate investment guru who will give you a good idea on how to become incredibly wealthy!!!

See that's the problem, I know how to do it, I just haven't. Not that I'm in horrible straights or anything, I've paid off one credit card completely, I have a plan for the others, (one at a time starting with the highest interest rate,) I make my student loan payments on time, even putting extra down each month. I've just been lazy about getting a new job and really buckling down on my credit stuff. I keep saying that I should call my credit card company but I never do. I'm going to do that right now. It'll make me feel like I've accomplished something. (Other than the two resumes I just fired off!)

For such a long time, CP was a demotivator... now it's motivating me! Thanks CP!