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

[SeeGeeWhy]

Firefly, people always think they need a higher paying job in order to get ahead, but it is not the case. You need to manage your money properly and put it into investments that make you more money, rather than make you pay interest. Establish passive income, and work to pay as few taxes as possible.

Tron, rental vacancy is at 0.5%, tied with an all time low. I think you can say that it is tight. How much do you have to put towards a second house?

[4X4]

Organizations like REIN are not too bad for people whose savvy is not necessarily in real estate. BUT they aren't necessary for those same people to make money in real estate.

You know all those infills going up in the inner city? They're expensive. Know what else? They're being built by guys like my uncle, my dad, and now that I'm back from italy, me.
Guess who funds it?
People like photon who know what to do with the equity in their house.
The profit on their investment is more than most people make in a year.

Then there's the buy and hold. The landlord business. While its not the most enjoyable way to make money, money it sure does make. Well, it used to. Properties that carry themselves are few and far between these days. Hell, a decent bi-level (suite potential) in dover is pushing $300k.
Sounds bad, but look at the upside:

Say you bought a bungalow or bilevel in dover for $275 and it had a suite. On a conventional 25 year mortgage, you're looking at a down payment of $68000, mortgage payments of ~1200 - 1300 (depending on interest rate) and a tax bill of ~1200 per year.

Find some solid tenants and rent the top for 950 and the bottom for 650. Here you've got a positive cashflow, (probably more than enough to pay the interest on the HELOC) plus you're gaining equity as well. And if the CMHC and CREB predictions are anywhere close to correct, you'll have made a year's salary in equity gain by this time next year.

And where do you get this 68grand? From the house you bought just 5 years ago, that you paid $150 for and now is worth $275.

There are so many ways for 9-5ers to put their equity to work, but most people think that its just for rich people.
Rich people are rich for a reason, and they started somewhere.

I'm not going to crack on the stock market, but I will say that IMHO, stocks is a crazy way for young people to make money. Sure, there are alot of success stories, I've got a friend that has made 60k in stocks over the last 3 years. He's a sharp one, however. He reads stock stuff like we read calgarypuck. Boring. And risky.

The real estate market in calgary is the reason I came back from italy. It's feast time. The years from 2003 till now and for the next bunch of years are going to produce alot more wealthy people than this province has ever seen. And it's going to be made in real estate. Oh, and I suppose oil and gas.

[FireFly]

Originally Posted by SeeGeeWhy

Firefly, people always think they need a higher paying job in order to get ahead, but it is not the case. You need to manage your money properly and put it into investments that make you more money, rather than make you pay interest. Establish passive income, and work to pay as few taxes as possible.

Tron, rental vacancy is at 0.5%, tied with an all time low. I think you can say that it is tight. How much do you have to put towards a second house?

Oh I know, I'm putting some of my cash in investments, but it's awfully difficult when my takehome pay is $1900 a month and my bills are $1600 of that... I still need to eat, man! New bank accounts and better credit card rates are a start, making more money will also help.

[Resolute 14]

A better job can make a huge difference though. The one thing I found talking with ScotiaBank is that even after a year of reducing my debt and increasing my savings tenfold, the mortgage their computer would give me hadnt increased a penny. And not only that, but their computer said the maximum monthly payment I can afford is roughly what I pay in rent now - and I have enough money at the end of the month to put $250 into my RRSP, $130 into my savings, and $100-200 into debt. So yeah, don't waste your time with a bank, talk with a mortgage broker.

However, according to the bank, income is a key factor. A person making $50,000 is going to be better able to afford a place than a person making $40,000. Making more money, coupled with being smart with your money can make all of the difference.

And if I had learned that lesson at age 25 rather than age 26, I wouldn't be stuck here at age 27. That's the problem with experience... it often comes too late.

[Resolute 14]

Originally Posted by FireFly

Oh I know, I'm putting some of my cash in investments, but it's awfully difficult when my takehome pay is $1900 a month and my bills are $1600 of that... I still need to eat, man! New bank accounts and better credit card rates are a start, making more money will also help.

If you have a lot of credit card debt, try to convert it into a line of credit. I found that when I did that, my interest payments on the LoC were less than half of my credit cards - and at $10,000, that made a significant difference.

[Tron_fdc]

Originally Posted by 4X4

You know all those infills going up in the inner city? They're expensive. Know what else? They're being built by guys like my uncle, my dad, and now that I'm back from italy, me.
Guess who funds it?
People like photon who know what to do with the equity in their house.
The profit on their investment is more than most people make in a year

I'm curious....do you have guys that are doing the entire build (everything from the engineering to booking all the trades), or are they buying the unit from the builder, sitting on it waiting for it to be finished, and flipping it on the day of posession?

[photon]

Originally Posted by 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.

The vacancy rate is basically zero. Officially it's like half a percent, but there's always a bit due to reno's, people who are satisfied with keeping a vacant property, etc..

Rents are still going up and I hear stories every week of insane rents, like basement suites renting for $1400 and such. It's easier to make the mortgage when you buy a house that you can rent the main floor, basement, and detatched garage all seperately.

A good realtor should be able to help you find what the market rents are for whatever you are buying.

Originally Posted by 4X4

Organizations like REIN are not too bad for people whose savvy is not necessarily in real estate. BUT they aren't necessary for those same people to make money in real estate.

Definately true. But I find the economic info I get very valuable (helps to comfort myself knowing I'm making a good decision, and helps win over partners and investors as well), plus the networking is nice. It also has the added benifit of keeping me focused a bit, when it's a rough tenant month or something it's easy to lose focus.

[4X4]

My family is the builder. Investment comes in two forms: my uncles have a mortgage investment corporation that funds alot of projects, and then there is a direct investment by an individual or two or three individuals.
The money they put in pays for the land, (and they are the title holders) and the bank finances construction.

Most of the time, the people who buy the finished product intend on living there, but I have seen them get flipped. The 4plexes get flipped more often.

[Tron_fdc]

Are people still buying new homes from a builder, waiting the 12 months for them to be built, and flipping them? It seemed like the thing to do a few years ago.

[4X4]

Yeah, people are doing that... Actually, I'm kind of forecasting a little fluctuation in the market in about a year or so. There are quite a few big towers going up that are going to be finished over the next while. There'll be alot of suites on the market being sold by speculators who bought up the presales. The presales that snakeeye wanted.

[photon]

Originally Posted by Tron_fdc

Are people still buying new homes from a builder, waiting the 12 months for them to be built, and flipping them? It seemed like the thing to do a few years ago.

I've got one like that going on right now. For a while builders stopped allowing it (they'd require a signed affidavit saying you were going to move in), but things have slowed enough that it's possible to do again. We're looking at maybe doing another one, we've got our names in for a condo as well though I'm starting to wonder if they'll ever do anything.

It's not the best return on investment for that money, but it certainly is a hassle free way as long as the build is near where you live. No worrying about tenants or anything.

[FireFly]

Originally Posted by Snakeeye

If you have a lot of credit card debt, try to convert it into a line of credit. I found that when I did that, my interest payments on the LoC were less than half of my credit cards - and at $10,000, that made a significant difference.

I've tried that. They want a cosigner and I don't want my parents to put up a million dollars worth of land on a $10,000 LoC. It's stupid. I'm going to go to the bank tomorrow though and see what they say.

[Resolute 14]

Originally Posted by FireFly

I've tried that. They want a cosigner and I don't want my parents to put up a million dollars worth of land on a $10,000 LoC. It's stupid. I'm going to go to the bank tomorrow though and see what they say.

Odd. When I went in for one, my car was used as the collateral (it was paid off, thankfully), and I was able to get a $10,000 LOC without issue. The only condition was that of my two credit cards at $5k each, one had to be cut up, and the other its limit lowered to $3k, which I had no issue with. Typically, the bank offered to double my limit two months after that... *******s.

If you believe that you can maintain the payments without problems, and if your parents trust you to do the same, then see if they will co-sign. In my case, it meant an extra $50-60 a month that I wasnt spending on interest, and an extra $600 per year that went to reducing debt.

[FireFly]

Originally Posted by Snakeeye

Odd. When I went in for one, my car was used as the collateral (it was paid off, thankfully), and I was able to get a $10,000 LOC without issue. The only condition was that of my two credit cards at $5k each, one had to be cut up, and the other its limit lowered to $3k, which I had no issue with. Typically, the bank offered to double my limit two months after that... *******s.

If you believe that you can maintain the payments without problems, and if your parents trust you to do the same, then see if they will co-sign. In my case, it meant an extra $50-60 a month that I wasnt spending on interest, and an extra $600 per year that went to reducing debt.

I have no collateral. My parents would have no problem doing it, except that their credit isn't the greatest because they also refuse to put the land up as collateral. I know I can make the minimum payments, it's the principle of the thing. Everyone else can do it alone, I can too....

[Resolute 14]

Originally Posted by FireFly

I have no collateral. My parents would have no problem doing it, except that their credit isn't the greatest because they also refuse to put the land up as collateral. I know I can make the minimum payments, it's the principle of the thing. Everyone else can do it alone, I can too....

Being one of the most stubborn people in a very stubborn family, I can respect the feeling. Though at some point, you do have to suck it up and ask for a little help. I know in my case, the Bank of Mom allowed me to keep from going under, allowing me to be in a place now where most of my spare money is going towards my goals, rather than my debt.

I'm not sure why they would have to put the land up as collateral though, especially if they have a car or something close in value to the LoC.

Though, these are the banks we are talking about. The same clowns that will happily give you a platinum Visa card with no collateral, but make it challenging to get a LoC.

[housejunk]

Originally Posted by Claeren

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.

Claeren.

In my initial post I was never really complaining about the taxes and that’s why I found your “explanation” to be so condescending. My primary focus was on the real estate market, and I’ve been more than receptive to the criticisms/comments relating to that. I politely mentioned that your response was unnecessary in relation to property taxes, yet you still continued to “explain things” to me. In my eyes you came across as the sort of arrogant, self-absorbed individual that I frequently have to deal with, and eat **** from on a regular basis. I was just here to complain about what I perceive to be a problem in Calgary. You can agree or disagree with me on that level, as many have done.

Admittedly, I’m in a great position, and I would never, ever complain about my station in life. I recognize my good fortune, but at the same time I’m concerned with the direction that the recent real estate craze is taking us. As mentioned, I worked in Vancouver for a few years and still do business there on a regular basis. To me, its unfortunate that hard-working, intelligent people have been priced out of Vancouver proper, and are forced to live in outlying areas such as Port Co. and Port Moody. I see the exact same thing happening here and its disturbing. I might not have articulated that as diplomatically before, but in effect there it is. Real-Estate is not my primary practice area, and perhaps I’m coming across as naïve, but I think it’d be beneficial to our community to see some more affordable ownership options in this city, particularly for those seeking that elusive first home. In that sense, yeah, I can’t wait for this market to collapse.

[return to the red]

I read somewhere that Lethbridge is going to be the next hotbed of real estate and it is starting to show. We are currently building our new home (down near Paradise Canyon if anyone knows the area) 1500 sq ft bungalow, and we upgraded everything total contract price 375k. The house we are living in now is about 1000sq ft no garage and a pretty basic cookie cutter house. We bought our current house for 136k bank just recently appraised our existing house at 220k! Hell one month after we signed our contract the Bank Appraised our new house at an additional 5,000.

If anyone is looking to buy in Lethbridge and use it as a rental property or has kids coming to school down here, I will be selling in the Summer

[ken0042]

Originally Posted by housejunk

In my initial post I was never really complaining about the taxes and that’s why I found your “explanation” to be so condescending. My primary focus was on the real estate market, and I’ve been more than receptive to the criticisms/comments relating to that.

Just keep in mind that your opening post looks to most people to be somewhat confrontational. The discussion has taken on several different angles, and that isn't surprising given this particular subject.

The fact that somebody has offered an explanation on a subject shouldn't be taken as condescending. I haven't read the posts in that manor.

[Reaper]

Originally Posted by prarieboy

That being said I couldn't agree more. If I had waited even two months I couldn't have afforded the house I'm in now.
Houses that were worth $20,000 30 years ago are selling for $400,000 now. Does that mean our kids will be paying $8,000,000 in 30 years time??
I doubt it. The market has to correct itself at some point but it's anybody's guess when that will be.

We were in the same situation when we put our deposit on our condo in August 2005. The best part of it was that our sales agreement included no clause for price increases being allowed due to rising costs. So, the developer took a bath on our condo. We paid $129,000 for our upper level corner unit. Just recently, a lower level corner unit which sold for $10,000 less than ours on pre-build sale closed at $273,000. I estimate that our condo could sell for $300,000 now and there would be no way for us to afford that kind of price. Timing is everything.

[housejunk]

Originally Posted by ken0042

Just keep in mind that your opening post looks to most people to be somewhat confrontational. The discussion has taken on several different angles, and that isn't surprising given this particular subject.

The fact that somebody has offered an explanation on a subject shouldn't be taken as condescending. I haven't read the posts in that manor.

Fair enough. Its not an issue involving anyone else, but in my eyes it appeared condescending as they still do. Especially the second post after I politely explained that the thread was not meant to be about the property tax scheme.