TORONTO DOWNTOWN CONDO - BUY OR RENT
- Thread starter RCC
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Rent
Less responsibility
Rent to purchase price very low in that area
Risk of losing money on shorter term purchasers from transaction costs
Less responsibility
Rent to purchase price very low in that area
Risk of losing money on shorter term purchasers from transaction costs
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QUOTE (RCC @ Mar 10 2010, 06:51 PM) Did some research. Studio units are selling for about $280K and renting for about $1300 a month + utilities.
$1300 a month can pay $200K of mortgage. Does this not sound like a buy situation?
The idea makes sense.
Your child will be going to U of T and you will paying rent to someone. Why not pay yourself?
Do not forget about the condo fees which will be $400 and up per month.
$1300 a month can pay $200K of mortgage. Does this not sound like a buy situation?
The idea makes sense.
Your child will be going to U of T and you will paying rent to someone. Why not pay yourself?
Do not forget about the condo fees which will be $400 and up per month.
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QUOTE (RCC @ Mar 10 2010, 06:51 PM) Did some research. Studio units are selling for about $280K and renting for about $1300 a month + utilities.
$1300 a month can pay $200K of mortgage. Does this not sound like a buy situation?
No. That is a terrible buy situation. Who is paying the additional $80,000. All you have is speculation on appreciation which, if there is any, will be wiped out by the additional $80,000 investment cost and real estate/legal fees to sell.
There are a lot more expenses involved in owning than simply mortgage and you still have utilities.
Condo fees, insurance, real estate fees when selling, repairs, upkeep, lost income on down payment. etc. etc. etc. etc. etc. etc.
RENT at $1300 is a steal. Who ever owns that place is losing there shirt. Rent don`t buy.
$1300 a month can pay $200K of mortgage. Does this not sound like a buy situation?
No. That is a terrible buy situation. Who is paying the additional $80,000. All you have is speculation on appreciation which, if there is any, will be wiped out by the additional $80,000 investment cost and real estate/legal fees to sell.
There are a lot more expenses involved in owning than simply mortgage and you still have utilities.
Condo fees, insurance, real estate fees when selling, repairs, upkeep, lost income on down payment. etc. etc. etc. etc. etc. etc.
RENT at $1300 is a steal. Who ever owns that place is losing there shirt. Rent don`t buy.
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QUOTE (invst4profit @ Mar 10 2010, 06:48 PM) RENT at $1300 is a steal. Who ever owns that place is losing there shirt. Rent don`t buy.
An opinion that is true for a short term .. but is it in the long term in an in-migration, thus rising market like Toronto or Vancouver or Calgary or Edmonton or Saskatoon or ... ?
Assuming you have 20% down .. and assuming a 3+ year stay it may make sense to buy a property in a desirable location .. perhaps a 2BR even where one bedroom could be rented for $500 to $900 .. and this could be used to teach the kid some responsibilities as a landlord / owner.
Here`s the math:
buy at $300,000
20% down so 60K
240K mortgage @ 4% for 5 years is 1280/month
plus condo fees of say $320 = $1600
plus taxes of say $200/month = $1800
plus insurance and misc. say $100 ..
so cost to own is $1900/month
rent is say $1500 for s.th. comparably nice.
Yes, you loose $400/month or 4.8K/year .. time 5 years: $24,000
in 5 years your mortgage is paid down 10% to $216,000 or $24,000 ..
volia: BREAK EVEN in 5 years renting vs. owning !!
The upside is all yours now .. and yes it may not be up 20% or $60,000 .. but likely it is ..
so make 60K in 5 years or 1000/month while kid goes to school !
Thus: a free education !!
An opinion that is true for a short term .. but is it in the long term in an in-migration, thus rising market like Toronto or Vancouver or Calgary or Edmonton or Saskatoon or ... ?
Assuming you have 20% down .. and assuming a 3+ year stay it may make sense to buy a property in a desirable location .. perhaps a 2BR even where one bedroom could be rented for $500 to $900 .. and this could be used to teach the kid some responsibilities as a landlord / owner.
Here`s the math:
buy at $300,000
20% down so 60K
240K mortgage @ 4% for 5 years is 1280/month
plus condo fees of say $320 = $1600
plus taxes of say $200/month = $1800
plus insurance and misc. say $100 ..
so cost to own is $1900/month
rent is say $1500 for s.th. comparably nice.
Yes, you loose $400/month or 4.8K/year .. time 5 years: $24,000
in 5 years your mortgage is paid down 10% to $216,000 or $24,000 ..
volia: BREAK EVEN in 5 years renting vs. owning !!
The upside is all yours now .. and yes it may not be up 20% or $60,000 .. but likely it is ..
so make 60K in 5 years or 1000/month while kid goes to school !
Thus: a free education !!
Just make a bit of a research, and you will want to buy Bloor/Young - as many as you can, better from the builder. Rents in minutes 1,700 and up. I`ve heard predictions high 300`s condos will be 600k in 2 years there.
It`s not a FMV, it`s just who have more money gets it. There is just as much of a Toronto downtown.
Young professionals love to be in a high energy environment whatever it takes.
It`s not a FMV, it`s just who have more money gets it. There is just as much of a Toronto downtown.
Young professionals love to be in a high energy environment whatever it takes.
Thomas`s suggestion has a lot of merit 2 bedroom units will give you more flexibility and give you a little extra income from another renter. There are a lot of areas in Toronto as well that make sense. Why does it have to be downtown? As opposed to on the subway line?
Regards,
Regards,
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Thomas your numbers are far to idealistic. Perfect case scenario that is at best a risky gamble. Too many possible negative scenarios to advise a novice investor with ulterior motives for purchase. I have witnessed many very bad outcomes from this scenario having been in the Queens University community for 35 years.
What happens if your kid flunks out or gets sick and has to quit at Xmas or in the spring.
Highest drop out/failure rate is first year.
It`s easy to say it won`t happen but both of my kids, each top 10% of there class high school honours graduates, did not finish there first year.
Trust me I have know many many parents that thought it easy money to buy a place for there kids and ended up losing a lot of money and sleep in the bargain.
Do it because you want to be a LL or a investor not because it seems easy because it is not. Would you do it if it wasn`t your kid? Are you buying your kid a home or are you a long term investor?
If you do not have the stamina of an investor I would advise against this plan.
What happens if your kid flunks out or gets sick and has to quit at Xmas or in the spring.
Highest drop out/failure rate is first year.
It`s easy to say it won`t happen but both of my kids, each top 10% of there class high school honours graduates, did not finish there first year.
Trust me I have know many many parents that thought it easy money to buy a place for there kids and ended up losing a lot of money and sleep in the bargain.
Do it because you want to be a LL or a investor not because it seems easy because it is not. Would you do it if it wasn`t your kid? Are you buying your kid a home or are you a long term investor?
If you do not have the stamina of an investor I would advise against this plan.
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QUOTE (invst4profit @ Mar 11 2010, 05:17 PM) Thomas your numbers are far to idealistic. Perfect case scenario that is at best a risky gamble. Too many possible negative scenarios to advise a novice investor ...
If you do not have the stamina of an investor I would advise against this plan.
you raise a good point .. of course there is an element of risk.
But: keep in mind that capital gains are tax free if condo is in kids name .. so think of it as an "early inheritance" ..
no I would not do it at these price points for an average investment .. but I would do it .. AND DID ... with our kids in Edmonton who live in a condo near UofA .. with similar numbers as stated above ..
I am mindful, as should be any prudent parent/investor, that there is risk: interest rate risk, kids-drop-out risk, special condo assessment risk, world-turns-gloomy risk, overbuilding, .. but if your kid has to rent anyway near a university then why not have your own place for 4-6 years which is the average university life for a science student .. but risks can be mitigated .. and I prefer this 60K investment in a kid`s condo over a 60K investment in a mutual fund or non-kid occupied piece of real estate that may or may not deliver a higher return ..
If you do not have the stamina of an investor I would advise against this plan.
you raise a good point .. of course there is an element of risk.
But: keep in mind that capital gains are tax free if condo is in kids name .. so think of it as an "early inheritance" ..
no I would not do it at these price points for an average investment .. but I would do it .. AND DID ... with our kids in Edmonton who live in a condo near UofA .. with similar numbers as stated above ..
I am mindful, as should be any prudent parent/investor, that there is risk: interest rate risk, kids-drop-out risk, special condo assessment risk, world-turns-gloomy risk, overbuilding, .. but if your kid has to rent anyway near a university then why not have your own place for 4-6 years which is the average university life for a science student .. but risks can be mitigated .. and I prefer this 60K investment in a kid`s condo over a 60K investment in a mutual fund or non-kid occupied piece of real estate that may or may not deliver a higher return ..
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QUOTE (RCC @ Mar 9 2010, 07:12 PM) I have a child starting university in Toronto downtown in Sep 2010 and wondering what the experts here would do.
Buy a condo in the U of T area or just pay rent?
If buying, would you buy a studio, 1BR or larger ?
Rent.
Buy a condo in the U of T area or just pay rent?
If buying, would you buy a studio, 1BR or larger ?
Rent.
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QUOTE (Rickson9 @ Mar 11 2010, 11:51 PM) Rent.
why ?
why ?
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If you`ve been following Rickson`s other posts the analysis is limited to needing a 11% cap rate or something to that effect. Or a market has dropped 60% in the last 6 months. Or the ferry god mother has placed the particular unit and he was told this by gold unicorn. All equally as probable reasons for a purchase.
QUOTE (ThomasBeyer @ Mar 12 2010, 01:09 AM) why ?
QUOTE (ThomasBeyer @ Mar 12 2010, 01:09 AM) why ?
Its vdery helpful to hear all the different opinions.
Thomas, thanks for the detailed insightful analysis. From Thomas`s analysis, it looks like it is a viable option if prices remain flat or increase. I see the biggets risk is if prices decrease.
With the frenzy in the Toronto condo market, where are prices going?
Is it overpriced ? Wish I had a crystal ball.
Thomas, thanks for the detailed insightful analysis. From Thomas`s analysis, it looks like it is a viable option if prices remain flat or increase. I see the biggets risk is if prices decrease.
With the frenzy in the Toronto condo market, where are prices going?
Is it overpriced ? Wish I had a crystal ball.
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QUOTE (RCC @ Mar 12 2010, 05:55 PM) Its vdery helpful to hear all the different opinions.
Thomas, thanks for the detailed insightful analysis. From Thomas`s analysis, it looks like it is a viable option if prices remain flat or increase. I see the biggets risk is if prices decrease.
With the frenzy in the Toronto condo market, where are prices going?
Is it overpriced ? Wish I had a crystal ball.
of course prices CAN drop .. and have in many markets from 2007 to 2009 .. so look at land cost and cost to build ... @ $300 or even $400/foot in down town Toronto that is tough to beat ..
Look rather at: where do people move to .. or where is the population growing ? That is where prices RISE ! A pretty good crystal ball proxy !
i.e.: certain areas of GTA, SW Ontario, most cities in W-Canada, some cities in Europe, many Asian cities, many African cities, many South- and yes, North-American/US cities ! Cities with: beaches, mountains/lifestyle, year-round jobs, decent quality of life, decent paying jobs, opportunities ..
So real estate usually makes sense in these parts of the world .. but may not in some others close by !
Thomas, thanks for the detailed insightful analysis. From Thomas`s analysis, it looks like it is a viable option if prices remain flat or increase. I see the biggets risk is if prices decrease.
With the frenzy in the Toronto condo market, where are prices going?
Is it overpriced ? Wish I had a crystal ball.
of course prices CAN drop .. and have in many markets from 2007 to 2009 .. so look at land cost and cost to build ... @ $300 or even $400/foot in down town Toronto that is tough to beat ..
Look rather at: where do people move to .. or where is the population growing ? That is where prices RISE ! A pretty good crystal ball proxy !
i.e.: certain areas of GTA, SW Ontario, most cities in W-Canada, some cities in Europe, many Asian cities, many African cities, many South- and yes, North-American/US cities ! Cities with: beaches, mountains/lifestyle, year-round jobs, decent quality of life, decent paying jobs, opportunities ..
So real estate usually makes sense in these parts of the world .. but may not in some others close by !
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QUOTE (RCC @ Mar 12 2010, 06:55 PM) Its vdery helpful to hear all the different opinions.
Thomas, thanks for the detailed insightful analysis. From Thomas`s analysis, it looks like it is a viable option if prices remain flat or increase. I see the biggets risk is if prices decrease.
With the frenzy in the Toronto condo market, where are prices going?
Is it overpriced ? Wish I had a crystal ball.
Buying in condo Yonge-Bloor is a good bet if you get the right price ($500-$550psf),
This is based on research from:
-CMHC
-Scotia
-Realnet
-Barry Lyon Consulting
-Urbanation
-Re/Max
-TD
All the REIN fundamentals are in that corridor (employment diversity, jobs, population growth, affordability, etc)
Thomas, thanks for the detailed insightful analysis. From Thomas`s analysis, it looks like it is a viable option if prices remain flat or increase. I see the biggets risk is if prices decrease.
With the frenzy in the Toronto condo market, where are prices going?
Is it overpriced ? Wish I had a crystal ball.
Buying in condo Yonge-Bloor is a good bet if you get the right price ($500-$550psf),
This is based on research from:
-CMHC
-Scotia
-Realnet
-Barry Lyon Consulting
-Urbanation
-Re/Max
-TD
All the REIN fundamentals are in that corridor (employment diversity, jobs, population growth, affordability, etc)
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QUOTE (Rickson9 @ Mar 12 2010, 06:51 PM) <br />Fairy godmother. I hate water.<br /><br /><br /><br />
Sorry my apologies
Sorry my apologies