My income statement

[humble_pie]

Real estate investment: Worth the hassle?

I can make far more just by working my day job in the near term ...

Has anyone dealt with student housing before?

lol it reminds me of actor donald sutherland's story about the first advice he ever got from high-powered US financial advisors after he became a bigtime US movie star.

they analyzed his situation. Sutherland was living in hollywood. He went back for the 2nd appointment, the one where they would hand him the Grand Design & tell him how he could stay rich forever.

from a tax perspective, you have only really got 3 choices, they explained. It's oil wells. Or railcar containers. Or slums.

so we're putting you in slums, they told donald.

[Dmoney]

Tried to find any reference to the above Humble, but was unable to.

The advice was probably sound though.

It seems like slums/student housing etc. is EXTREMELY profitable from an ROE perspective, but it's also extremely difficult from a management perspective. It's possible to live for free in a respectable house if you fill the remaining rooms with students. They'll not only pay off the mortgage, but you'll live rent-free and you may have some cash flow left over.

$300,000 mortgage can be had for less than $1,600/month, rent is easily $2,000/month plus utils in this kind of house, plus take a room for yourself at no cost.

The problem is growing this business model. Turnover is very high, and it's harder to monitor a place if you're not living in it.

[ddkay]

I accidentally stumbled across a site called today called condos.ca and am happy that I found it. They let you see historical average prices per square foot of specific buildings. For now they seem to only operate a database for TO and a lot of places are missing. Afaik MLS require people to privately query past solds for this kind of info (pretty opaque process). I am guessing that is what this site does, manually adding each and every address to a program that will do scheduled queries and parse out relevant info - price data, transaction volume. It's pretty unique so I hope it doesn't get shut down or something.

Some examples
http://condos.ca/condominiums/toront...lair-st#trends - volatile looks correlated to equity market
http://condos.ca/condominiums/toront...mond-st#trends - volatile super low volume
http://condos.ca/condominiums/toront...king-st#trends - powered by momo
http://condos.ca/condominiums/toront...arf-crt#trends - powered by momo
http://condos.ca/condominiums/toront...king-st#trends - total disaster, original owners underwater after dev miscalculated expenses for building insurance among other stuff, consequently wears the highest psf maint fee in the city

If you look back 10 years it was "hard to go wrong" purchasing anything, prices were reasonable, you could easily get a high return, sometimes double digits renting to people staying extended periods for business, local workers or families with little credit risk etc. Now punch bowls are sitting around the room and everybody has had one too many sips it's hard to say the same thing.

[Dmoney]

Seems that the realtors have access to a huge database of information that would be very valuable in the general public's hands. Would be fantastic to see this monopoly dealt with. Need some competition from some entrepreneurial individuals on the inside who can make this widely available without the need for a binding buyer's agreement or other realtor nonsense.

[GOB]

If you decide to get into real estate (and eventually own several houses) I strongly suggest you get a reliable property manager. Doing it yourself is a huge inconvenience especially if you have other employment. I'm not positive but I think the cost would be about a month's rent for each house managed, so it would reduce the gains but still offer good returns and the value of your time saved would be priceless, especially with student housing.

[Dmoney]

GOB, I'm starting to feel like the active real estate side of things is probably too time consuming to be called passive income. It might be difficult to find a property with a high ROE if you're paying ~10% of gross rent in management fees, which a lot of the single family home management companies are charging. For now I'll likely keep my eyes open, but only buy a great opportunity, or a very easily managed opportunity.

[Dmoney]

BNS calls and Telus puts likely to expire worthless tomorrow provided BNS stays below $56 (closed at $55.05) and Telus above $56 (closed at $59.35).

Will likely roll the BNS calls into July $56s, going for ~$1.10 right now.

Any input on the Telus puts? I like Telus at $56, but at $58/$60 it's beginning to get pricey. May $58s are ~$0.80 but commissions will eat a chunk out of that, especially if I get assigned or have to buy/sell to roll the position forward. August $58s have a wide spread, but are giving premiums >$2.00.

Will wait for Monday to see how it all plays out, but in the meantime, any suggestions?

[Dmoney]

Went with the middle ground on the Telus puts and sold 6 June $58 strike contracts for $1.74 premium today.

Net cash of just over $1K.
Annualized, the premium is just over 20%.
Missing out on the dividend, but that should be built into the high premium I received, so that's okay.

~$30K at risk on my margin if Telus falls below $58, though my premiums offset this by $4.56, so would be as though I had bought at $53.44... hope to keep dropping this number.

Still need to roll my BNS calls over, waiting for an up day so I can get a nice premium for $56 strikes.

[Dmoney]

Sold 6 BNS October $56 strike calls for $1.60.
I think the premiums on these might be higher tomorrow since BNS had a strong finish today, but no guarantees.
I put in the order midday and watched the ask hover around $1.58/$1.59 all day before my order filled in the final minutes of trading.

$933.50 net cash to me... I really wish I could trade with a cheaper brokerage, but that's life. Hopefully will be working with 10 BNS and Telus contracts in a few months, so the commission will be a little less as a %.

Premium is ~6.2% annualized
Possible capital gains ~4.6% annualized
Dividend of ~4.0% annualized

Total return of 14.8% possible. Not a fantastic trade, but still decent. The July $56s would have been a better play if commission wasn't a factor, but I'm worried about the big cost of getting assigned or rolling the trade forward. Stupid required brokerage for work is useless.

[Dmoney]

In April I increased my net worth by a pretty weak 0.12%

Assets
Cash: $6,710(+18%)
TFSA: $22,803 (-3.91%: $928 in losses, TA-T down, although I did get its dividend this month)
Unregistered account: $74,947 (-0.10%: $76 loss. Market didn't do much in April, I'm marking my options to market so I'm taking a $3,000+ hit.)
Employee share plan: $3,073 (+4.18%: $500 contribution, $377 losses)


Liabilities
Margin: $0 (0%: no change)

Net Worth
$107,534 (+0.12%: $126)

The bad news was that I lost ~$1,000 in the market. The good news was that I saved enough to still have a positive month for net worth growth.

Not a great month for market performance, with TA-T and BNS-T down.
However, a really good month for dividend income ($624.20 - TA, BNS and the usual monthly suspects contributed) and option income ($509.31)
Total portfolio income of $1,131.51, so for a second month in 2011 I've reached my target of $1,000+ monthly portfolio income. I now have two months of $1,000+ income, out of my target of 4. It's looking likely to be Jan, Apr, Jul, Oct, which will be $1,000+, due to big dividends in those months.

Hoping for stable markets for the next few months, which should benefit my writing strategy the most. Keep Telus at $58.01, BNS at $55.99 and TLM at $12.99 and I'll be happy for life .

Still contemplating buying a place, but in no real hurry. Enough volatility in the job market without the added headache of worrying about a potential Toronto housing crash.

Hopefully bonus comes in May, which will likely dictate if I reach the $150,000 target by year-end. Fingers crossed.