# To Sell or continue Renting our Vancouver townhouse



## handwedge11 (May 15, 2019)

Hi all --
We recently expanded our family and moved away from Vancouver (we couldn't afford a house in Vancouver so we bought a house in the Interior of BC and relocated). We kept our 2-bedroom townhouse in Vancouver as a rental property. We now have a good amount of equity in the rental property, so we're debating on whether to sell (and apply the proceeds to the mortgage on our new house) or to hold onto it.

Current Value of Rental property = $585,000
Remaining mortgage = $235,000
Rent generated = $2255 / month (this will probably go up as it is in a trendy area under development).

New Home Value = $590,000
Remaining mortgage = $445,000

Other than these two mortgages, we are debt free. 100k in RRSP/TFSA. 420k in my company (corp) investment accounts. We are 40 & 31 yrs old with a new baby. My company nets around $115,000 per year.
Any advice would be greatly appreciated.


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## heyjude (May 16, 2009)

If you keep the Vancouver townhouse you will have to pay speculation tax on it. To me this is a no brainer. Sell it and pay off most of your debt.


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## Mukhang pera (Feb 26, 2016)

I thought speculation tax was for properties left vacant. The OP is thinking of keeping it as a rental, if I understand. Would it not just be subject to eventual capital gains tax and tax on the rental income in the interim?


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## Mukhang pera (Feb 26, 2016)

handwedge,

Can you say what the holding costs are on the townhouse? How much monthly for mortgage, strata fees, insurance, property tax, etc.?

You will soon be told here to cut and run in any event. The conventional wisdom hereabouts is that the property is an albatross around your neck if it does not gross 1% per month, i.e., a property valued at $585,000 should be bringing in $5,850/mo. You are a bit off that target.


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## heyjude (May 16, 2009)

Mukhang pera said:


> I thought speculation tax was for properties left vacant. The OP is thinking of keeping it as a rental, if I understand. Would it not just be subject to eventual capital gains tax and tax on the rental income in the interim?


I was wrong, sorry. But I still think it makes more sense to sell it.


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## OhGreatGuru (May 24, 2009)

But talk to a lawyer about how you can avoid selling it to a money launderer. (Or a foreign "student" who owns 15 other units in the same complex.). If you aren't part of the solution, you're part of the problem.


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## handwedge11 (May 15, 2019)

Mukhang pera said:


> handwedge,
> 
> Can you say what the holding costs are on the townhouse? How much monthly for mortgage, strata fees, insurance, property tax, etc.?
> 
> You will soon be told here to cut and run in any event. The conventional wisdom hereabouts is that the property is an albatross around your neck if it does not gross 1% per month, i.e., a property valued at $585,000 should be bringing in $5,850/mo. You are a bit off that target.


Hey Mukhang,
Monthly mortgage payment = $1385
Strata fees = $315/mo
Prop tax = $1200/yr

With the current rent ($2255), we're very close to breaking even each month. 

Thanks!


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## handwedge11 (May 15, 2019)

OhGreatGuru said:


> But talk to a lawyer about how you can avoid selling it to a money launderer. (Or a foreign "student" who owns 15 other units in the same complex.). If you aren't part of the solution, you're part of the problem.


Agreed!


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## handwedge11 (May 15, 2019)

heyjude said:


> I was wrong, sorry. But I still think it makes more sense to sell it.


I think I'm leaning that way. In the long term, I'd probably make more if I kept/rented it out. But it would be nice to pay our mortgage right down.
Also, we don't live in Vancouver anymore, so we have to pay 8% of the rent to a property manager.

Thanks for your feedback.


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## Mukhang pera (Feb 26, 2016)

Well handwedge, I am really going to go out on a limb here and be the only one who will suggest that maybe you should keep it. I'll leave the rest here to tell you about 1% rules, gross rent multipliers and a host of considerations to make it look like keeping that sucker will be the road to perdition.

You acknowledge being close to break even. So, not much, if any, cash flow from an asset worth $585,000. If you have spent any time reading on this forum, you will know that there are some who will say you should be paying no more than $100,000 for a "door" that will bring in not less than $1,000 a month. Hard to argue with that, I suppose. But not too many of them cheapie doors to be found in Vancouver. Maybe in a downtown eastside hotel. So, what are your choices?

You could sell and buy half a dozen or so rentals in Spuzzum, BC, or Windsor, Ontario, or some outpost in Newfoundland.

You could sell put the cash into your new place and have no mortgage. That might feel nice. The new home mortgage is greater than the rental home mortgage, which should be reversed for tax purposes, but that ship may have sailed.

Or you could keep it. I probably would.

Why do I say that? For one thing, they are making no more land in Vancouver. For another, it's Vancouver.

Back in the 1990s I moved from Vancouver to Los Angeles. I sold my Vancouver house (not a great idea) and bought one in LA. Lived there for 3 years and moved to a country in SE Asia and bought a house there (also not a great idea). Did not sell the house in LA as the market was lukewarm. I would have got my money back, but nothing for all the trouble I went to to find the place. So I rented it (Strike 1 - most will tell you never rent out a house in which you have lived. They can explain why.) Actually it was a duplex (Strike 2 - most will tell you that duplexes and triplexes are not "quality" investments. Again, I'll allow others to say why.) The initial rent was then about $4,500 US/mo. (Strike 3 - the house was worth about $600,000 US, so the rent was woefully shy of the 1% mark). 

Here's what one fellow (his blog is here - http://kagansblog.com/ - wrote about LA awhile back:

_Have been thinking about how amazing it is that a person can own land in LA.

I know that’s a weird thing to think about, but stay with me.

Land is permanent and, increasing density aside, they’re not making more of it.

It’s pretty amazing to me that, through actions taken in the course of one’s impermanent, transitory life, one’s descendants can, for as long as they’d care to, literally own this permanent thing.

And we’re sitting here in the 2nd largest city in America, one absolutely bursting with ideas, capital, connections, style, etc., and blessed with incredible weather and outdoor opportunities that differentiate it from all the other major metropolitan areas in the US.

And, with the right partners / investors and by finding the right deals, you or I or anyone with energy can literally stake a permanent claim to a piece of land right in the middle of all that dynamism.

Get the numbers right and you can even use (moderate!) leverage to magnify your outcome.

Seems like a pretty spectacular one-way bet, so long as you don’t do anything really stupid.
_

In the above commentary you could substitute "Vancouver" for "LA" and not be far off. Vancouver shares many of the same attributes. It's one of a few of what I call North American gateway to the Pacific rim cities. There will always be a market there to buy/sell/rent. 

I still have the LA house. I have always managed it long distance. Not the hassle some would suggest. Being in the US, I _do_ use a cross-border tax expert, although that is partly due to being lazy. I could probably just follow what he has set up for me in the past and come out okay. But he keeps up on the cross-border issues, how to calculate the tax credit here for income tax paid there, etc. As against the income, his fees are not much. 

Today, that doggone LA house still balks at paying obeisance to the 1% rule, any GRM formula or much else. The market value has gone up, the rents have gone up, but that all-important ratio remains elusive. And I don't give a hoot. That's perhaps why I am not rich. Not a one percenter. I should have wised up long ago and sold that puppy and bought a city block in Radville, SK, or some such, and have pots more money coming in. It could be that if dynamite were brains, I wouldn't have enough to blow my nose. Problem is, I am happy. I seem to have enough, notwithstanding my fiscal ignorance.

Your are still on the young side. Your income is somewhat modest by today's standards, but by no means shabby. It also appears you have retained earnings in your company and you appear to have managed your assets well overall. So, looking down the road to age 65, you have the Vancouver place, paid off (another no-no apparently in real estate guru country - a paid off rental is somehow a burden and a shameful thing) and bringing in a rent which will keep up with inflation, as will the value of the underlying asset. Or you never pay if off, refinance every year and buy another rental every year. For me, one good one is enough.

So handwedge, maybe this has given you a bit to think about. I have made this post a tad tongue-in-cheek, poking fun at my own very unconventional (and perhaps foolhardy) notion of real estate investing. I hold other forms of real estate, some for investment purposes, but I have only one rental house. I seldom (if ever) mention it here, since it's so far beyond the pale that it can only evoke the opprobrium of more sophisticated members. I expect you'll choose the more conventional route and pull the pin on Vancouver.


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## handwedge11 (May 15, 2019)

Thank you so much for the thoughtful reply, Mukhang pera. To accentuate my ignorance about real estate investing, I've never actually heard of the 1% rule (that seems like a foreign concept in BC!) I completely agree with your assessment of the Vancouver market, though. Not much land to build upon -- the city is slowly tearing down and rebuilding with taller structures. 
On one hand, since the property isn't losing us any money (and the renters are covering the mortgage), it seems like a safe place to keep some cash (allowing us to diversify and not put all our eggs in the mutual fund basket). On the other hand, selling it and paying off a significant portion of our house mortgage would feel very good (relieve the stress of "what ifs" etc) and, in a way, creates portfolio diversification because we're paying down debt.

I've never considered selling and buying a handful of cheaper units (in Sask or elsewhere) but that's an enticing option as well. I wonder if Alberta will be a great spot to scoop up cheap rental property in the coming years. But as you said... how many rental properties does one really need? 
Thanks again!


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## Mukhang pera (Feb 26, 2016)

Just a Guy said:


> If you ask nice, maybe muk will sell you some of his secret sauce which makes all your tenants perfect and long term.


It's commercial break time watching the Survivor finale (yes, I admit to being a fan), and, before my torch gets snuffed, I'll share my secret sauce, gratis.

No secret, really. Already mentioned. It's the reason why I suggest maybe your Vancouver property is worth keeping, handwedge. It's not difficult to recruit and obtain high quality long-term tenants in markets like LA and Vancouver. On the other hand, as JAG posted in just the past few days, his tenants are welfare types, with no insurance, whose careless smoking cause fire loss. 

Suppose you buy a place for under $100,000 and it fetches $1,000 a month. At some point that tenant might harken to the fact that said tenant can buy a place for what is being paid in rent. Hence more turnover, even without fires. But, handwedge, what prospect does your tenant - who pays $2,255/mo. to occupy a house worth $585,000 - have to buy an equivalent Vancouver house? Not so likely to happen and, moreover, that tenant has little incentive to buy. Better to stick with you long term. Your vacancy rate is almost certain to be lower.

Another aspect to owning a rental in locales such as Vancouver, is better prospect for capital appreciation. Again, many investor types will say to forget about it, cash flow is all that counts. Me, I happen to like to see capital appreciation. My place in LA has appreciated by, conservatively, $65,000 US per year since purchase. Those like JAG will poo poo that, saying it counts for nothing until liquidated and in pocket. Take that as you will. But I am certain that your Vancouver property, 25 years hence, will sell for much more than today's price. I will acknowledge that, like the stock market, there will be down years in the long term. My LA place took a beating in the global financial meltdown that commenced around 2007. But the rent revenue did not abate. Not a bit. And the market came back. Stronger than ever, as Vancouver has done in cycles for decades.

Handwedge, do not take too seriously JAG's offensive comment that your are "lying to yourself" about cash flow. He says that to everyone. To say that "The equity portion of your money isn’t earning you anything" is fatuous and, moreover, no one has yet taken into account the fact that a chunk of your monthly mortgage payment of $1,385/mo. is paying down principal and is, in essence, positive cash flow. In time, the rents will retire the mortgage completely. 

Handwedge, I have no horse in this race and my thoughts here are my own and tailored to suit the kind of investor I am. JAG will say i am unworthy of the "investor" descriptor. I don't care. To my way of thinking, you won't regret holding on to your Vancouver property, even if, in the short term, you do no better than break even. 

I also take into account intangibles, such as pride of ownership. Maybe something a true "investor" should forsake. But i feel good about owning my LA house. Like you with your Vancouver townhouse, I chose it as my home. That in itself makes it a good rental because you know its strengths and weaknesses. I am fond of my LA home. It's a classic Spanish-style home, with red tile roof, turrets, etc., built in 1928 and carefully restored. 2,000 square feet on each floor. The lot is large, with lemon and orange trees, mature palms and foundation planting. I pay for garden service to keep the grounds as they should be. As my sister says, "it looks like a movie star home". I love owning it and love where it's located. I love LA, maybe an odd thing to say for one who lives off grid in the BC boonies. In short, I feel very good about my LA investment and, while I am perhaps deluding myself, the US dollars it brings in every month seem real to me. So yes, I have some emotional attachment to the place and that, I know, is antithetical to the way a true investor should look upon an investment. 

As I mentioned, I am pleased with the capital appreciation I have seen, but I know until the cash is in hand, the gain is rather illusory. It's still nice to see, but, for me, it really matters little. LA is for my heirs. As the blogger I quoted above wrote: _It’s pretty amazing to me that, through actions taken in the course of one’s impermanent, transitory life, one’s descendants can, for as long as they’d care to, literally own this permanent thing._ Amen. I would have a hard time feeling as warm and fuzzy about a skid row condo. Even if the BC Ministry of Social Development and Poverty Reduction was paying the rent into my account every month.

Thus endeth another long essay, awaiting the wrath of JAG.


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## sags (May 15, 2010)

Our landlord's family bought a farm on the edge of the city in the 1960s and built a village of townhouses. The city grew to surround their village of rental units.

Today we pay $1100 a month for a nice 3 bed/3 bath townhouse. Comparable rents are $1600 a month. Many good tenants stay for decades and there is a long waiting list.

At today's prices the rent wouldn't cover the costs, but over time the rise in property values hasn't affected our landlord's ability to have reasonable rent and a long waiting list of tenants.

If you own a property in Vancouver and can afford to keep it, you will own a rental that you can offer very competitive rent, earn a profit and have no problem finding long term tenants.


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## Longtimeago (Aug 8, 2018)

Mukhang pera said:


> So, looking down the road to age 65,


I have no bias either way as far as holding or selling. It depends far too much on an individual's circumstances and GOALS. Mentioning 65 to me is an assumption however and an assumption that might affect the best course for the OP.


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## Longtimeago (Aug 8, 2018)

OhGreatGuru said:


> But talk to a lawyer about how you can avoid selling it to a money launderer. (Or a foreign "student" who owns 15 other units in the same complex.). If you aren't part of the solution, you're part of the problem.


I find that remark amusing. If I have something to sell, I sell it to the highest bidder. I don't care if he is a career criminal a la Good Fellas.


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## Longtimeago (Aug 8, 2018)

If anyone is looking at investment real estate, my advice is to look for a place that is likely to grow in price. Edmonton and Calgary are historically cyclical for example. So when the time comes to sell, you may find it is in a down part of the cycle. Vancouver and Toronto are not places I would personally invest in even though I have owned there in the past. I just think residential real estate in those cities is just not predictable enough over the long term and again you could find yourself wanting out when the market is low.

Right now, I live in a small town of around 3000 Pop. It is a 2-3 hour drive from Toronto (depending on where in Toronto you are driving to/from). Over the course of the last 10 years, house prices have more than doubled. Why? Because Baby Boomers who live in Toronto have been retiring and moving out of the city to more affordable houses. They're cashing in on their high priced old house in Toronto in other words. That trend is set to continue for another 10 years. So it doesn't seem to take much thought to figure out that buying where they are moving to and then selling to them down the road is something that is pretty sure to work and not be subject to much possibility at all that prices will go down or even stagnate.

I don't think many investors in residential real estate are giving enough thought to the Baby Boom generation and what it can mean to them. The BBs are selling in the cities and moving out to smaller towns. This is happening around every major city in Canada. What's more it was and is predictable and it is also predictable that it will continue for the next 10 years. How many things does anyone know of as an investor where you can predict the future like that?


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## sags (May 15, 2010)

We thought about moving to a rural area, but realized we would end up having to move again a few years down the road. We decided we didn't want to move again when we were older.

So we moved from a small city to a bigger city and that was that. Healthcare, shopping and entertainment were the main reasons for moving.

Some people did sell their homes in Toronto and commute to work from here, but the commute is too stressful now and people stopped coming.


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## peterk (May 16, 2010)

Mukhang pera said:


> _Have been thinking about how amazing it is that a person can own land in LA.
> 
> I know that’s a weird thing to think about, but stay with me.
> 
> ...


I would just point out that this is merely a popular colloquial interpretation of how the world works, most popular amongst people of a certain advancing age who have not experienced anything other than peacetime expansionary, inflationary, urbanization, globalization policies aggressively implemented since WWII, and who will long be dead by the time any changes or detrimental effects of these policies come to fruition.

There is no economic law that says that populations densify indefinitely, that urban centers can't die, that land has cash value, or that the west coast is the natural and permanent destination for Asian assets.


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## Eclectic12 (Oct 20, 2010)

sags said:


> We thought about moving to a rural area, but realized we would end up having to move again a few years down the road. We decided we didn't want to move again when we were older.
> So we moved from a small city to a bigger city and that was that ... Some people did sell their homes in Toronto and commute to work from here, but the commute is too stressful now and people stopped coming.


Whereas my relatives lived in Toronto then when retiring, sold and moved to a smaller city instead of a rural area. I'm pretty sure it padded their retirement stash while dropping crazy traffic out of the picture.:biggrin: 


Cheers


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## Mukhang pera (Feb 26, 2016)

peterk said:


> I would just point out that this is merely a popular colloquial interpretation of how the world works, most popular amongst people of a certain advancing age who have not experienced anything other than peacetime expansionary, inflationary, urbanization, globalization policies aggressively implemented since WWII, and who will long be dead by the time any changes or detrimental effects of these policies come to fruition.
> 
> There is no economic law that says that populations densify indefinitely, that urban centers can't die, that land has cash value, or that the west coast is the natural and permanent destination for Asian assets.


Just about anything said here and on other investing forums can be characterized as a "popular colloquial interpretation of how the world works". For example, the so-called "couch potato" method of investing draws heavily on lessons of the past as being predictors of the future. None of us have any divine insight into the future. 

As for "people of a certain advancing age" who adhere to their colloquial interpretations, is there any economic law that says that the generations behind are endowed with greater investment savvy or knowledge of whence goeth the world?

BTW, did you check out the blog of the LA author I quoted? From his photo, I would not say he yet qualifies to be of a certain advancing age. Looks to be in his 30s and I would guess he has fared better than you economically, unless all he says is a tissue of lies.

Finally, with respect to your "no economic law" reference, rather trite is it not? I did not advance such a proposition, nor has anyone else that I am aware of. All any of us can do is, in effect, place our bets. In the real estate arena, I see major hubs such as Vancouver, Seattle, San Francisco, LA, as being west coast places that are likely good long term holds. There are others across the land. Toronto will probably be a good spot for the foreseeable future. I know less about places I have not actually lived. I am sure there are other good bets in the country.

In my own case, I choose to have but a single rental property, in part, to be diversified. If LA washes into the sea tomorrow, my life won't change. I have other irons in the fire. Me and my family in no way depend on the long term welfare of that one locale for our support. For now, I see it as a good bet. Any type of investment is, to some extent, a bet. Wise to never risk it all on one bet. If WWIII comes, or a good-sized asteroid strikes the earth, or climate change sinks us, all bets might be off.

However, Peterk, it sounds as though you have studied the matter and you know what will happen and when. Care to share? I am open to suggestion and learning. Can you say with some certainty that I should now liquidate my LA asset and move the money elsewhere? Come up with a sound strategy and I'll pay heed, despite my advancing age. You are fortunate, I suppose, that your age remains static and is not advancing. However, you seem to be foreshadowing some trying times ahead. Your immortality might turn into a curse.


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## Mukhang pera (Feb 26, 2016)

Longtimeago said:


> I don't think many investors in residential real estate are giving enough thought to the Baby Boom generation and what it can mean to them. The BBs are selling in the cities and moving out to smaller towns. This is happening around every major city in Canada. What's more it was and is predictable and it is also predictable that it will continue for the next 10 years. How many things does anyone know of as an investor where you can predict the future like that?


You are right in that. But I wonder if we can continue to see that doubling. I see it on Vancouver Island. Prices are reaching Vancouver levels in Comox, Courtenay and Campbell River. There are bidding wars on Quadra Island. But there is no employment in these places, no manufacturing. What will sustain it? I suppose it might be easy pickings for the next 10 years or so, then time to cut and run as all the boomers start dying off en masse, leaving a lot of empty houses.


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## AltaRed (Jun 8, 2009)

handwedge11 said:


> Mukhang pera said:
> 
> 
> > handwedge,
> ...


 In my opinion, you are not remotely close to breaking even if your rent is $2255/month and 8% is going to your property manager. That is a hemorrhage in my books.

Biggest additional risk to me us lack of substantial additional capital appreciation. Don't count on GVR's past being a harbinger of the future.

If you don't have future plans to use it yourself in the future or keep it for family members, it doesn't make economic sense to keep it.


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## dubmac (Jan 9, 2011)

Interesting thread.

My situation was similar in that I decided to stay in Vancouver townhouse (duplex) and deal with the fact that I had a small family in a small space. It certainly hasn't been ideal, but we have managed. It hasn't bee easy - the place is small and I can appreciate why the OP poster moved away to raise a family for this crazy RE market (at least it was crazy at one point). The place is paid off, and now the kids are getting close(r) to having their education done and moving out into the working world.

I have been thinking that I would keep the Vancouver place, and buy another somewhere else to spend my 60's and 70's. I'm looking at Vancouver Island (Courtenay, Fanny Bay, Qualicum Beach) presently - most places near skiing/hiking/beaches are in the 400-500 range. ideally, I would buy in the next 2 years or so. try to scare up a 50% deposit, and work a little to help pay down the rest- still not sure if I want a 200K mortgage at age 60 tho!

Once that place is purchased, keep the townhouse- mostly for the kids and my wife, as she likes to spend time in the city to enjoy the cultural aspects & friends that we have here.


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## like_to_retire (Oct 9, 2016)

dubmac said:


> I have been thinking that I would keep the Vancouver place, and buy another somewhere else to spend my 60's and 70's.


Only 60's and 70's? What about the 80's and 90's?



dubmac said:


> Once that place is purchased, keep the townhouse- mostly for the kids and my wife, as she likes to spend time in the city to enjoy the cultural aspects & friends that we have here.


Sort of like an apartment in the city, except it's a townhouse with all the maintenance and upkeep, along with the maintenance and upkeep on the new home at (Courtenay, Fanny Bay, Qualicum Beach)? It seems like a lot of work for a retired guy.

ltr


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> ... BTW, did you check out the blog of the LA author I quoted? From his photo, I would not say he yet qualifies to be of a certain advancing age. Looks to be in his 30s and I would guess he has fared better than you economically, unless all he says is a tissue of lies ...


He is young ... though with so much of the site geared to helping anyone who wants to join the insider email list offering investment opportunities, the quote about being an investor in fund 1 since 2012, another blog entry outlining that fund 5 has closed and the key stats listed are about property under management - one wonders how much of a hit he would take should RE drop.

One would think the property management fees would keep rolling in.


Cheers


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## dubmac (Jan 9, 2011)

like_to_retire said:


> Only 60's and 70's? What about the 80's and 90's?


them too. there's a nice hospital in Courtenay now. !




> Sort of like an apartment in the city, except it's a townhouse with all the maintenance and upkeep, along with the maintenance and upkeep on the new home at (Courtenay, Fanny Bay, Qualicum Beach)? It seems like a lot of work for a retired guy.
> 
> ltr


I don't plan on doing the mtce - my kids will.


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## Plugging Along (Jan 3, 2011)

handwedge11 said:


> Hi all --
> We recently expanded our family and moved away from Vancouver (we couldn't afford a house in Vancouver so we bought a house in the Interior of BC and relocated). We kept our 2-bedroom townhouse in Vancouver as a rental property. We now have a good amount of equity in the rental property, so we're debating on whether to sell (and apply the proceeds to the mortgage on our new house) or to hold onto it.
> 
> Current Value of Rental property = $585,000
> ...





handwedge11 said:


> Hey Mukhang,
> Monthly mortgage payment = $1385
> Strata fees = $315/mo
> Prop tax = $1200/yr
> ...


It sounds like you have a good grasp on your finances which makes a difference in the answer. I think it easy to over analyze these things. My dad came here with pretty nothing, never really invested other than in real estate, his views were simple and they worked for him. 

He always believed that you should hold on as long as you can. When we talked to him in selling at a high in the market, he said replied 'Why eat chicken when you can have the eggs'. I tried to tell him make more in returns in other investments, get cash flow, all of these things (which in my mind where important). He didn't really care.

His reasoning for keeping places:
- Do I need to money from the sale or do I foresee that I will need the money? No, then don't sell
- Is the place cashflowing positive in the year on average? Yes, then don't sell. No, then why not, and fix the issue, and don't sell. Can't fix it, then sell.
- Can I cover the costs if things go really bad and you can't rent out for 12 months (he used 12 months cause he had picked a whole bunch properties in the late 70's early 80's when people where walking from there homes) ? Yes, then don't sell. No, then I might not have a big enough float.

I think he may have asked me a few other questions, but his thought is that real estate always goes up. He always counted the capital gains as gravy and just held on. In the worst times, he just said, he will just keep hanging on, and it always worked, but keep in mind he was able to weather the rough time.

I was planning to sell my rec property, and it would be at a lost right now, he essentially thought, I should hang on it, enjoy it when I can, and then if it's still at a lost, pass it on to the kids. 

The general thought he had was if I could weather it out indefinitely in terms of time and expenses, then keep.


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## peterk (May 16, 2010)

Mukhang pera said:


> Just about anything said here and on other investing forums can be characterized as a "popular colloquial interpretation of how the world works". For example, the so-called "couch potato" method of investing draws heavily on lessons of the past as being predictors of the future. None of us have any divine insight into the future.
> 
> As for "people of a certain advancing age" who adhere to their colloquial interpretations, is there any economic law that says that the generations behind are endowed with greater investment savvy or knowledge of whence goeth the world?
> 
> ...


Quite defensive, Mr. Boomer, against my rather innocuous reply pointing out a different perspective, and suggesting, lightly, that people of your pedigree who have experienced only one economic direction their entire lives, central bank backed expansion, might develop some mild amount of tunnel vision on certain matters like infinitely inflating real estate as *"pretty spectacular one way bets"*.

I haven't heard anyone else particularly voice much of the same things I have here actually...what reference? but sure, call me "trite" if it helps you stay relaxed.


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## kcowan (Jul 1, 2010)

AltaRed said:


> In my opinion, you are not remotely close to breaking even if your rent is $2255/month and 8% is going to your property manager. That is a hemorrhage in my books.
> 
> Biggest additional risk to me us lack of substantial additional capital appreciation. Don't count on GVR's past being a harbinger of the future.
> 
> If you don't have future plans to use it yourself in the future or keep it for family members, it doesn't make economic sense to keep it.


You can rely on the past for both GVA and GTA. It is just that it has not happened in current times because of artificial stimulus. GVA has had several boom and bust cycles, whereas GTA had one large one from 89-97. Since 97 it has been all one way. The Asian invasion of the 80s stopped dead in 1990 and that made the correction more dramatic.


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## kcowan (Jul 1, 2010)

dubmac said:


> The place is paid off, and now the kids are getting close(r) to having their education done and moving out into the working world...


You might find that the kids find their own way much separate than what you think. A good friend was centered in the GTA with a cottage in Muskoka. His three kids had their own ideas with one moving to Vancouver and another to Paris. Only one stayed in Mississauga. The friend has subsequently sold and bought a house in Huntsville to be near his cottage on Tobins Island.

In my case, both kids stayed in the GTA but they have cottages that consume their spare time and cash.


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## Longtimeago (Aug 8, 2018)

Mukhang pera said:


> You are right in that. But I wonder if we can continue to see that doubling. I see it on Vancouver Island. Prices are reaching Vancouver levels in Comox, Courtenay and Campbell River. There are bidding wars on Quadra Island. But there is no employment in these places, no manufacturing. What will sustain it? I suppose it might be easy pickings for the next 10 years or so, then time to cut and run as all the boomers start dying off en masse, leaving a lot of empty houses.


Yes it has a limited window of opportunity Mukhang pera but the BBs will still be there and dying off for 20 years after the last of them retire in 10 years. So, buy for the next ten years and sell before 30 years. There is no need to cut and run in 10 years. Not unless you expect all the BBs to die in the next 10 years.


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## nobleea (Oct 11, 2013)

Longtimeago said:


> Yes it has a limited window of opportunity Mukhang pera but the BBs will still be there and dying off for 20 years after the last of them retire in 10 years. So, buy for the next ten years and sell before 30 years. There is no need to cut and run in 10 years. Not unless you expect all the BBs to die in the next 10 years.


Prices are only sustained by those buying at the margin. If the premise is that baby boomers are doing the buying and driving the prices and you remove only 5% of them that drops the prices substantially.5% drop of a population of say 800,000 BBs is a lot compared to the number of sales. And it only takes a few sales to drop the comparables and thus all the remaining properties.


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## kcowan (Jul 1, 2010)

handwedge11 said:


> Thank you so much for the thoughtful reply, Mukhang pera. To accentuate my ignorance about real estate investing, I've never actually heard of the 1% rule (that seems like a foreign concept in BC!)


Here is a good blog to follow plus this article summarizes the main rules of thumb for qualifying potential purchases.
RE Investing ROTs


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## Just a Guy (Mar 27, 2012)

To put the main information back,

There are currently well over 100 properties available in alberta’s Major cities for under 100k/door. 

You could sell your property, buy 5 such properties, rent them for 1000/month each, and mortgage them for only 100k (assuming an 80% LTV mortgage). This would give you an income of 5000/month in rent and allow you to pay down your mortgage with the remaining proceeds of your sale. 

Most of the properties I found in Alberta were priced below 100k/door and were bigger than a 1 bedroom place. 5here was a news article saying the average rents for Edmonton started at 1000+/month for a 1 bedroom, meaning you’d get an average tenant for that price in an average area. So you’re not a slum landlord with slummy tenants. It also means the numbers I presented are probably low as far as rental income. I’m not going to bother looking up the article again, but you can find it with a simple google search for rental prices in <insert city>.


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## AltaRed (Jun 8, 2009)

Simply not relevant to a decision whether to rent or sell a Vancouver townhouse. Gotta think the OP has exited stage right by now.


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## Mukhang pera (Feb 26, 2016)

peterk said:


> Quite defensive, Mr. Boomer, against my rather innocuous reply pointing out a different perspective, and suggesting, lightly, that people of your pedigree who have experienced only one economic direction their entire lives, central bank backed expansion, might develop some mild amount of tunnel vision on certain matters like infinitely inflating real estate as *"pretty spectacular one way bets"*.
> 
> I haven't heard anyone else particularly voice much of the same things I have here actually...what reference? but sure, call me "trite" if it helps you stay relaxed.


Defensive? Maybe. 

But I see your post as offering little of benefit to the OP, while simply reflecting your ageist view of the world. 

As for the "_rather innocuous_" characterization, I see it as less so. Besides being unabashedly ageist, it would appear to reveal an oft seen discontent found among those younger than the boomers, who blame boomers for all ills of the world and for their own sorry lot (where that applies). I detect a distinctly seething frustration and anger in your words "_people of a certain advancing age who have not experienced anything other than peacetime expansionary, inflationary, urbanization, globalization policies aggressively implemented since WWII, and who will long be dead by the time any changes or detrimental effects of these policies come to fruition._" Your remark about a "_mild amount of tunnel vision_" suggests that us older folks, unlike you, have an inability to see things as they are, to make sensible plans for the future, for ourselves or anyone else, because our antecedents have blinded us and robbed us of the ability to exercise good judgment.

I am not sure that the blogger I quoted intended his words to convey the notion that anywhere will be the site of "_infinitely inflating real estate_". I certainly did not intended to convey that sense to the OP of this thread. I _did_, however, intend to convey my own personal view (and I clearly set out that I recognized that I would be alone on cmf in suggesting the OP should consider keeping the Vancouver property) that places like Vancouver are a good bet for long-term holding of rental properties. For one such as I, with no intent to sell in my lifetime, "infinite inflation" is not a consideration. But ability to always be able to find stable tenants, with rents that should at least track inflation, is important to me.

Let me say, also, that you read into my words a meaning not there when you say I suggest that "_the west coast is the natural and permanent destination for Asian assets._" I referred to west coast cities as Pacific rim gateway cities. If that is understood in common parlance as meaning a gateway by which Asian assets flow endlessly and one-way into those cities, then I was egregiously in error. 

Now, peterk, perhaps you are onto something with your gloomy forecast about when the "_detrimental effects of these policies come to fruition_". As a boomer in his 60s, maybe I lack your insight. But, to keep things in harmony with what the OP brought up, can you tell us what that means for him? Does it mean he should eschew real estate as an investment altogether? Or just in Vancouver? Can you elaborate on just what will be the "detrimental effects" of which you speak and the effect they will have for real estate as an investment? Can you give us a timeframe, by which time one should be out of real estate, for those invested there now? Can you say what will prove to be a much safer and more secure investment against the day when the chickens come home to roost? For my part, I am willing to listen and learn. 

As I have said, I am quite content with my LA investment. I paid $150,000 down years ago and that sum has long since been paid back and the mortgage retired out of rents. So, in a way, if it disappeared tomorrow, I would have lost nothing. The money invested has been paid back, plus a lot more. I am able to afford it becoming a total loss, since the after-tax income it provides gets invested elsewhere and not used to pay our bills. But it would be silly to simply watch it disappear. So peterk, counsel me. Do I now sell and, if I do, what would be your advice for re-investment? At today's prices, and after no small amount of tax paid to two governments, I should come away with about $1.5 million in Canadian funds. Que faire? What should I do with that capital sum? I'll open that question to anyone else reading here.


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## Plugging Along (Jan 3, 2011)

Just a Guy said:


> To put the main information back,
> 
> There are currently well over 100 properties available in alberta’s Major cities for under 100k/door.
> 
> ...


just curious are finding these realtor.ca site? And what do consider as a major city. I have been looking on and off years, and as your post suggest previously stopped looking for a while. Just seeing if you have a better than I do, and what your definition of a major city is. Right, I haven’t found anything under 100k in my city that wasn’t a mobile home.


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## Just a Guy (Mar 27, 2012)

I did a quick search on mls a couple days ago. The OP mentioned Alberta, so I looked at Edmonton, red deer and Calgary. It wasn’t single family homes, it was apartments and townhouses. I consider those three to be major cities in Alberta...red deer may be a bit of a stretch.

Mobile homes aren’t worth anything.


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## Plugging Along (Jan 3, 2011)

JAG: Thanks for the confirmation that it is the mls/realtor.ca site. I did not expect a single family home, or even a duplex or triplex, and figured it would be a townhouse/condo/apart. In Calgary, there is one bachelor suite listed. I have looked at that one, and know there are some problems with the building management and building which I choose not to deal with. Everything else in Calgary is a mobile home, and I know the one with the most listings will be closing down soon in due to some changes with land use. 


You are right, there is more in Edmonton, I have some friends who buy cheaper places in Edmonton and does fine. Yeah, Red Deer is stretch, but the city is growing, it's not a bad place to live. There is a lot of potential there if you can find a good job. I had a couple of classmates move there, made probably a third less than in the City, but living costs a lot less, and they were able to pick a couple of four-plexes for less than a nice house in Calgary. As you said, if someone wanted to make that change and move to smaller city, that might be worth selling.


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## kcowan (Jul 1, 2010)

Mukhang pera said:


> At today's prices, and after no small amount of tax paid to two governments, I should come away with about $1.5 million in Canadian funds. Que faire? What should I do with that capital sum? I'll open that question to anyone else reading here.


Well the smart money would say to keep it in USD. They would also advise to defer taxes as long as possible. Oh wait! That is what you are doing...


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## Mukhang pera (Feb 26, 2016)

kcowan said:


> Well the smart money would say to keep it in USD. They would also advise to defer taxes as long as possible. Oh wait! That is what you are doing...


That's been my thinking until now, kc. 

I have to admit I only recently got with the program of using a currency exchange (Knightsbridge in this case) for any US funds we bring up here. For a long time I would simply write a cheque on our B of A account in LA and deposit it to our RBC account here and accept whatever exchange rate RBC cared to give us. On Tuesday, I took $5,000 US out of the LA account. Using RBC's online exchange calculator (which usually shows exactly what they will pay at the time you look), RBC would pay CAD6,530 for USD5,000. Knightsbridge gave us CAD6,696. A difference of $166. Worth keeping. Sorry I waited so long.


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## kcowan (Jul 1, 2010)

MP just make sure you know the details. I got quit far along with XE.com and then discovered that I could not get the money from my bank account without fees. If your US account does bill payment to Knightsbridge it might be fine if they have no other restrictions.


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## Mukhang pera (Feb 26, 2016)

Thanks for the tip, kc.

I think I'll be okay. But all new. Last week I had a US dollar a/c added to our RBC accounts. With that, I deposit to the RBC US a/c a cheque drawn on our Bank of America account in Los Angeles. No fee or exchange to be paid to either of those banks to get that far. RBC says I am entitled to one free transfer per month. That will do. Knightsbridge, on its website, says one can pay:

_Via online banking bill payment, bank transfer, or our account to account service
We're integrated with all Canadian banks for free transfers_

We'll see.


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## handwedge11 (May 15, 2019)

Can't thank you all enough -- really appreciate the volume of responses. 
I'm hesitant to sell in Vancouver and buy out of province for a few reasons: 1. Distance between me and the property (what if something goes wrong?). 2. Lack of familiarity with these cities (but I guess I could do some reading and talk to realtors to find the favorable areas). 3. Finding quality of tenants in a low-price 1-bedroom condo (some of you have suggested that isn't something I should worry about, but I do).

I use a property manager in Vancouver. I assume I could do the same in Edmonton or Red Deer. What have your experiences been dealing with property managers out of province?

Thanks again. This is really helpful.


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## Just a Guy (Mar 27, 2012)

Price of the property isn’t always an indicator of the quality of the building. My son just bought a very nice 3 bedroom apartment two blocks away from a very trendy street for $70k. The next cheapest place to sell in that building was a one bedroom for $115k. This isn’t a common occurrence, in fact even I was surprised, but it can happen. The market for real estate is pretty much dead in certain areas, no one is buying so, if you have some cash, you can literally steal some places. I didn’t actually look at any of those listings, but there are over 100 in Edmonton alone, chances are one or two may be good. 

Properly screening the tenant is a different matter. Some property managers will do this for you, if not you’d better know how to do it. There are some who can fake their references. I remember a CBC news report on a guy who had a young family with two girls who bounced his cheque’s, trashed the places and was nearly impossible to evict in Vancouver (later heard he’d moved to Alberta) who cost landlords upwards of 40-60k in damages. Everyone interviews thought he’d be an ideal tenant. 

I found the link. 

https://www.cbc.ca/news/canada/brit...-powerless-as-tenants-get-free-ride-1.1307443

As for property managers, there are crooks, some bad ones, and a few good ones. A good property manager is rarer than finding a cheap property, but you only need to find one or some local guy you trust.


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## james4beach (Nov 15, 2012)

Mukhang pera said:


> For a long time I would simply write a cheque on our B of A account in LA and deposit it to our RBC account here and accept whatever exchange rate RBC cared to give us. On Tuesday, I took $5,000 US out of the LA account. Using RBC's online exchange calculator (which usually shows exactly what they will pay at the time you look), RBC would pay CAD6,530 for USD5,000. Knightsbridge gave us CAD6,696. A difference of $166. Worth keeping. Sorry I waited so long.


Do you have a discount brokerage? Through TD Direct Investing, trying it right now, 5000 USD converts to 6628 CAD which isn't too bad (it's about 1.5% FX fee). Certainly better than standard bank FX rates and better than the rate RBC is giving you.

For example one can write a cheque drawn on the US bank, deposit it at TD, then transfer the money into the TDDI brokerage and convert using the TDDI transfer tool. Though this rate isn't as great as the 3rd party service, it's still very easy to do and never takes the money out of the super-safe big bank system.


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## Mukhang pera (Feb 26, 2016)

james4,
Nope, no discount brokerage. I must confess to being wholly unschooled about such things. Do you think I should learn? Would I get better results than with an outfit like Knightsbridge?


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## Mukhang pera (Feb 26, 2016)

handwedge11 said:


> I use a property manager in Vancouver. I assume I could do the same in Edmonton or Red Deer. What have your experiences been dealing with property managers out of province?


Handwedge. I'll again depart from the prevailing view, which seems to be if your rental property is not close to where you live, you need a property manager and finding a good, honest, property manager is about as hopeless a task as finding a good, honest, politician.

When I lived in Vancouver, I always owned a rental or two there and managed myself. I found that living close to hand was an advantage once in awhile, but I never spent a whole lot of time visiting any rental I owed. I have addressed on cmf before my own views about hiring yourself as second rate repairman. I don't fix toilets. I have painted a few suites, that's about it.

When I moved out of my duplex in LA, it crossed my mind to get a property manager. As it happened, the downstairs tenants said they knew someone who would move into my suite the day I left, so I did not need any help in that department. I knew the downstairs tenants well, found them reliable and, apart from asking a few questions, did little in the way of screening their recruit. It worked out just fine. In the back of my mind, I thought that maybe I would get a manager later. Never did. For some time, my downstairs tenants were my de facto managers. They would contact me (usually by email) if there was, say for example, a repair issue. Because I had lived there for a few years, I knew locals with various skills, so I would tell the tenants just to call Joe (for example) and arrange for him to come over and do the fix. I would arrange payment for Joe, or the tenants would pay him, deduct from the rent (with prior agreement) and send me the receipt for my taxes. When those tenants were there, they would collect and deposit to my account the rent cheques for each suite. 

When my helpful "property manager" tenants moved out from the lower unit and went off to buy their own home in Studio City, the upper unit tenant asked to rent both units, using the lower for his office. He is still there. He has a couple of employees who report to work at his office every day, and one is sort of a personal assistant and she has been assigned the task of reporting to me. She makes the rent deposit each month and deals with me on any repair issues. Because he claims a tax deduction for the rent he pays for the lower unit, his accountant does a nice job of sending to my accountant each year a statement of rents paid, he keeps track of original receipts (I get scanned copies by email) and I hardly even deal with my accountant except to pay my US taxes as he instructs. 

I would say that, with a single townhouse to rent (or something similar in any other city you choose, if not Vancouver), there should not be so much complexity as to require you to pay someone 8% (ugh) of gross rents to do the modest amount of managing required. Heck, I'll even agree with JAG and suggest, at the most, find a local guy you trust to step in on the odd occasion, if needed.


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## humble_pie (Jun 7, 2009)

Mukhang pera said:


> Nope, no discount brokerage. I must confess to being wholly unschooled about such things. Do you think I should learn? Would I get better results than with an outfit like Knightsbridge?




MP what a pity you've been paying those ultra-high bank/broker FX fees. Still, it's fairly easy to avoid these & they say it's never too late for anything.

cmf has always had a well-developed anti-FX pro-consumer politic. You can see this recently in the zero-fx credit card threads.

many older threads treat currency arbitrage, an operation in which parties exchange one currency for the other, with never a penny of FX fee, via a paired purchase & sale of one single interlisted canadian stock at an online broker.

MP you mention you are a roybank client & this means an ideal setup for currency gambit trades in the future. RBC discount brokerage is one of only 2 brokers in the whole of canada whose online trading platform allows paired instant currency gambit trades. All other brokers have to be phoned for the sell side, or else some other workaround has to be utilized to overcome the glitches. Only RBC & BMO offer seamless instant gambits.

because of this RBC advantage for currency gambits - which i believe might eventually be useful for yourself - i for one would encourage you to open a broker account at RBC, not at TD. RBC is already your home base & it happens to be a choice pick when it comes o currency arbitrage trading.

this being said, a gambit pair trade is an operation of medium complexity. I for one do not believe that a newcomer to online brokers would be able to correctly manage such paired orders right off the bat. Some basic learning - how to carry out a single online trade for example - is required. Client must also be able to understand dividend payment cycles & market data that affect his proposed gambit operation.

the above makes me think that a combination of knightsbridge for the immediate present plus a campaign to set up & learn to use a broker account for the purposes of currency arbitrage might be a promising approach.

very sincere apologies to the OP here, whose thread was slightly hijacked a few messages back. 

MP if you happen to read this post & if you reply, perhaps you could use this thread which was recently treating the actual topic of currency gambit trades:


https://www.canadianmoneyforum.com/...ert-s-Gambit?p=2018226&viewfull=1#post2018226


.


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## james4beach (Nov 15, 2012)

Mukhang pera said:


> james4,
> Nope, no discount brokerage. I must confess to being wholly unschooled about such things. Do you think I should learn? Would I get better results than with an outfit like Knightsbridge?


I agree with humble_pie that we should move this discussion to another thread, but it's an important discussion. I think the Knightsbridge approach sounds like a good way to go but there are other good options. How much 'effort' it's worth doing all this will depend on how routinely you convert USD to CAD and how long you expect to do it.

I've converted ~ 200K cross border over the last few years and I've saved thousands of $ using the better techniques, so happy that I did.


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## Mukhang pera (Feb 26, 2016)

Thanks to both james4 and hp for helping to save me from myself and a conspicuous lacuna in my fiscal savvy. I will not add more to that topic on handwedge's thread.


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## susanalisa247 (Jun 10, 2019)

*It is definitely quite expensive*

It is definitely quite expensive out there, i moved out from there 7 years ago.


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