# What would you do with all this $$$ ?



## envision29 (Jun 17, 2010)

A little about myself, I am 29, single, annual income of 50K. 
I just sold my condo that I bought in 2005 and made 130K net profit in just 6 years. I moved back to my parents who are renting and will probably stay with them for a while until I decide what should I do next. In the meantime, I placed 100K in GIC at 2.25% and 15K in TFSA. I know this isn't the best option but the amazing profit I received makes me wonder if this can be repeated by purchasing another real estate property, this time a house with my parents. Probably not, with all the talk about possible ''correction''
I have my sight on a certain residential project which will be completed sometime in 2012 for which I am planning to put 100K as DP so after consulting my bank advisor, the only safe investment I could do for a year would be a GIC. 
In the meantime, I will finally enjoy debt free life, mom's meals, and pretty much my whole salary to myself.
I wonder what would you do with all that money ? Just for the record, I am not familiar at all with stocks and the market. 
I already used the HBP, and now repaying 1000$ each year for a total of 14 000$ 
My current RRSP is at 3K with contribution limit to 30K

Thanks for any advice.


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## FrugalTrader (Oct 13, 2008)

If your plan is to redeploy the capital into real estate within the next 3-5 yrs, then it might be best to preserve capital. In other words, stay out of the market.


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## the-royal-mail (Dec 11, 2009)

Interesting. I think you were incredibly lucky. You remind me of a casino or lottery winner. They win, but then gamble even more. No! Stop gambling, take the winnings and RUN! Your chances or making this kind of money again are slim to none.

However, living at home isn't a really great plan. Not a very good way to impress the ladies.


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## Rico (Jan 27, 2011)

I wouldn't count on making money like that again just because it happened once. 

Maxed TFSA is great! I would consider upping RRSPs slightly to reduce tax to the top of the lower bracket since you're at 50K (e.g., reduce income to no lower than 41,544 for 2011).


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## I'm Howard (Oct 13, 2010)

I suggest you stay with a one year GIC and see which way rates move.

Money can be made in RE but usually by some one with construction skills who are willing to buy Fixer Uppers in good areas.

JNK is a High Yield Bond Fund that yields about 7%, you may consider putting 10% of your monies into it.

The Wealthy Barber might be a good book to read.

A House with a Basement apartment might be an option.

HGTV have lots of programmes on Real Estate, you might want to catch a few.??


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## OhGreatGuru (May 24, 2009)

I don't believe all the doomsayers who say we are going to see a collapse of real estate. But I think it unlikely you will see the same growth rate you had over the past 6 years. So from a purely investment perspective I would agree with others it is time to capitalize and diversify into something beside real estate. The only qualification is that you have to live somewhere, unless you want to live with Mom & Dad in their rental unit forever. So maybe you may need to plow it back into a house, but for living space, not as an investment per se.


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## Kim (Jan 10, 2011)

Living at home isn't so bad - shows that you are trying to save money and perhaps will compel you to seek ladies that have their own place!


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## GeniusBoy27 (Jun 11, 2010)

I think I would also diversify. You could use some of the money to pay back your HBP now, if you want, as well.

But as this stage, I would consider good short-term investments. Real estate is probably going to be relatively flat for the next little while, so I'd be cautious in investing, unless you're willing to fix the place up.


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## sprocket1200 (Aug 21, 2009)

did you say a 100K deposit on an unbuilt development? why not just throw it out the window!

seriously, search the book lists on here. read a book a week for atleast a month, then go see a fee for service financial advisor.

meanwhile, keep that money in a GIC or high interest savings account. over a month or two you won't see much difference and the flexibility may be worth it.

and take a good look in the mirror at your mom and dads. the only reason you 'made money' is because you cashed out and could move there without redeploying the capital. if you would have had to purchase another property, you would have only been able to buy the same type. no advantage to you as everyone else had the same gains, so relatively you did not get further ahead...


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## the-royal-mail (Dec 11, 2009)

That's true. Moving back home at the OP's age should only be done in extreme cases of adversity and not as a money making move IMO. sprocket makes a good point. Also, the point further above about the ladies, good luck finding one who won't pass judgement on a man living with parents. There is stigma with this.

I would place the money as suggested here, but find a nice apartment to live in. You can't put your life on hold while you enjoy having the money. I could probably retire in a quarter of the time if I didn't have to pay for food, gas, rent and numerous other life expenses.

All my opinions only.


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## Pigzfly (Dec 2, 2010)

The OP didn't use any masculine pronouns.


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## envision29 (Jun 17, 2010)

Thank you everyone for your opinions. I appreciate it. I would like to explain my motives behind the sale of my condo. Other than making money, there were a few more factors to it. 

First of all, the condo is way too big for one person (1025sf) with 2 bedrooms. Initially, I bought it with a perspective of having a familiy and having an extra room is always nice. Little did I know that my personal life wouldn't turn out as good as I imagined, so after 4 years relationship we got separated and in some ways it changed my view on having a family again. Priorities shifted and I now I want to think about myself first. 

Other than the size of the condo, the location wasn't the best either, on a very noisy street and not the best neighbourhood. Everyone who considered to buy this place was turned away by it's location. But finally I sold it. 

I have to agree with sprocket, in a way I don't feel like a lottery/casino winner because if I would to buy something similar right now, my whole profit would be spent. So even though I have this much money the excitement is not there because I know that in a year or so I would put 80% of it into a house.

However, I could have easily rented for 6 years and got 0$ at the end. So it depends on how you look at it.

The only reason why I temporary moved back to my parents is because we have decided to purchase a house together.

They don't have any savings at all and basically I will be the one buying a house by putting 100K as a downpayment and sharing a mortgage with them 50/50. 

This particular residential project is located right next to the bridge that will be open in may 2011 which will make it much easier to get to and from Montreal which in terms MUST make the prices of current house go up ( I know I am speculating but it only makes sence). They will only start building at the end of 2011, beginning 2012 but we already reserved a lot, this is why next summer.

I agree with OhGreatGuru, the capital must be directed to a place for better living space (especcialy now that we live in a tiny 3 and half apt.) mostly, and if the price of house goes up it will only be a plus.

Besides, what this sale allowed me, is to have lots of free money. Nobody is forcing me to reinvest my whole profit into a new house. I could put 100K or I could put 80K. I could have never imagined having such savings of 15K in my TFSA and I was basically living paycheck to paycheck.

Rico- thanks for advice to contribute to RRSP to reduce tax to the top of the lower bracket - this makes sence, although it would be probably more beneficial to do next year when I will withdraw the 100K with taxable interest.
By the way, yes I am a male. And though it may not appeal to ladies that I live with parents, my bank accout should definitely play a role.


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## marina628 (Dec 14, 2010)

lol I love it ,but don't share your bank account with the ladies. Not sure if it is fair to you to put up the equity into house and still split the mortgage with parents 50/50. We bought a house with a friend and we put $80,000 down ,friend put zero down.We factored in a ROI on $40,000 which represents the share of money we put in for our friend at the same interest as the mortgage which is 3.49% a year .We pay the bills 50/50 but when house is sold we will get a interest payment from our friend on the $40,000.Without our cash investment he would not have gotten into real estate.In 13 months we have seen appreciation of $70,000 on this property .


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## envision29 (Jun 17, 2010)

Marina, thanks for sharing. 
But parents are not the same as a friend, especcialy after I realized that they are the only ones who can be trusted 100%
If say we resell the house and make for ex. 100K profit on it, my dad suggested the following :
400 000$ original price
100 000$ my down payment
300 000$ mortgage

When selling say in 5 years for 500K, I would get my original 100K + 50K of the profit the house made and parents get 50K for their retirement. Sounds fair to me.


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## marina628 (Dec 14, 2010)

Parents are not same as friends I agree ,I bought my Dad a 2010 Ford Escape a few months ago so have no problem giving to my parents.Just wanted to share the option.You may also want to consider what is fair if house goes down in value before you enter in this contract .


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## Plugging Along (Jan 3, 2011)

envision29 said:


> Marina, thanks for sharing.
> But parents are not the same as a friend, especcialy after I realized that they are the only ones who can be trusted 100%
> If say we resell the house and make for ex. 100K profit on it, my dad suggested the following :
> 400 000$ original price
> ...


I totally agree from the point of parents are not friends. 

However in terms if this deal would be fair if you were looking at just the merits of the deal (relationships aside), it isn't.

You are putting a larger amount because you paying for 1/2 the mortgage, plus the only part of the downpayment. Though you get the down payment back before the profits are split, you are not getting any additional 'return' for your intial down payment. In my mind, from a strictly investment and fairness standpoint, you should actually be getting more from the $100K profit than 50%.

However, if you don't mind subsidizing your parents, that's totally cool.


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## sprocket1200 (Aug 21, 2009)

marina628 said:


> Parents are not same as friends I agree ,I bought my Dad a 2010 Ford Escape a few months ago so have no problem giving to my parents.Just wanted to share the option.You may also want to consider what is fair if house goes down in value before you enter in this contract .


you did what? clearly you are a millionaire! congratulations...!

i will NEVER be able to afford a new vehicle...


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## kcowan (Jul 1, 2010)

marina628 said:


> You may also want to consider what is fair if house goes down in value before you enter in this contract .


Yes! If the selling price in 5 years is $350 and they are willing to put up their $25k of the loss, then the deal is fair.

Otherwise you can consider this deal just like renting out a room to them because you are taking all the risk. And as the Plugging said, in your example, the gain is 25%, so you take $125k, and split the remain $75k. This would be a more than fair gift to your parents.

Also what happens when you need the money to buy your own place, and your parents do not want to sell?


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## marina628 (Dec 14, 2010)

I appreciate the OP loving his parents and they probably can live together cheaper than apart.I am all for extended family living arrangements but you must have a clear set of 'WHAT IF' rules before you get into this.Maybe consider a three year arrangement as it seems that is the point that people tend to refinance etc.Also you may find a life partner and this new person and your parents may not like each other enough to live together.
You should also buy the house you can afford yourself in case of illness ,change in ability to work for your parents or yourself.
My friends bought a house with their son a couple years ago ,he got married last august and bailed on his responsibility ,it was a 10 acre lot and the parents are not able to keep it up so they are selling it and will be facing a $34,000 mortgage penalty as they are going back to renting.


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## twowheeled (Jan 15, 2011)

Pigzfly said:


> The OP didn't use any masculine pronouns.


funny how we all automatically assume the male gender when it comes to these things.


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## Cal (Jun 17, 2009)

I would pay back all of the RRSP money...might as well use some compunding interest, you have to pay it back anyways.

And read up on the markets/equities...it is great that you made some money on your condo...but this is a great opportunity to get a little more diversified.

And yes, IMO...wait a bit on the housing market.


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## realist (Apr 8, 2011)

Im not clear on how much you are looking at the house as an investment vs. a place to live. 

In the Toronto market I have been reading that many people feel that the "pre-construction" prices for condos are not nearly as good as they would have been around the time you bought your last property. Something to think about when buying other pre-construction property is how much of a down payment you are putting down vs. what you expect the property to be worth when you take possession.


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