# so many brand new townhouses for rent in Ottawa.... is my math correct?



## getliquid (Mar 2, 2014)

there are TONS of new build town houses for sale in any given developing areas around Ottawa, the cheapest new build town is 300K and their all being rented between $1450-1600. I mean if you search for town rentals on kijiji or even agent site there are tons, and hearing from some co-worker who were renting places go pretty fast.

by using mortgage calculator

https://www.ingdirect.ca/en/tools/calcs/Borrowing.html

$300K mortgage 25 years 2.99 fixed is monthly paymt $1418 + 250 property tax = which is neg cashflow of -168 a month , brand new town might not need repairs for awhile but still...

am I missing something or are these people cant do simple math? lets assume the annual increase is 2-3%

would you get a town rental right now in the Ottawa market given the above numbers? 

We are tryign to diversfity our investment which is heavy into stocks, we can put 20% down but is it worth it?


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## Just a Guy (Mar 27, 2012)

1450-1600 return on 300k is not very good. Your tenants don't pay the rent, you usually lose about 3 months income before you regain your place and get it rented again...if they damage it, more costs...on townhouses there could be condo fees...

I won't even touch the drop that could occur with a correction...also, your payments will go up in 5 years as interest rates probably won't stay at 3% for the next 25 years...count on an extra $300/month for each 1% increase when you renew.

I wouldn't touch these...bad investment unless you make oodles of money and want a tax write off of your losses.


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## sags (May 15, 2010)

They are probably owned by developers who had to finish the project, despite the lack of sales......and are now renting them out instead.

The "sale" price is what the developer wants to sell them for...........not what it cost him to build them.

The developer may still be realizing a profit from renting the units.


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## chantl01 (Mar 17, 2011)

Minto has often done this with its housing developments around Ottawa. My cousin bought a house from Minto some time back that had been a rental unit for a couple years, as Minto was slowly unloading the 'unsold' properties in the development to avoid driving down the prices across the board. She was able to go to the Minto design centre to pick out new carpets and paint to bring it back to a 'nearly new' state when she bought it.


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## Hawkdog (Oct 26, 2012)

does that 300,000 include new home taxes?


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## Mortgage u/w (Feb 6, 2014)

Definately not worth it. Even with a down-payment of 20%, the return if at best will break even. Might as well stuff the money under your mattress.

Resale could also hurt you....not sure many people will be attracted to live in such an area dominated by tenants. The condo market is currently affected as such - too many renters in the building scaring off potential owner-occupying buyers....beware of what you invest in when it comes to RE.


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

sigh. Nearly every week someone comes on here asking about this. $2000 a year gross is hardly an enticing amount of money. OP forgot to calculate the selling costs for RE as well as the hassles of dealing with tenants. Far easier to cut spending and waste $2000 less every year on consumables. If you want RE diversity get a REIT and keep your hands clean.


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## Charlie (May 20, 2011)

It doesn't look like a deal I'd be interested in....but your math should account for the principal paydown. Under the $170/mo original shortfall scenario, our investor puts up no funds, pays 170/mo over 25 years ($51K total) and ends up with a $300K condo (subject to a zillion variables).

On $1450/mo with tax of $250 and repairs of $200 he nets $12K on $300K -- about 4%. Measure that 4% against hassle factor, vacancy, repairs etc, offset by increasing rents etc and it may make sense for some.


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## marina628 (Dec 14, 2010)

Back when we were buying $160,000 houses that we could rent out for $1100 -$1200 we looked at fact that somebody else was paying the house off for us.You cannot ignore that somebody else is paying the house off for you with you tying up very little cash .300k homes would need to rent for $1800+ to even begin to make sense.


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## andrewf (Mar 1, 2010)

^ 8% rental yield makes a lot more sense than 4%.


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