# Not sure which financial route I should take



## Mulak (Feb 7, 2017)

Hi,

I'm going to be a 30 years old single guy next month.

I have a condo in Oakville, Ontario that I bought for 285k which I put 20% down. I rented the condo out for almost 2 years now and I'm cash flow positive like $50 a month which pay everything including property taxes.

I make roughly 30k a year and I have 50k cash currently.

I would like to get a house so there is a housing development in waterdown that I'm checking out on which sales coming out in the spring. So I don't know the prices yet because phase 1 was a few years ago starting from mid or high 200s to mid 350 for a townhouse.

If the prices for phase 2 are out of reach for me then I will be staying in Oakville and live in a condo instead. My options are:

1. should I kick out my tenant, live in it and just do 10% repayment every year or invest the 50k (which I have no investment/investing knowledge )
2. sell my condo (10 years old building) which is now worth 310-330k depending on features, and buy a pre construction condo instead using the 20% down, rent from tenant and profit from my condo plus a good chunk of 50k cash plus future savings from working for a few years as a huge down payment on the pre-construction condo.
3. Keep the old condo rented out and buy a pre construction with the 50k plus the money I will save up while the new condo getting built which is probably a few years.
4. You got a better option

What do you guys think?


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## OnlyMyOpinion (Sep 1, 2013)

Just to make sure we understand:
Where do you live now?
You are considering:
1) move into your condo instead of renting it out as you do now?
2) sell your condo and use monies to buy a new house being built?
3) keep renting your condo out and buy a new house to live in?

Have I captured these correctly?


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## CalgaryPotato (Mar 7, 2015)

Don't forget if you sell that condo you are subject to capital gains tax because it wasn't your primary residence. If you want to try to prove it was that will probably be difficult.

So the 25-45K sounds nice on the surface. But you have to pay legal fees and if you pay realtor fees and taxes it might not amount to a whole lot.


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## TomB19 (Sep 24, 2015)

Real estate isn't as much of a numbers game as you are presenting.

If you have a good renter and things are operating smoothly, hang onto that. Good renters are not that common.

You could consider moving the $50K into your TFSA, giving yourself a $50K 2nd mortgage on the condo with the TFSA money, use the $50K to pay down the bank mortgage, and your tenant will be paying you $285 per month. In effect, you will be buying back your mortgage and making 3% tax free on your $50K savings.

In 5 years, you could have the bank mortgage down to $125K with little additional investment but you'll have lots more cashflow. When your TFSA hits $100K, re-do the 2nd mortgage and take the $540 per month in your TFSA.

2 years is too soon to sell the condo, unless things are going in a direction you don't like. There is overhead in the ownership cycle so I've found it's generally best to hold property for 5~7 years.

During the next few years, study investing. Even though I don't know you, what you've written leads me to believe you will do well at investing but don't just jump in with a bunch of money and start trying things randomly. Study it. Look at buying good companies that are making money. It will take time for you to learn the ropes. Be patient. Once you are up to speed, you will have some nice TFSA cashflow with which to buy productive companies which will add even more to your cashflow.

Forget about doing things quickly. That's how you lose money. Select your investments very carefully. Commit to them and be patient.

Above all, remember this: Investing is about getting rich slowly. You will lose money if you become impatient and try to get rich quickly.


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## tygrus (Mar 13, 2012)

You already made a big mistake in RE. Never buy something without a peice of land you control under it. 

$50 a month cash flow positive is nothing. A bad tenant or a couple months vacancy will put you at a loss in a heartbeat. 

My advice - stop messing around with condos.


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## CalgaryPotato (Mar 7, 2015)

tygrus said:


> You already made a big mistake in RE. Never buy something without a peice of land you control under it.
> 
> $50 a month cash flow positive is nothing. A bad tenant or a couple months vacancy will put you at a loss in a heartbeat.
> 
> My advice - stop messing around with condos.


Great point here.

A couple of months vacancy would be a minor issue in this case, how about a special assessment? A 20K assessment, (and I know lots of people who've had them in that range) would take 400 months (over 30 years) to pay off at your current profit.


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

First you need to figure out where you want to live. Your scenarios are all great just as they could be all bad.

Condos are not your ideal rentals. So I would already lean to either selling it or go live in it. Makes no sense to renting out a condo when you have to pay rent somewhere else. Your $50/mth profit is nothing when you factor in capital gains.

If you want a bigger place, sell and buy a new one - and live in it.
If you want to build a RE portfolio, now is not the right time and condos/single dwellings are definitely not what you want.


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## Mulak (Feb 7, 2017)

OnlyMyOpinion said:


> Just to make sure we understand:
> Where do you live now?
> You are considering:
> 1) move into your condo instead of renting it out as you do now?
> ...


I live in Oakville with my mother right now.

1. Yes
2. Yes, if the new house is affordable enough for me
3. Yes but not a house, a condo since I put 20% down already on my rented condo and don't want to pull out anything that will cause a negative cash flow that I have to pay the difference on top of my own place



CalgaryPotato said:


> Don't forget if you sell that condo you are subject to capital gains tax because it wasn't your primary residence. If you want to try to prove it was that will probably be difficult.
> 
> So the 25-45K sounds nice on the surface. But you have to pay legal fees and if you pay realtor fees and taxes it might not amount to a whole lot.


A family friend of mine is a realtor and she said I don't have to pay her or a very small percentage when I'm ready to sell the condo, so at least it soften the blow a bit.



TomB19 said:


> Real estate isn't as much of a numbers game as you are presenting.
> 
> If you have a good renter and things are operating smoothly, hang onto that. Good renters are not that common.
> 
> ...


Thanks for the advice, appreciate it ... what information do you recommend that I study investing from?

I will look into the TFSA. I currently have two accounts from TD, one is high interest savings account (46k) and the other is every day chequing account (6k). Should I get rid of the high interest savings account and take 50k towards the TFSA?



tygrus said:


> You already made a big mistake in RE. Never buy something without a peice of land you control under it.
> 
> $50 a month cash flow positive is nothing. A bad tenant or a couple months vacancy will put you at a loss in a heartbeat.
> 
> My advice - stop messing around with condos.


I agree with you but I wouldn't be able to get a mortgage later on because my mom is planning to buy a house and not sure if she would be able to get approved for her own mortgage if she has her name under my mortgage as my co-signer. Also my dad passed away before I bought the condo, so my mom was the only person I can get as a co-signer. it was either that or pay 50% down which will take me like another 3 years to save up. So I thought I buy a place earlier and build up enough credit/reputation for paying the payments that the bank can make me the sole owner of my condo property. It was a kind of a rock and a hard place kind of situation for me.

My tenant is great, she is like 60 years old flight attendant and she is gone like over 60% of the time. So far, no damages or anything that cost me money, I was just there like 10 days ago and already told me that she will be gone for 3 weeks flight attending.



CalgaryPotato said:


> Great point here.
> 
> A couple of months vacancy would be a minor issue in this case, how about a special assessment? A 20K assessment, (and I know lots of people who've had them in that range) would take 400 months (over 30 years) to pay off at your current profit.





Mortgage u/w said:


> First you need to figure out where you want to live. Your scenarios are all great just as they could be all bad.
> 
> Condos are not your ideal rentals. So I would already lean to either selling it or go live in it. Makes no sense to renting out a condo when you have to pay rent somewhere else. Your $50/mth profit is nothing when you factor in capital gains.
> 
> ...


I would love to live in Oakville but houses are crazy expensive for me to afford it. change career that make decent money since I'm currently a pastry chef at a restaurant right now. I'm checking out this development in waterdown where my aunt moved to... she got a 2 bedrooms 3 stories townhouse for 285k pre construction a few years ago. Phase 2 coming out this spring and I hope during the 3 years doesn't cause a huge price increase that I can't afford it.

What do you recommend for investing? TFSA? like what TomB19 suggested?


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## CalgaryPotato (Mar 7, 2015)

Honestly you shouldn't have a mortgage that you can't get on your own. The fact that you had to get your Mom to cosign for it should be a big red flag for you. And it's barely breaking even, and you want to buy another condo? Do you realize how screwed you (I mean your Mom because she is the one with skin in the game) will be if prices drop just a little.

Why don't you rent yourself? Also, you must be very close to minimum wage given your current salary. I'm not sure what the reason is for that, but maybe you should consider investing in yourself with some sort of schooling or something. Because while that 50K is a nice starting place for investing, 30K a year isn't very much for someone who is already in their 30's. 

Also a TFSA isn't really a type of investment. It's just a place where you can put different types of investments to shelter them from tax. So you could move your HISA into their and not change a thing. If you are saving up the money for something. Or you can do some investing of whatever type you want to do in there.


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## Saniokca (Sep 5, 2009)

Mulak said:


> Hi,
> 
> I have a condo in Oakville, Ontario that I bought for 285k...
> 
> ...


You make 30k, "own" something that's 10 times your income and want to buy a second property? I think that's crazy 

My advice:
1) Sell the condo and either stay with your mother or rent something - you can buy something when you're married. I wouldn't move into your condo because at 10 times your income it's something well out of your price range.
2) Work on increasing your income.
3) Don't ever ask friends/family to cosign any of your loans. Don't cosign anything for others either.


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## Mulak (Feb 7, 2017)

CalgaryPotato said:


> Honestly you shouldn't have a mortgage that you can't get on your own. The fact that you had to get your Mom to cosign for it should be a big red flag for you. And it's barely breaking even, and you want to buy another condo? Do you realize how screwed you (I mean your Mom because she is the one with skin in the game) will be if prices drop just a little.
> 
> Why don't you rent yourself? Also, you must be very close to minimum wage given your current salary. I'm not sure what the reason is for that, but maybe you should consider investing in yourself with some sort of schooling or something. Because while that 50K is a nice starting place for investing, 30K a year isn't very much for someone who is already in their 30's.
> 
> Also a TFSA isn't really a type of investment. It's just a place where you can put different types of investments to shelter them from tax. So you could move your HISA into their and not change a thing. If you are saving up the money for something. Or you can do some investing of whatever type you want to do in there.


you recommend that I should sell the condo as well like what Saniokca suggested?

Lowest rent in Oakville I can find for one bedroom apartment is $1100 which is uncommon to find and it only $100 less than what my current 1 bed 1 den condo mortgage/fee payment is.

I make $16/hour full time plus $350-400 a month from tips, no debts and I don't have any expenses like a car.

I want to do a career change, I'm trying to find a career that is deaf/hearing impaired friendly because I was born deaf and wear hearing aids. It hard to move up the ladder and get better promotion/money because of employers are a bit ignorant and not willingly to take a chance with me.



Saniokca said:


> You make 30k, "own" something that's 10 times your income and want to buy a second property? I think that's crazy
> 
> My advice:
> 1) Sell the condo and either stay with your mother or rent something - you can buy something when you're married. I wouldn't move into your condo because at 10 times your income it's something well out of your price range.
> ...


1. that is something to consider. If I sell the condo then what kind of investments do you recommend that I could pursue?
2. considering a career change, trying to find a prosperous profession for a deaf/hearing impaired person like me
3. oh no I will never cosign anything for others... i like my family but i don't trust them financially lol


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## TomB19 (Sep 24, 2015)

Not many people have purchased property entirely on their own. Getting help from a parent is probably more common on a first home than doing it on your own.

At that income level, you need to look at finding yourself a home that is as affordable as possible. Perhaps a house with a basement suite. You could live in the basement suite, rent the upstairs, and live for close to not cost. You will need to live on that level, considering your income, if you want to make any net worth gains at all.

The TFSA would be with a brokerage such as TDDI, but a brokerage that offers self directed mortgages. You can then withdraw the money as a mortgage. If your Mom has enough of an RRSP, you could even look at pooling your money to hold an entire mortgage on your own. Your Mom would put in $200K and you would put in $50K, for a $250K mortgage.

Don't worry about doing fancy financial transactions. At this point, the most important thing is for you to keep your expenses down. You could move into the condo and find a room mate or find a house where you can build a suite. At $30K per year, you're not going to be able to carry a $1500/mo mortgage plus utilities and have anything left.


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## TomB19 (Sep 24, 2015)

CalgaryPotato said:


> ....(and I know lots of people who've had them in that range) would take 400 months (over 30 years) to pay off at your current profit.


Mulak, people on this site are mostly negative on real estate. I love real estate. I've been in a position to retire for the last few years, entirely due to real estate.

Real estate is not all good, to say the least. There are all sorts of liabilities to be aware of, only some of which have been pointed out in this thread.

You're young. You're taking risks. You're saving money. I have every expectation that you will find financial success with time, even if you hit a few road blocks along the way.

In the mean time, how much advice do you want to take from someone who cites a 30 year payoff with no regard for inflation? That's ridiculous and likely coming from someone who is scared of real estate and will fabricate ideas to convince himself it's a bad investment. R-E is a bad investment... for some people.

When I buy a house, I amortize it over 22 years and have zero cash flow. That's my goal. If the house would have to be amortized for more than 22 years at zero cash flow, I wouldn't buy it. As the rent goes up every year or two, I raise the payment. That eliminates the debt in 11~14 years. Not bad but there are plenty of liabilities during that 11~14 years, far more than have been pointed out in this thread.

Whatever you do, take your time and make sure you make the decision that will take you in the life direction you need to go. You'll know what's right.


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## Saniokca (Sep 5, 2009)

Mulak said:


> I make $16/hour full time plus $350-400 a month from tips, no debts and I don't have any expenses like a car.
> 
> I want to do a career change, I'm trying to find a career that is deaf/hearing impaired friendly because I was born deaf and wear hearing aids. It hard to move up the ladder and get better promotion/money because of employers are a bit ignorant and not willingly to take a chance with me.
> ec
> ...


I am not great at career advice . I think in my field the hearing disability would not be a big issue, if at all. It seems that you have done some research about what you'd like to do - what are your options?

1) Something boring - like canadiancouchpotato.com but take some time to read and research about it. Also if you decide to go to school instead of taking on debt maybe spend the cash you have.
2) Yep - my advise here would be to talk to someone in that profession (or better a few people) before getting into it.


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## Mulak (Feb 7, 2017)

TomB19 said:


> Not many people have purchased property entirely on their own. Getting help from a parent is probably more common on a first home than doing it on your own.
> 
> At that income level, you need to look at finding yourself a home that is as affordable as possible. Perhaps a house with a basement suite. You could live in the basement suite, rent the upstairs, and live for close to not cost. You will need to live on that level, considering your income, if you want to make any net worth gains at all.
> 
> ...


I agree I need to find a place that is more affordable for me. I don't know if I can do roommate(s) because we always hear horror stories involving roommate and they aren't what they seem day to day comparing to seeing them every once in a while.

I would like to have a house with a basement suite, and I have no problem living in the suite but those houses are typically a detach bungalow with a big lot which means a hefty price tag I bet

my condo is a 1 bed 1 den condo... not suitable for a mate

I guess it best to stay where I am until I improve my professional life in some way to surpass the 30k 



TomB19 said:


> Mulak, people on this site are mostly negative on real estate. I love real estate. I've been in a position to retire for the last few years, entirely due to real estate.
> 
> Real estate is not all good, to say the least. There are all sorts of liabilities to be aware of, only some of which have been pointed out in this thread.
> 
> ...


Thank you for the reassurance 



Saniokca said:


> I am not great at career advice . I think in my field the hearing disability would not be a big issue, if at all. It seems that you have done some research about what you'd like to do - what are your options?
> 
> 1) Something boring - like canadiancouchpotato.com but take some time to read and research about it. Also if you decide to go to school instead of taking on debt maybe spend the cash you have.
> 2) Yep - my advise here would be to talk to someone in that profession (or better a few people) before getting into it.


what is your field? I currently have no options... I'm kind of flexible on whatever profession nowadays that are easy to get into, make decent money and having hearing disability not being frown upon while moving up the ladder

I was planning on opening a pastry shop but my passion for it got killed while working at my current job... I didn't like working for this employer and disliking pastries/desserts that bad that I don't experiment recipes anymore at home. I have been trying to find another job for quite a while and it been tough

I will check out canadiancouchpotato.com and read up on it... I might have to consider going back to school  .. dislike studying so much lol


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## Just a Guy (Mar 27, 2012)

Well, looking at your posts, it seems like you may be lying to yourself about your "cash flow positive", since you're not factoring in your down payment. 

That being said, this isn't the worst investment ever posted on here when it comes to real estate. In the long run, barring an interest rate hike, you'll probably come out of the whole thing ahead...but it'll take time.

Personally, I wouldn't have bought that rental in the first place because it doesn't cash flow. In this market, if you're not pocketing several hundred dollars a month extra then you're probably playing with fire.

I understand that there aren't a lot of options out there, but that doesn't mean you need to bite the bullet and jump in anyway. The prudent investor waits for opportunities to come up.

Unlike others, I don't think the stock market is any better right now than real estate, both are generally overpriced and risky. The difference is, in real estate, it's not bound by "market price", which means you can find a bargain, even in a bull market. Also, even if you make a mistake and pay too much in real estate, time will often bail you out. In less than 20 years, your place should be paid off and still generating you money.

When your mortgage comes up for renewal, you should look at taking your mother off the loan and title.

If I were you, I'd sell your current rental and buy a couple of cheaper rental places with the same money, but I've been doing this a long time. You may want to check out www.easysafemoney.com as a beginner's primer on real estate. 

In the long run however, your place is being paid off by someone else. If your luck holds out, it'll be paid off before you get into trouble. At least you've started investing, which puts you ahead of 95% of the population. While this isn't the "ideal" investment, no one is perfect right out of the gate. You, hopefully, learn from your errors and improve going forward. It took me a while to work out my system of investing, and made my share of mistakes along the way. Thankfully they weren't too costly, but they certainly hurt.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> Well, looking at your posts, it seems like you may be lying to yourself about your "cash flow positive", since you're not factoring in your down payment.
> 
> That being said, this isn't the worst investment ever posted on here when it comes to real estate. In the long run, barring an interest rate hike, you'll probably come out of the whole thing ahead...but it'll take time.
> 
> ...


I'm actually planning on taking my mother off the loan and title this year. The bank want me to have at least 3 years of employment with the same employer so I can get it in my name only, I just recently worked over 3 years now. Also my mortgage renewal coming up in a few months or so, I will have to decide if I want to renew it or not. You think I should sell condo this year and just move on to something else.

I'm a bit nervous of the interest rate when the renewal come up that might increase the mortgage payments

You only do real estate investing or do other things as well?


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## Saniokca (Sep 5, 2009)

Mulak said:


> what is your field? I currently have no options... I'm kind of flexible on whatever profession nowadays that are easy to get into, make decent money and having hearing disability not being frown upon while moving up the ladder
> 
> I might have to consider going back to school  .. dislike studying so much lol


I'm am an actuary (well, almost). My field requires 4 years of university and then anywhere from 3 to 10 years of further studying while working to get the designation. If you talked to me I would tell you not to do it 

I don't know of a field that would have both "easy to get into, make decent money" - maybe a trade where you could be your own boss eventually?


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## Mulak (Feb 7, 2017)

Saniokca said:


> Mulak said:
> 
> 
> > what is your field? I currently have no options... I'm kind of flexible on whatever profession nowadays that are easy to get into, make decent money and having hearing disability not being frown upon while moving up the ladder
> ...


Interesting profession ... that's like risk management in the corporate basically?

I thought of a trade but not sure which ones would be best because safety liability that employers dont want to deal with it like if I'm at a construction site, and something bad happening and I can't hear other people calling out like a head up or whatever


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## CalgaryPotato (Mar 7, 2015)

Mulak... the numbers you posted are closer to $40K a year, which is a significant difference. 

Anyway I think the service industry would be one of the hardest to get into with a hearing disability. Have you considered things like IT or accounting? 



TomB19 said:


> In the mean time, how much advice do you want to take from someone who cites a 30 year payoff with no regard for inflation? That's ridiculous and likely coming from someone who is scared of real estate and will fabricate ideas to convince himself it's a bad investment. R-E is a bad investment... for some people.


Well obviously, you have to account for inflation, but you have to remember that it isn't just the rent going up, it's also the property taxes, condo fees, insurance and utilities. So it isn't a straight up growth with inflation calculation. 

I'm not against real estate at all. But I think you need to have positive cash flow, and when I say positive cash flow, I don't mean making a couple of dollars a month over the basic expenses, I mean including the regular unexpected expenses that come up with property ownership.

Personally I wouldn't invest in something that took me 22 years to start seeing a profit. Especially when the rest of my financial situation wasn't in good shape.


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## CalgaryPotato (Mar 7, 2015)

Also, I'm not necessarily suggesting you sell the condo. It's one of those things that the damage is done so to speak. Like I said, the costs to sell will eat up a lot of the growth you've made even with 0 realtor fees. You should definitely not be considering more real estate at this point though.


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## Just a Guy (Mar 27, 2012)

I'm more diversified than most people, I invest in real estate, stocks/bonds, and run businesses. In the last 2 years I've picked up 9 properties averaging well under $100k/door which average a rent of over $1100/month each. Granted, I look over a much larger geographical area than most people do, but I generate a lot more cash flow as well. Those are properties which you don't need to worry about, even with a fairly hefty correction.

I bought at least two properties for the amount you paid and generate more cash flow. Having said that, let me point out that there aren't a lot of these cheap properties out there to buy. I see less than a dozen come up every year probably, and they don't stay on the market long (the last one I bought was on the market less than a week). People like me give unconditional offers, and pay cash up front (I get the financing later). So, you probably won't be able to duplicate my returns at your age.

To be fair, I didn't start out this way either. I started out with one place. After a year or so I bought another. Free a couple of years, I was able to refinance both of them to help buy a third. Real estate is a slow investment. Patience is required, this isn't a get rich quick scheme. 

What I buy has changed over the years too. When I started I bought houses and townhouses...today I buy condos. I go where he cash flow is being generated. I don't care about the value of the property much, since I don't plan on ever selling (making the value meaningless unless I use them to refinance). You need to adapt your strategy to match the market, those who force their ideas on the market tend to earn the market has its own ideas. 

As for interest at renewal, you'll probably get a lower rate than you had originally, I got 2.35% on my latest purchase this month. Make sure you go in and talk to the bank though, the letter they send out at renewal will be higher (they are counting on people just signing and returning it, thus paying more). Just by going into the bank and talking tom someone should get you a lower rate than the letter...no real negotiations either.

Another good resource would be matt's (he's also on this board) video series.

https://m.youtube.com/channel/UCdRtqnqBSq4GY7DGiYICu5g


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## My Own Advisor (Sep 24, 2012)

Like others, I think borrowing too much money, too young (or any age) is a recipe for disaster.

1) Consider selling the condo now. 
2) Rent something affordable/live with family, etc. Don't buy anything you're not willing to live in for at least 10 years. Otherwise, again, rent/live with family.
3) Don't buy anything you can't sign for yourself. It means you cannot afford it.

Grow your income and wealth over time by creating a habit of saving 10% of your net income, and investing that money long-term.

When you get to the point where you have no consumer debt, a small investment portfolio and cash in the bank to buy a home (if you want) then you can consider that.


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## Just a Guy (Mar 27, 2012)

There are many people who are scared by debt, and many who've never learned to use it properly. 

I lived for a time debt free, and it nearly destroyed me when I got injured and couldn't work. Now I have a large amount of debt, but an even larger amount of assets, not to mention all my debt produces cash flow. 

Debt is a tool, if you know how to use it properly, you can build mighty structures. If you don't know how to use it properly, you can build a disastrous nightmare. If you fear the tool, you'll never build anything. 

As for co-signing being a sign you can't afford it, that's not always true. Banks get nervous when you don't fit in the box. Getting loans has always been difficult for me. I am self employed, I own too many places, whatever. There is always some excuse. I remember one time the bank said my house was "worthless" because it was clear title. Had it had a mortgage, they would have loaned me money to buy my new house. They tried to explain how it was too costly to foreclose if they needed to without already having a mortgage...it was just silly (I just wanted to use it as collateral on my new house until I sold it as I bought before listing. I sold it within a month of my new purchase and paid down my mortgage).


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## My Own Advisor (Sep 24, 2012)

Good points JAG.

I guess from my perspective, again, just a perspective, co-signing with others for loans and making that a habit of it teaches you to rely on others - for debt. I'm not sure that's a good thing when it comes to money management. 

This has nothing to do with a bank and where you sign on the dotted line. It's about creating a behaviour with debt that's not really a good one except for maybe people like you that can manage it.

Debt is part of what makes our economy churn. I'm not against it but it must be managed. Otherwise it manages you.


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## tygrus (Mar 13, 2012)

JAG I challenge you to see if your portfolio can handle a calgary style correction. There are 100,000 vacant properties there right now. Collectively, these landlords are losing $150,000 per day there.

The math around rental properties is often illusory. Factor in true depreciation of structure, increases in property taxes, strata increases, insurance, assessments, bad renters, vacancies, damages, cleaning, repairs, area overbuilding, competition, eventual necessary improvements, unfavorable taxation on rental income and capital gains, the net in the end is probably zero.

A better investment is to buy your principle residence and improve the hell out of it over time and rent an out building for extra cash. If I had to do it all over again, I would buy about 10 acres some place, put up a modular home to live in and then build a mega mansion behind it over time.


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

Rental properties are not for everyone. Those who jump in with little experience or knowledge will most likely have a negative experience and exit at a huge loss. Those are the ones who will tell you RE is a bad investment.

I have had a very positive experience with my rentals and can only recommend it. Its not for everyone and that's ok. Just like investing in the equity market - go in with little experience or knowledge and you will be unsuccessful.

The point is you need to be cautious regardless the investment you choose. There is no such thing as a "safe" or "risk-free" investment.


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## CalgaryPotato (Mar 7, 2015)

tygrus said:


> JAG I challenge you to see if your portfolio can handle a calgary style correction. There are 100,000 vacant properties there right now.


Do you have a source on that? We only have 400 something thousand properties in Calgary, I don't even think 1/4 of them are rentals, let alone vacant rentals.

Anyway I think debt can be a very powerful tool, but real estate is high leverage debt. And it's especially high leverage compared to the income and cash flow of the person. Co-signers can make sense in some cases as well, but asking his mother to co-sign for two places for him now, because she can't later because she wants to buy something of her own? What are the odds that she is going to be unable to get off of these 2 mortgage contracts and unable to get her own place? That is a really bad situation to put his mother in.


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## tygrus (Mar 13, 2012)

“These [vacant] homes show an average rental rate of $1,477, therefore private Calgary landlords [cumulatively] are losing $4,431,044 per month or $147,700 per day - based on the current economic climate and rental market.” 

https://www.biv.com/article/2017/2/calgarys-new-condo-market-craters/


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## Just a Guy (Mar 27, 2012)

Tygrus,

If you read my other postings, you'll see that I purchase my properties with a much higher correction expected than what has hit Calgary. Personally, I think Calgary will be a temporary blip unless interest rates increase. People are foolish in the amount of money they are throwing at "investments" these days. 

I, unlike many others, don't lie to myself about the numbers. I also don't believe prices are going to go up, I predict, by my own calculations at least a 40% correction and buy with that in mind. My plans are to break even when the correction hits, while my competitors will probably lose their shirts having paid too much to begin with.

I can afford to drop my rents a lot and still make money (I paid less than 100k/door and rent for more than $1100, my break even point is around $700 on average) not something my competitors can do.


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## CalgaryPotato (Mar 7, 2015)

tygrus said:


> “These [vacant] homes show an average rental rate of $1,477, therefore private Calgary landlords [cumulatively] are losing $4,431,044 per month or $147,700 per day - based on the current economic climate and rental market.”
> 
> https://www.biv.com/article/2017/2/calgarys-new-condo-market-craters/


The article has those numbers and says *3000* vacant units which if you do the math is dead on.

That is very different than 100,000.

I don't disagree with your point by the way, just that isn't a correct number (or even ballpark)


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## Mulak (Feb 7, 2017)

CalgaryPotato said:


> Mulak... the numbers you posted are closer to $40K a year, which is a significant difference.
> 
> Anyway I think the service industry would be one of the hardest to get into with a hearing disability. Have you considered things like IT or accounting?
> 
> ...


yeah it is a bit difficult to get into but at the time I was planning to open my own pastry shop so I wouldn't have to deal with it in the future (now)... but now my current job making me not want to do it anymore.

funny enough, accounting was actually my first profession I was thinking of getting into when I was in high school. I thought it would get boring over time, just crunching numbers basically. IT isn't bad but I'm not updated with technology for the past 10 years, I'm quite a newbie in the tech world which is weird for me because 10-15 years ago, I know basic IT sh!t lol.

I understand what you are talking about not investing in something that take 22 years to see a profit. You recommend doing something like couch potato investments?



Just a Guy said:


> I'm more diversified than most people, I invest in real estate, stocks/bonds, and run businesses. In the last 2 years I've picked up 9 properties averaging well under $100k/door which average a rent of over $1100/month each. Granted, I look over a much larger geographical area than most people do, but I generate a lot more cash flow as well. Those are properties which you don't need to worry about, even with a fairly hefty correction.
> 
> I bought at least two properties for the amount you paid and generate more cash flow. Having said that, let me point out that there aren't a lot of these cheap properties out there to buy. I see less than a dozen come up every year probably, and they don't stay on the market long (the last one I bought was on the market less than a week). People like me give unconditional offers, and pay cash up front (I get the financing later). So, you probably won't be able to duplicate my returns at your age.
> 
> ...


Damn! ..sounds like you are doing well lol

My current rate is 2.04% fixed 2 years

What do you recommend for someone who want to start investing into something? 



My Own Advisor said:


> Like others, I think borrowing too much money, too young (or any age) is a recipe for disaster.
> 
> 1) Consider selling the condo now.
> 2) Rent something affordable/live with family, etc. Don't buy anything you're not willing to live in for at least 10 years. Otherwise, again, rent/live with family.
> ...


1. I understand... I'm actually planning to meet a financial advisor, my mom's boss refer me to someone ... the boss make crazy amount of money beside his career
2. gotcha... then I guess I'm stuck living with my mother lol.. rather save up money faster 
3. ok, will do



Just a Guy said:


> There are many people who are scared by debt, and many who've never learned to use it properly.
> 
> I lived for a time debt free, and it nearly destroyed me when I got injured and couldn't work. Now I have a large amount of debt, but an even larger amount of assets, not to mention all my debt produces cash flow.
> 
> ...


oh nice... glad things worked out for you in the end



What is the rule of thumb for how much house/property should a person afford or percentage of their monthly to be their mortgage payment?


Also I got a situation to throw at you guys... I'm not doing it or anything ... just curious on what your opinion on the matter

My aunt have a proposal for me like a few weeks ago to join together and buy a pre construction house in waterdown, rent it out and maybe like 10 years we sell it. what is your take on this? would you do it? or is it risky partner up with someone?


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## Just a Guy (Mar 27, 2012)

I recommend you discover your investment personality. Me, I'm a buy and hold value investor, it makes me good at real estate, but a lousy day trader. 

Not everyone is a buy and hold value investor, nor can they become one, any more than they can be a day trader. 

You need to figure out what works for you, not try to copy someone else. 

Next, only invest in things you understand. Forget "hot tips" and IPOs, if you don't understand what the company does or makes, and how they make money, don't buy it. Same with real estate, if it doesn't make money, don't buy it. 

Read history, and see how people with money in their pocket, and desperate to spend it, bid up prices, all while denying doing so. Then look at the market today and understand why I don't recommend jumping in just to be in. 

Right now, there is probably a better chance of finding something in real estate, but not by much. Both markets are overpriced by a lot. 

I'd get educated and wait for some crisis to hit and then buy during the panic, but that fits my personality. 

As for partnerships, it's a good way to end relationships unless you are similar minded. Money has a way of changing people, even family. 

As for preconstruction, they probably won't cash flow and 10 years is short term thinking in real estate...that's usually a breakeven point.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> I recommend you discover your investment personality. Me, I'm a buy and hold value investor, it makes me good at real estate, but a lousy day trader.
> 
> Not everyone is a buy and hold value investor, nor can they become one, any more than they can be a day trader.
> 
> ...


I don't know if I can do day trader because I would be too antsy checking every day making sure it didn't drop too crazy or did I sell it at the right time.

I rather buy and hold over time... no I can't do hot tips or IPOs .. they can fizzle out and drop like a hot potato and IPOs got way higher unpredictable variables that can throw out of whack... I'm not experienced or knowledgeable with stock market 

I do like market crashes  ... If I had enough money to buy a fixer upper in Oakville and live in it while fixing it up over time, I would do that and sell it later

You just confirm my concerns with the partnership ... hopefully my aunt won't take it too hard lol


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## Just a Guy (Mar 27, 2012)

Don't just think of it as day trader vs buy and hold. There are literally 1000's of different strategies out there (indexing, couch potato, dogs of the Dow, options, futures, pump and dump...), even in real estate there is commercial, residential, flipping, presales, joint ventures...

Then there are variations on each of these strategies...

It can take a while to discover what works for you.


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## james4beach (Nov 15, 2012)

Mulak said:


> I want to do a career change, I'm trying to find a career that is deaf/hearing impaired friendly because I was born deaf and wear hearing aids. It hard to move up the ladder and get better promotion/money because of employers are a bit ignorant and not willingly to take a chance with me.


Hi Mulak. I can see how the hearing impairment can be a real challenge.

(This is just an idea). Have you considered a field such as Audiology or training as a technician in the hearing aid field? We have an incredibly large aging population. There is a limitless number of seniors who need help with hearing aids and other auditory assistance. You would have some experience in the area. It's also a field that involves personal interactions. The job can't be automated, can't be outsourced, and has a human element...all of these are critical aspects.


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## TomB19 (Sep 24, 2015)

CalgaryPotato said:


> I'm not against real estate at all.


I think R-E is hard work and requires expertise to succeed at. Most who try it will not succeed. Having said that, we've done extremely well at it, also.

I don't cashflow my houses because I don't need to. It's a sideline for us and we can fund whatever repairs are required. We just roll with the punches.

If being a landlord was my only income, I would have to cashflow the way you point out, or I would be knocked out of business by the first problem. A contingency float would need to be accumulated and stored for such eventualities or maybe an LOC.

More bothersome are comments such as suggesting a non-cashflowing property will take 22 years to pay off or calling Mulak's condo a mistake. Mulak has some nice equity in his condo. He has taken some risk and is in a position to be rewarded. Good for him. As for making up ridiculous numbers, I think it would be better if people who don't understand R-E were less vocal.

From reading more of this thread, it sounds to me like Mulak would do better to start a business or go back to school than to buy another property.


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## tygrus (Mar 13, 2012)

The guy wanted advice. We are giving it warts and all.

When an area crashes, its the vacation properties and rental units hit first. Then homeowners starting with condo owners are next. If you look at calgary SFH are the winners by far.

I like how people say they cant handle the stock market so they want to do RE instead not knowing it has ups and downs.

Besides once T2 raises the inclusion rate for capital gains, both assets classes are going to die.


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## CalgaryPotato (Mar 7, 2015)

I don't think we are going to agree on this Tom. He's being rewarded because the housing market is still doing really well. It doesn't always do that. If the housing market had been almost anywhere else in Canada over the time period he'd owned it, he'd probably be in the hole after expenses.

For yourself, clearly if you are in a position to fund whatever expenses come up on your rentals out of your other funds with no expectation out of any payback from them until the very long term, I think you are in a very good financial position which you should be proud of, but isn't typical of, almost anyone else.

Clearly the OP in this thread is not in anywhere near the same financial position you are in, and to recommend your strategy to him is concerning to me.


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## jargey3000 (Jan 25, 2011)

To Just a Guy :
1)would you be interested in working with a "silent partner" on your RE investments ? 
2) On a mores seriuos note-I'd appreciate your comments/ advice: i'm seeing a bit of spike up in "public auctions" of homes in my area (NL) lately. The oil hit in our economy, I guess... people cant make their mortgage payments whatever.. . most are being sold thru lawyers offices "to satisfy an amount due on the mortgage". I have zero knowledge of this area, but i do know my home town, and SOME of these are nice home, in nice areas. Is there a buck to be made in this game? Can u you get a "good deal" (unconditional offers etc) then maybe flip the property? Or is it a mug's game? Do you have any experience in this field? i'd appreciate your (or other's) comments.


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## Just a Guy (Mar 27, 2012)

In a down market, flipping is quite hard. No one wants to buy, let alone pay full price. It's a good time to pick up some properties. 

Personally, I don't like to sell them once they are generating cash flow, but I do know a few guys who pick them up when markets are down, fix them up to "rental quality" until the market recovers, then after a tenant leaves, they fix them up to "resale quality" and then basically flip them. Sort of a slow flip approach. 

Just because the property is in foreclosure though doesn't mean it's a good deal. Just because the current mortgage is higher than the selling price doesn't mean you're getting a deal either. Fools overpay all the time in bull markets. Your job is to know what price you need to get a property for and not to overpay no matter what the banks or realtors say. 

Now, after you buy, if the bank wants to value it higher and give you a big mortgage on it, that's different...then they are being wise in spotting that you got an exceptional deal.

P.S. I haven't had a lot of luck with partners in the past...even the silent ones don't tend to remain silent when money is involved. Besides, they also don't want to do any of the work, just collect their share.


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## tygrus (Mar 13, 2012)

Just a Guy said:


> In a down market, flipping is quite hard. No one wants to buy, let alone pay full price. It's a good time to pick up some properties.


Next down market will be structural and generational.


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## jargey3000 (Jan 25, 2011)

Just a Guy said:


> In a down market, flipping is quite hard. No one wants to buy, let alone pay full price. It's a good time to pick up some properties.
> 
> Personally, I don't like to sell them once they are generating cash flow, but I do know a few guys who pick them up when markets are down, fix them up to "rental quality" until the market recovers, then after a tenant leaves, they fix them up to "resale quality" and then basically flip them. Sort of a slow flip approach.
> 
> ...


thanks!


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## Mulak (Feb 7, 2017)

james4beach said:


> Hi Mulak. I can see how the hearing impairment can be a real challenge.
> 
> (This is just an idea). Have you considered a field such as Audiology or training as a technician in the hearing aid field? We have an incredibly large aging population. There is a limitless number of seniors who need help with hearing aids and other auditory assistance. You would have some experience in the area. It's also a field that involves personal interactions. The job can't be automated, can't be outsourced, and has a human element...all of these are critical aspects.


Funny enough I thought about that ... but a large part of being an audiologist is doing the hearing test with the patient while he/she is in the "box" and I have to communicate through headphone which is hard because the patients can have different tones, volumes, accents or simply just can't understand them make the experiences not great... so I don't think it suitable for me 



CalgaryPotato said:


> I don't think we are going to agree on this Tom. He's being rewarded because the housing market is still doing really well. It doesn't always do that. If the housing market had been almost anywhere else in Canada over the time period he'd owned it, he'd probably be in the hole after expenses.
> 
> For yourself, clearly if you are in a position to fund whatever expenses come up on your rentals out of your other funds with no expectation out of any payback from them until the very long term, I think you are in a very good financial position which you should be proud of, but isn't typical of, almost anyone else.
> 
> Clearly the OP in this thread is not in anywhere near the same financial position you are in, and to recommend your strategy to him is concerning to me.


So I kind of dodged the bullet since the housing market is doing really well? 

You are correct that I'm not in the same financial situation as him but would love to lol

if you don't like his strategy to me ...then what is your recommendation? sell the condo now?



TomB19 said:


> I think R-E is hard work and requires expertise to succeed at. Most who try it will not succeed. Having said that, we've done extremely well at it, also.
> 
> I don't cashflow my houses because I don't need to. It's a sideline for us and we can fund whatever repairs are required. We just roll with the punches.
> 
> ...


Would you mind clarifying on "is in a position to be rewarded" ... do you mean the condo is worth 25-45k more than what I paid for?

I have no problem not buying another property... I would love to start a business but not sure what kind of business though and not go back to school if I really really have to lol


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## Just a Guy (Mar 27, 2012)

Melak,

you Need to be careful about trying to get advice from an anonymous message board. No one here knows your situation, only the few details you provided. Asking us "what should I do" is unfair to us, who don't know your situation, and to you if you accept the advice (since it could be completely wrong for you given your situation). 

You need to ask general questions and learn more about all the different aspects of investing than come to a conclusion on your own that will meet your needs.

think of us as a resource, not the answer. The answer should only ever come from you.


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## tygrus (Mar 13, 2012)

Melak, if you can your first priority is to your own long term residence. Get into a SFH in an affordable manner, forget the condos. They are a drag. The financial security from having your own place is unmatched. After that, it doesnt cost as much to live and if you have a disability finding work could be a challenge in the future.


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## TomB19 (Sep 24, 2015)

Mulak said:


> Would you mind clarifying on "is in a position to be rewarded" ... do you mean the condo is worth 25-45k more than what I paid for?


Yes.

You won't make money until you sell it, so you haven't made money on it but it is cash flowing and you have some equity. You put $57K down on it and now, apparently, you have 25K more equity than you started with after less than two years. If I were in your situation, I wouldn't consider that a mistake.

I've made worse investments than that. Far worse. I lost over $200K on an apartment block. I said I'd never invest in R-E again. Now I'm in deeper than ever but I'm a bit more wise.

These days, we have our program fairly dialed in. We know what works. We know what rents. We know what sells. We have a source of renters. We're self financing. The most odd thing about it is that R-E investing full time has been my dream for a number of years and now that we could do it, we don't need to and we're thinking about semi-retiring.

It sounds like JAG has figured out a system that works for him, too. Suffice to say, it's not my system. I don't like the renters that come with low end housing but I have no doubt that JAG has been able to manage that problem where I have not. He has figured out what's best for him.

I suggest figuring out what's best for you. It's unlikely to be anything that I do. I find houses that are in tough condition, renovate them, and rent them for 5~7 years. I put 20% down and, when the renos are complete, I'm usually close to 50% loan to value. Keep in mind, I have a skid steer, dump truck, work truck, tons of tools, etc. I grew up in the trades. My Dad was a tradesman. Also, we made a decision to work like maniacs for 10 years and then retire. We've had almost no life during that time. That alone would be a mistake for most people.

If re-roofing or changing a furnace is a deal ender for you, maybe a condo is a good property for you to own. You might be right where you need to be. You'll figure it out.

Mostly, I think of your age and find myself thinking that you would do well to invest in education so you can have a chance at making a decent salary with which to fund whatever investment program you build over the years.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> Melak,
> 
> you Need to be careful about trying to get advice from an anonymous message board. No one here knows your situation, only the few details you provided. Asking us "what should I do" is unfair to us, who don't know your situation, and to you if you accept the advice (since it could be completely wrong for you given your situation).
> 
> ...


Yeah you are right that I'm the only one who can provide the answer. Do you know any reputable sites that have information on every type of investments and their pros/cons?



tygrus said:


> Melak, if you can your first priority is to your own long term residence. Get into a SFH in an affordable manner, forget the condos. They are a drag. The financial security from having your own place is unmatched. After that, it doesnt cost as much to live and if you have a disability finding work could be a challenge in the future.


Yeah I want to get my own long term residence but thats 700-800k minimum in Oakville :S ... Oakville is where I would like to stay but thats probably like $2500/month which take all my current money lol and still haven't pay for property taxes, bills and even food to survive 

I have to improve my professional life... thats pretty obvious to everybody here .... it just a matter of what



TomB19 said:


> Yes.
> 
> You won't make money until you sell it, so you haven't made money on it but it is cash flowing and you have some equity. You put $57K down on it and now, apparently, you have 25K more equity than you started with after less than two years. If I were in your situation, I wouldn't consider that a mistake.
> 
> ...


oh wow.. quite a loss.. I would probably freak out lol

damn you got quite a bit of equipments ...I don't have experiences in fixing things, I'm handy but just not tradesperson level handy like you 

I was wondering if it possible to keep the condo even though it low positive cash flow until I buy my own freehold house in the future so I can use 57k, refinance the mortgage (the non-interest part of the mortgage from my tenant), profit from selling the condo and 50k plus future savings into big down payment for the new mortgage on the freehold house if the pre construction house in waterdown is like 400k which means I could get lower mortgage payments than my current condo's mortgage payments which is $800/month .... or is it risky to hold on to the condo not knowing what the market in future holds that could affect the price ... so instead is to sell the condo while it still high (at least I made some money)

also the uncertainty of what my professional life going to be like in the near future... if I go back to school which means quitting my current full time job and get a part time, then I should sell the condo and invest some money long term instead

bigger the salary, the better the chances to get approval from the bank for the mortgage on my own and able to pay the mortgage payments effortlessly and leftover money can go to investing/retirement


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## CalgaryPotato (Mar 7, 2015)

Mulak said:


> So I kind of dodged the bullet since the housing market is doing really well?
> 
> You are correct that I'm not in the same financial situation as him but would love to lol


Any investment is a risk, any investment that is leveraged is much more of a risk. Any investment that is leveraged and has basically no cash flow is even more of a risk.

So yes I think you are lucky. If you were in Calgary or many other cities your investment would be negative and you'd be at high risk of losing your renter and having a hard time of find one willing to pay the current price.


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## Just a Guy (Mar 27, 2012)

The main problem with your current investment is the fact that you paid too much initially for it so the cash flow isn't very good. That was your rookie mistake, it wasn't a terrible one. If you buy another property, wait for one with better cash flow and suddenly your investments will be better, and people will criticize less. The fact that you found a break even property in this market is already an achievement. There are many on this board who've posted way worse "investments" that they believe will make them money. 

Many people on this board are very risk adverse, but they do t really understand what risk is. 

To most people risk is debt, risk is the unknown, risk is doing something different. 

To many, the idea of being debt free is safe. 

I, and others I know, have discovered the hard way that this isn't always true.

Being debt free nearly pushed be into poverty when I lost my ability to work for several years. Even though I had no debt, it didn't mean I had no expenses. Without income, those expenses quickly eat up your net worth.

Investing, for me, replaced that lost income. However, the idea of going into debt, with no income, then investing that money would probably seem like the stupidest thing to most people on this board. Especially since my investments weren't going to pay out very quickly. My investments didn't initially save me from debt, I wound up living off credit cards for a while, as opposed to selling my investments before they ripened, but I believed in what I was doing.

I had a lot at risk too, kids, a wife, businesses, employees, etc. Had I posted on here back then people would have screamed at me to sell everything and get a job...not understanding my situation and all being "experts" on the subject, but without any personal experience likely...

In the end, my plan was right. My investments started to ripen, cash started to flow in. First it was a little slow, but it quickly turned up the pace. It took a while for me to realize how fast it had become. I was literally out of debt and making more money per month passively than I had before I got injured before I even realized that it had happened. I was still living frugally (probably always will to some extent after that experience, once you lose everything it tends to stick with you that it could happen again). 

I've continued investing ever since. I'm not a slum landlord as Tom seems to think, but I cater to a specific nish of renter...it's all part of the system I've developed that works for me. 

When I started out, I couldn't afford to fail, I had to think of all the possibilities and avoid the pitfalls. Later on, when I could afford it, I tried other types of investing and soon discovered that you need to stick with what works for you (I lost money, but that was the price of education). 

Today, I have a lot of debt relative to most people on this board (I have a lot of mortgages), yet few would say "sell it and live debt free" if they saw my books. I doubt may would ever advise doing what I did to get to this point because it's too risky, however I didn't have any other options. I used what I had at the time, some minor savings, my brains, and the tool called debt. Being self employed I didnt have any social safety net, nor any family willing or able to help...even my company started to flounder without me at the helm.

Going the path I did, led me to where I am today. Had I not been injured, I probably would have been fairly successful still today as my company was doing fine. However, I wouldn't have the stocks and my real estate which provides a steady income to me every month, allowing me to do much more than I ever could before. I've started new companies, spend more time with my family and kids, etc.

What I do, I don't find risky at all as I designed my strategy to not risk any of my own capital and produce income as quickly as possible from the beginning. To people who don't do what I do, or understand it, it's scary and different, thus risky. 

I've been following my strategy for many years, I've been through bulls and bears and my system hasn't failed me so, despite what others think, I trust in what I'm doing. The experts haven't lived my life, so their opinions are just that.


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## Mulak (Feb 7, 2017)

CalgaryPotato said:


> Mulak said:
> 
> 
> > So I kind of dodged the bullet since the housing market is doing really well?
> ...


Wheew *wipe my forehead*


Just a Guy said:


> The main problem with your current investment is the fact that you paid too much initially for it so the cash flow isn't very good. That was your rookie mistake, it wasn't a terrible one. If you buy another property, wait for one with better cash flow and suddenly your investments will be better, and people will criticize less. The fact that you found a break even property in this market is already an achievement. There are many on this board who've posted way worse "investments" that they believe will make them money.
> 
> Many people on this board are very risk adverse, but they do t really understand what risk is.
> 
> ...


That's an inspiring story 

I do like real estate... I just like the tangible aspect of it ... you can see it, touch it, change things 

At first I was planning to buy a fixer upper some time ago and fix it up over time while living in it and sell it later but when the crazy housing boom occur ... it was out of my reach

I will check out other types of investment as well


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## Just a Guy (Mar 27, 2012)

That is one advantage that real estate has over stocks. In some cases, you can influence the value of your holdings. You can have some physical control over it.


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## TomB19 (Sep 24, 2015)

I recommend being skeptical of Cinderella stories that involve effortless millions.

Every R-E investor has been all-in, at some point. I'm talking about being at the point of not being sure they can do it.

Oh yeah, it's risky but that's part of it. If you make it, you are a genius. If you don't make it, you are a moron. Some of that is warranted but it's not as risky as it outwardly appears.

Other r-e investors know what I'm talking about. At the time, it's terrifying. Looking back after five years, it seems like less of a big deal.


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## Just a Guy (Mar 27, 2012)

If a bottle of coke costs $1 at the store you are at, but costs $2 across the street, do you cross the street to pay more because that bottle must be worth more? No, you think people who do that are silly.

If coke was $10/bottle, would you buy it? Probably not, you'd pass on it until it comes on sale because you don't need it.

When it comes to stocks or real estate however, people seem to be willing to pay more. It makes no sense to me.

You don't need to be a genius to be successful in investing, you just have to avoid the hype, and not overpay. 

Don't get me wrong, there is work in investing. Even with my systems that I've developed, I work on my investments every day (research, reading, looking,etc.) there is no easy, get rich quick scheme, but it's not as hard as working for a paycheque either. That being said, it's not rocket science. Also, not everyone can do it. You have to have the right personality


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## Mulak (Feb 7, 2017)

Just a Guy said:


> If a bottle of coke costs $1 at the store you are at, but costs $2 across the street, do you cross the street to pay more because that bottle must be worth more? No, you think people who do that are silly.
> 
> If coke was $10/bottle, would you buy it? Probably not, you'd pass on it until it comes on sale because you don't need it.
> 
> ...


So let say coke 12 pack regular price is $5 and sale price is $3.50. I know I can wait until sale price show up and buy it then

But for stocks how do I know what is the sale price? And if I do know the sale price then how do I know it not going to drop down in price even further down and I lose money?


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## Just a Guy (Mar 27, 2012)

The price to earnings is a good indicator...you read old investment books they talked about a p/e of 10 to be good...today 40 is the new 10! There are other indicators, and investing isn't black and white.

As for the price to pay, you have to pick what you think is a fair price...do you beat yourself up if coke goes on sale for $2.99? Do you only buy it then? That is your personal choice. For the stocks or rentals I buy, I've got a price in mind of what I'm willing to pay. It's rarely the "bottom", I'm not that lucky, it's the price I think is fair based on my knowledge. I don't buy stuff I don't understand. 

Sometimes the hardest part of investing is knowing when not to buy. There was a long stretch of time when I didn't buy real estate because I couldn't find anything. I haven't bought a stock in a couple of years...doesn't stop me from looking and being ready to buy when/if something happens.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> The price to earnings is a good indicator...you read old investment books they talked about a p/e of 10 to be good...today 40 is the new 10! There are other indicators, and investing isn't black and white.
> 
> As for the price to pay, you have to pick what you think is a fair price...do you beat yourself up if coke goes on sale for $2.99? Do you only buy it then? That is your personal choice. For the stocks or rentals I buy, I've got a price in mind of what I'm willing to pay. It's rarely the "bottom", I'm not that lucky, it's the price I think is fair based on my knowledge. I don't buy stuff I don't understand.
> 
> Sometimes the hardest part of investing is knowing when not to buy. There was a long stretch of time when I didn't buy real estate because I couldn't find anything. I haven't bought a stock in a couple of years...doesn't stop me from looking and being ready to buy when/if something happens.


Nah I wouldn't beat myself .. as long it a cheaper price, I can still make money knowing I can sell it at a higher price 

With that mindset... I can do that easier with real estate than stocks... I find stocks are more prone to be volatile that even unexpected something can plummet the price down rapidly and I can't do anything about it... it just weird for me with stocks that it almost like Russian roulette hoping I don't get the bullet lol ... probably need a better understanding on how stocks work and how to make money from it

Wow ... that's quite of time of not buying real estate or stocks


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## Just a Guy (Mar 27, 2012)

Over the past two years I've bought 9 rentals. I also run a couple of companies, so I find things to do with my time, but family comes first.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> Over the past two years I've bought 9 rentals. I also run a couple of companies, so I find things to do with my time, but family comes first.


Are they all houses? 

Remember I told you guys about my aunt proposal to buy a house in waterdown with her, rent it out and sell it later

Well my mom talked to her some time ago and the proposal came up again. Apparently my mom told me that my aunt want to put her money along with my money as a crazy amount of down payment on a house and I live in it. So it actually my house and we will decide on the date like 5 or 10 years later on whatever the house is worth then and I pay her out the down payment and percentage of the house worth based on the market... so if her downpayment is like 20% of the entire down payment then she get 20% of the market worth at a later set date

Get it?... this is purely investment for my aunt

This will make the mortgage payments way cheaper than my condo mortgage. It not going to happen now, but if I ever want to do it... basically I will let her know

But then my concerns like you guy said regarding to dealing money with people and how it can change them... not sure

At first, I thought she want to buy the house together, rent it out and sell it later


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## tygrus (Mar 13, 2012)

Mulak said:


> At first, I thought she want to buy the house together, rent it out and sell it later


Never ever own real estate with anyone you dont share a bed with.


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## Mulak (Feb 7, 2017)

tygrus said:


> Never ever own real estate with anyone you dont share a bed with.


That's a bit disturbing image lol ... could have used a different analogy for the same meaning or something lol


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## Just a Guy (Mar 27, 2012)

Mulak said:


> Well my mom talked to her some time ago and the proposal came up again. Apparently my mom told me that my aunt want to put her money along with my money as a crazy amount of down payment on a house and I live in it. So it actually my house and we will decide on the date like 5 or 10 years later on whatever the house is worth then and I pay her out the down payment and percentage of the house worth based on the market... so if her downpayment is like 20% of the entire down payment then she get 20% of the market worth at a later set date
> 
> Get it?... this is purely investment for my aunt


What happens if something happens and your aunt suddenly needed money, but you didn't have the money or credit to pay her out? You'd have to sell your house.

What if the market goes down 30% and it's underwater? What if she still expects her cash back?

How do you decide what a fair market value is 5-10 years later without selling? What if she doesn't agree with the appraisal and bring in someone who says it's worth a lot more? Again do you need to sell your house?

Is your aunt the type to use her investment as a control or power over you? I know many families who use money as a control over others...

There are a lot of potential problems.

Btw, 20% isn't what many consider to be a "crazy down payment".


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## Mulak (Feb 7, 2017)

Just a Guy said:


> Mulak said:
> 
> 
> > Well my mom talked to her some time ago and the proposal came up again. Apparently my mom told me that my aunt want to put her money along with my money as a crazy amount of down payment on a house and I live in it. So it actually my house and we will decide on the date like 5 or 10 years later on whatever the house is worth then and I pay her out the down payment and percentage of the house worth based on the market... so if her downpayment is like 20% of the entire down payment then she get 20% of the market worth at a later set date
> ...


You took the words out of my mouth on the concerns

We can find out later in 5 or 10 years on whatever date we agree on... No matter what if the market crash ... that's the risk for her... can find out the value from the houses like mine sold around that time or get an appraisal 

No she is not a controlling type of person at all

I meant crazy down payment that my aunt could put in 50k plus my money which may be 200k in 3 years and put it on a low 400k house in waterdown... so she get 20% of whatever the new value of the house is worth


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## Just a Guy (Mar 27, 2012)

These are not questions you want to have hovering over you...

another thing to consider is if you get married in that time. Now you throw a third person into the equation...one that can have some strange ideas, and can convince you that you are getting "screwed" in such a deal. Facts don't always apply. 

I wouldn't want uncertainty over my primary residence.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> These are not questions you want to have hovering over you...
> 
> another thing to consider is if you get married in that time. Now you throw a third person into the equation...one that can have some strange ideas, and can convince you that you are getting "screwed" in such a deal. Facts don't always apply.
> 
> I wouldn't want uncertainty over my primary residence.


Yeah good point on the married thing ... ok I won't do it at all then... my aunt or anyone beside gf/wife are off the table

Im curious on the primary residence location ... would you buy a house in waterdown or a condo in oakville knowing your friends and family live like 30-50mins away from waterdown or 20-30 mins away from oakville for the same price


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## Just a Guy (Mar 27, 2012)

That's a personal choice. Depends on a lot of things, including how much you like your family. I know some people who've moved to another country to put as much space between them and family as possible. 

It also depends on the building, neighbourhood, location of services, etc.

Personally, I don't like communal living, so a house has more appeal than a condo. Then again, I've seen some very high end condos that are nicer Han most homes and you never hear or see your neighbours. 

When buying a personal residence, you'd better like everything about it because you're the one who has to live with it for a long time.


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## Mulak (Feb 7, 2017)

Just a Guy said:


> That's a personal choice. Depends on a lot of things, including how much you like your family. I know some people who've moved to another country to put as much space between them and family as possible.
> 
> It also depends on the building, neighbourhood, location of services, etc.
> 
> ...


Meh on family... being nice to include them lol but more toward friends ... come over, hangout and watch sports, man cave, socialize and eat, BBQ during the summer

Waterdown is a bit country, not developed like Oakville, only have 1 transit bus and no mall... if I want to go to downtown Toronto, I have to go to aldershot go station, which sucks ...waterdown is slowly building up though. They got greenery and can hike around which would be great when I get a dog in the future.

The main thing that tick me off for condo in Oakville is the maintenance fee. My current condo's maintenance fee is $409/month along with mortgage payment of $800, that's 1/3 and most likely if i move in my current condo. I'm not going to use the amenities, not my thing to use those things in public. Also if I sell the condo and buy a bigger condo in Oakville that means bigger maintenance fees

That's a rock and a hard place


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