# How safe are condos near universities?



## Time4earlyretirement (Feb 21, 2014)

So here is the DL:

1.) I just turned 25 years old
2.) I have roughly 45k saved; zero debt
3.) Current income is around 50k, don't expect it to go down, unless I lose my job. However, my line of work is in a relatively stable area of finance.
4.) *To my luck, I need not buy my own place. I am currently living with a grandparent in a small townhouse in downtown Toronto. My parents have already told me that they do not plan on selling it when my grandparent is gone. I will be allowed to live in it so long as I cover any/all money it needs, and any income if i chose to have tenants is theirs. *
5.) ^ Point 4 is a rough 2-5 years in the future estimation.

I am thinking of investing in a condo in the 300K's near Uoft St. George (within the parameters of College, Bay, Spadina and a block or 2 south of Bloor) 

Knowing nothing about real estate, this thread is just for testing the waters.
I have calculated that with a 300k mortgage, my monthly payment is roughly 1300$-2200$ with the mortgage range of 3 and 7%.

What I am not sure is (and if someone can kindly shed light on):

1.) Rent around these areas are 1300-1500 $/month per room+den type units?
2.) Around how much are monthly utility expenses?
3.) The companies that you hire to take care of all tasks (ie finding tenants, taking care of property and payments), what are their commissions?
4.) Is 7% a realistic mortgage rate for the future? 


Ideally, I don't mind having to supplement roughly 600-800$ a month, which would be halved once my significant other has the means to. 



What do you guys think?

Cheers


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## Taraz (Nov 24, 2013)

Why not just invest in equities? At your age, it can be a bad idea to tie yourself down to a single location. 

Also, I imagine that most people on this site would agree that Toronto real estate is at least a tad overvalued right now. How much can you afford to lose? My house outside of Edmonton is still worth $100 k less than I (stupidly) paid for it at the peak.


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

Terrible idea. See the other threads from other folks with this exact same idea. This is a good time to SELL if you have RE, and a very bad time to buy. Also, why would you choose to buy yourself a job that is losing $600-800 a month? Do you know anything about landlording? Why take on such a huge financial burden and tie up all your money in such an illiquid asset?


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## Beaver101 (Nov 14, 2011)

the-royal-mail said:


> ... Why take on such a huge financial burden and tie up all your money in such an illiquid asset?


 . .. Time4earlyretirement? at age 25? LOL.


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## andrewf (Mar 1, 2010)

What kind of rental yield would you be getting? What would your net income be (net of condo fees, utilities, taxes, repairs/wear and tear)? I think property management cos typically ask for 1 month's rent to show the unit and set up a new tenant. We have a resident property manager on the board (Rachelle Berube) if you want to talk to her about terms. 

I'm in a similar situation, and I wouldn't touch downtown condos especially, but condos in general in the GTA. The rental yields don't really support current valuations, and prices are likelier to correct than rents.


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## Pluto (Sep 12, 2013)

Seems to be a bad time to buy real estate in To. You probably will not see any capital gains for 5 - 10 years, maybe even longer. Given the price and rent estimate, its really bad. My opinion is that the annual rent should be at least 7%, preferably 10% of purchase price. The later would be 2500.00 per month rent.


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## Arshes76 (Jul 5, 2013)

Taraz said:


> Why not just invest in equities? At your age, it can be a bad idea to tie yourself down to a single location.
> 
> Also, I imagine that most people on this site would agree that Toronto real estate is at least a tad overvalued right now. How much can you afford to lose? My house outside of Edmonton is still worth $100 k less than I (stupidly) paid for it at the peak.


Wow, I live in Edmonton and noticed alot of people havent the drop in Re here. It's always it's oil country etc etc....


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## Berubeland (Sep 6, 2009)

Hi All, 

Costs for rental are 1 month's rent plus HST and a further 5% per month thereafter for management. 

You must make money on the rent in real estate otherwise you are just specuvesting and in a market that has no gas left in it and is now considered by the rest of the world to be defying gravity. There is so much supply and a lot of these building are up to 70% investor owned.


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## RBull (Jan 20, 2013)

Are you saying you are living rent free and this will continue as long as you are there? If so this is an easy question to answer. Stay there and save. 

I would not consider buying in TO as an investment or for yourself at the present time for all the reasons mentioned above.


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## Taraz (Nov 24, 2013)

Arshes76 said:


> Wow, I live in Edmonton and noticed alot of people havent the drop in Re here. It's always it's oil country etc etc....


Yeah, it's recovered a bit, but still not back to the peak.


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## NotMe (Jan 10, 2011)

Safe from what? Earthquakes?


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## andrewf (Mar 1, 2010)

Financial loss is implied, I think.


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## NotMe (Jan 10, 2011)

Could be physical safety, one never knows.

In any case, I don't think you can conclude how safe a particular investment is based on the perceived safety of an asset class. For instance, 'stocks' are safe. Blackberry stock not so much. That's my two cents.


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## Time4earlyretirement (Feb 21, 2014)

NotMe said:


> Could be physical safety, one never knows.
> 
> In any case, I don't think you can conclude how safe a particular investment is based on the perceived safety of an asset class. For instance, 'stocks' are safe. Blackberry stock not so much. That's my two cents.



That's why I clarified in the location and type of real estate; condos in one of the biggest educational institution in the heart of Toronto, 1+den. My question is how well will this do in the very long term because of tendency for better vacancy rate and appreciation _relative to similar investments outside of these areas._


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