# 2 choices -please help! thanks



## hedgehog12 (Feb 28, 2011)

I met up with one of my friends last weekend, and after doing some thinking and even though I don't have the money for it, these two ideas came up in my head. I'm wondering what would be the better investment. This is for Vancouver, BC, btw.

1) Townhouse for 500k. Mortgage will be around 2000/month after downpayment
However, townhouses appreciate faster (go up in price) and are better investments.

2) Apartment for 300k. Mortgage will be around 1400/month after downpayment. However, apartments rise slowest in price.

Suppose I plan to sell after living there for 2-3 years, what would you guys recommend? 

Obviously for the townhouse, I would have to put down more. But, I would make more too since real estate is on the rise in Vancouver, townhouses rising faster than apartments.

thanks!


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## leoc2 (Dec 28, 2010)

hedgehog12 said:


> I met up with one of my friends last weekend, and after doing some thinking and *even though I don't have the money for it*, these two ideas came up in my head. I'm wondering what would be the better investment. This is for Vancouver, BC, btw.
> 
> thanks!


This tells me you should not do it at all.


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## financialnoob (Feb 26, 2011)

^--- read the bolded red text from leoc. Now read it again.

You're basically banking on the place appreciating considerably to make this worthwhile, because if it doesn't, you will gain nothing, and probably lose a bit in realtor fees for that short a period. 

And gains over a short period of time are not guaranteed. Just look at the link in this thread:

http://www.canadianmoneyforum.com/showthread.php?t=9472

I'm not saying you can't hit it big. It could work out. But it's a gamble, and it sounds like you don't really have the money to gamble here.


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## crazyjackcsa (Aug 8, 2010)

As a thought exercise, Townhouse, for the reasons you pointed out.In reality, It's a terrible idea. You should feel bad for asking.


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## kcowan (Jul 1, 2010)

Is CMF getting overrun by real estate trolls? Speculative plays in Peterborough and Vancouver the same day...???


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## HaroldCrump (Jun 10, 2009)

kcowan said:


> Is CMF getting overrun by real estate trolls?


Many of us have noticed that recently....


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## Plugging Along (Jan 3, 2011)

+1 for all of the posts after the OP.

Seriously, YOU DON'T HAVE THE MONEY, none of them are good ideas. The best idea is the save the money. Real estate is NOT a short term investment, this is how people lose their shirts.


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## Saniokca (Sep 5, 2009)

I think both are great! By doing both you'll diversify! You can borrow money from parents or buy together with your friends! Don't keep all the profits to yourself...


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

It's funny how society seems to think that RE and investment always work hand in hand. That is not necessarily true. RE, legal fees and taxes are all lying in wait for all property owners when they live in and sell their place. These huge expenses typically create underwater situations. The only ones making any money these days seem to be the aformentioned middlemen.


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## Cal (Jun 17, 2009)

I thought it was funny that the initial poster had only perceived the notion that the RE investment property could only rise in value, no consideration for a decrease in value at all.


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## Berubeland (Sep 6, 2009)

I hurt for the specuvestors they'll be in a hell of pain when this entire canadian ponzi scheme comes to fruit. 

This is how you know that the end is nigh folks, the panic and desperation from people dying to get in and make huge profits. It's like a bad infomercial.


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## crazyjackcsa (Aug 8, 2010)

@Harold and kcowan.

It's why I've given up with being polite.

I have no issues with people asking a question that has been asked, or even asking a "stupid question".

I do take issue with schemes and willful ignorance. It drives me nuts.

I'm by no means the most senior or prolific poster. But I've been here a year and a half, and I respond to the things I can weigh in on or interest me. But ask a terrible question, and you get what's coming too you. And I'm not even going to be nice about it anymore.


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## Young&Ambitious (Aug 11, 2010)

Your mortgage costs may be X versus X. But then there's strata fees, repairs & maintenance, utilities/cable, property tax, etc. And on the purchase (or sale) you've got CMHC fees, realtor fees, legal, transfer tax, title fees, etc etc. 

You will likely not be making a profit in this time span with all of these costs. I recommend you find somewhere to rent with friends for $600-$800 and bank the difference, your return will be much better.


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## hedgehog12 (Feb 28, 2011)

Thanks for your opinions! I was skeptical about this whole thing myself, as I too know that property prices are in a possible bubble, and this has reinforced that view. 

I really don't have the money to buy anything yet, I'm hoping I do have something in the near future, but I hopefully won't do anything stupid, lol


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## peterk (May 16, 2010)

Hedgehog, you should read this week's Maclean's Magazine cover story for a more "official" take on the housing market, just incase us internet folk haven't convinced you sufficiently.


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## MoneyGal (Apr 24, 2009)

You know, sometimes I worry that the "tone" here seems overly negative. On this post and similar ones, the responses are almost all "this is a bad idea." (I make some of those posts, for sure; I'm not intending to point fingers in any way.)

But then I realize that the tone (and in fairness, I don't think it is actually negative - just realistic) only seems negative because there is so much OTHER chatter promoting speculative real estate buys. I think what I'm noticing is not so much "negativity" as it is *contrast,* if that makes sense. 

Anyhoo: there was a great post on Rob Carrick's Facebook page the other day - a chart from housing analyst Ben Rabidoux. But what made the post great was not the chart, it was the exchange in the comments, below: someone said that "persistent negativity is tiring and counter-productive." But it turns out that the person who said that is a RE agent. 

Ben responded, "After seeing on your profile that you work for ReMax, it adds some context to your comment that my negativity is 'tiring and counter-productive'. I guess it would be to anyone in that line of work."

Here's a link to Rob's page - the post was on Thursday: https://www.facebook.com/robcarrickfinance


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## peterk (May 16, 2010)

On a related note, from the Maclean's article:

"It's hard to blame the consumers for taking on huge mortgages when banks are offering five-year rates as low as 2.99 per cent. "Low interest rates are like a drug" says TD Economics chief economist Craig Alexander."

I'm getting real sick of this attitude. It's NOT hard to blame the consumer. Everyone whines that the government doesn't do anything to fix our problems or prevent disaster. The government and the BOC make decisions and set rates based on the assumption that the general population is _not_ a bunch of morons. Harper, Flahrety and Carney have been warning for _years_ to not leverage yourself up on cheap debt. 

Of course it's all their fault because they "keep rates low for too long." Well no - they have very good reasons for doing that. Just because people are too stupid to do what needs to be done doesn't mean they deserve to be rescued when the **** hits the fan.

The most frustrating thing is that it's so glaringly obvious that we are repeating exactly what happened in the US 5 years ago and everyone seems to think that it will just magically be ok this time. 

Needless to say, I'll be renting for the forseeable future. Perhaps the light at the end of tunnel is that when I'm in a more mature stage of my career in 5-10 years, our housing market will have bottomed out and I'll get a screaming deal.

Edit: MoneyGal - I don't think the negative tone hurts at all, and is necessary. I don't mean to insult you Hedgehog, but do you really think that a half an hour discusssion with a friend and a couple hours of "wondering" on the internet is sufficient research for making a $500,000 decision? You(people) often spend days or weeks of solid research, and become experts, when choosing what car or flooring or TV is the best for their needs and finances, but when you go to buy a half a million dollar property spending a few hours talking to each friends/parents, salesmen (RE agents), and reading a forum/blog/newspaper is enough?


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

Great posts by peterk and MG. I completely agree. I think too we're all socially conditioned to "go with the flow" in many situations, esp when what's being presented is being presented in a positive light. Those of us who call BS to a lot of this rhetoric are indeed labelled as being negative. You have to stick to what's right and ignore rhetoric. I've seen enough RE pumping here in CMF and elsewhere to know when we're being fed a line. Never subscribe to rhetoric.


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## NotMe (Jan 10, 2011)

I can see MG's point here though abit, can't you? I think there are some people on here who just believe in arbritrary rules, like "you shouldn't pay over $200,000 for a house."

My father in law is one of these people. In 2007, my wife and I did the worst thing we could do: bought a house in dreaded Toronto for $450,000. He argued with us that was too much money, we should have started below asking price (instead of $40,000 over it with the other 7 bidders), and that you got much more 'value' in Oshawa, Pickering and the like. I simply said the asking price was irrelevant, houses are that much money in Toronto and I like my 25 minute door-to-door commute (a lot of people say their commute from Pickering is only a 50 minute train ride, but that's never door to door including driving to the station, waiting for the train, etc). 

5 years later the house across the street from us is up for $680,000 and has had a revolving door of people through it in the last 7 days. So we'll see but so far, it's been a good call. 

I'm not saying necessarily that I'd buy today for 700K, but that there is a certain percentage of people on here who are saying "I'd never recommend buying today" who would also have said the exact same thing 5 years ago too. (and maybe 5 years before that too!).


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## MoneyGal (Apr 24, 2009)

Low housing prices are a terrible reason to move somewhere, IMO. However, this is distinct from determining what an affordable housing price is. Because housing prices are lower in Oshawa does not mean that buying in Toronto is the best solution for any given person. 

If I was buying today (and I was the age I was when I bought this house), I'd probably set my budget at $450K (much as it kind of pains me to think that). As a matter of fact, I paid *just* over $200K for this house 12 years ago.


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## Four Pillars (Apr 5, 2009)

NotMe said:


> I can see MG's point here though abit, can't you? I think there are some people on here who just believe in arbritrary rules, like "you shouldn't pay over $200,000 for a house."
> 
> My father in law is one of these people. In 2007, my wife and I did the worst thing we could do: bought a house in dreaded Toronto for $450,000. He argued with us that was too much money, we should have started below asking price (instead of $40,000 over it with the other 7 bidders), and that you got much more 'value' in Oshawa, Pickering and the like. I simply said the asking price was irrelevant, houses are that much money in Toronto and I like my 25 minute door-to-door commute (a lot of people say their commute from Pickering is only a 50 minute train ride, but that's never door to door including driving to the station, waiting for the train, etc).
> 
> ...


Great point. I bought my first house 12 years ago and at that time, a lot of people thought real estate was too high in Toronto.

The reality is that nobody can predict the real estate market with any kind of accuracy, especially with regards to timing.

I'm recently of the opinion that T.O. is in a housing bubble and could have a bit of crash. But I don't know for sure and I definitely don't the timing.


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## donaldmc (Feb 27, 2012)

Well, as i see they are both a great idea, but i think i would go for the first choice, the townhouse.


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