# Looking to Invest



## End (Dec 25, 2016)

I'm looking to invest in real estate. I want to buy a detached house in the range of 300k-450k, rent it for a couple years, then sell it. I make 70k a year, in early 20s, and live with my parents so saving money isn't difficult. 

Friends have recommended me to buy in Hamilton but I'm still looking around and not 100% sure. Do you guys have any ideas of potentially hot neighbourhoods, the closer to the GTA the better (because I'd want to go every weekend for repairs and renovation).


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## tygrus (Mar 13, 2012)

You are thinking too small. You should be buying like 10 houses cause things are so hot in the GTA right now.


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## Just a Guy (Mar 27, 2012)

In that price range it's unlikely to cash flow.


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## lifeliver (Aug 30, 2010)

Who cares about cashflow? Real Estate prices always go up :rolleyes2:


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## Steve Divi (Jul 14, 2016)

Seems like a bad time to buy. 

Good luck and watch interest rates.


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## End (Dec 25, 2016)

tygrus said:


> You are thinking too small. You should be buying like 10 houses cause things are so hot in the GTA right now.


I recently bought 10 lambos, but you're right, probably should have went with houses. 



Just a Guy said:


> In that price range it's unlikely to cash flow.


Not looking for cash flow, using it as an investment, prices don't seem to be dropping anytime soon.



Steve Divi said:


> Seems like a bad time to buy.
> 
> Good luck and watch interest rates.


Why would you say it's a bad time to buy?


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## tygrus (Mar 13, 2012)

End said:


> Why would you say it's a bad time to buy?


Go google toronto and 1990 together and do some reading.


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## lifeliver (Aug 30, 2010)

Read around greaterfool.ca 
Its good entertainment and you may learn a thing or two.


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## james4beach (Nov 15, 2012)

lifeliver said:


> Who cares about cashflow? Real Estate prices always go up :rolleyes2:


Then just buy REITs (leveraged real estate). If it's true that real estate will only ever go up, then buying REITs is a much simpler way to benefit. XRE has 10.12% annual return since the fund was started in 2002.

Warning: real estate may not go up forever and if there's a real estate correction/crash, REITs could easily decline 50% to 70% as they did in the US.

That being said, the return of IYR - an American REIT index ETF - is +9.9% since inception in 2002, despite going through the crash.


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## End (Dec 25, 2016)

tygrus said:


> Go google toronto and 1990 together and do some reading.


Open ended answers are useless, I see how you've obtained your post count.


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## tygrus (Mar 13, 2012)

End said:


> Open ended answers are useless, I see how you've obtained your post count.


You have decided to jump into the biggest purchase of your life and you havent even bothered to do any research. Go for it then.


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## AltaRed (Jun 8, 2009)

The message is the '90s RE crash in GTA took a long time to recover. Why do you think it is different this time? Doesn't take much explanation to figure that out.


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## Just a Guy (Mar 27, 2012)

End said:


> Not looking for cash flow, using it as an investment, prices don't seem to be dropping anytime.


Umm where do you plan on making money? Between the closing costs (lawyer, financing, etc), carrying costs (mortgage, maintenance, taxes) and then selling costs (realtor, legal, bank fees) most properties take 7-10 years just to break even with appreciation.

If there is a correction because interest rates go up, values will stagnate if not collapse...

Losing money from the start, hoping prices go up. Exactly how is this an "investment"? At best your gambling. Why not put go down to the casino and put your money on red?

Warren buffet said "there are only two rules in investing. Rule 1, never lose money. Rule 2, see rule #1."


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## hboy54 (Sep 16, 2016)

AltaRed said:


> The message is the '90s RE crash in GTA took a long time to recover. Why do you think it is different this time? Doesn't take much explanation to figure that out.


AltaRed is a wise old dog around here and someone whose opinion should always be considered seriously.

There are times in life that are conducive to certain moves, and times it on a balance of probabilities it makes sense to wait. 

If your wife just gave birth to a child, would now be the time to go on an African safari, or would a better time have been maybe 5 years ago? Maybe another better time will be in 15 years.

Same in investing. On a balance of probabilities is now likely to be an outstanding time to buy a house after ~20% run up in GTA last year, and the stampede upwards the past 15 years? Or would it have been a better idea 15 years ago? Or perhaps will be a better idea 5 or 10 years from now?

Nothing can be said or known for certain. So we have the situation where for many years one set of people have been warning of excessive house prices based on a balance of probabilities, and another set saying yes, but you have been wrong the past 10 years, RE just keeps going up. Maybe GTA housing will go from 10 times annual household income today to 20 times. The thing is, when it was at 3 or 4 times 20 years ago, I personally don't want to take that side of the bet. It just does not feel like a sensible move. Yet, I may be wrong.

I have spent at times years being wrong in an investment. The thing is, by playing reasonable odds, I do very well in the aggregate in the fullness of time. The home runs I do make, made up for the laggards, and yes even made up for not owning Toronto RE the past 15 years. Toronto RE did not have good odds the past 10 years, and the fact that these poor odds did wonderfully for people does not in any way detract from the truth that the odds are even worse now.

Frankly right now, I am not keen on much of anything. Locking in 2% in GICs for 5 years seems silly. Toronto RE seems silly. Buying stocks at current lofty valuations seems silly.

Maybe on the balance of probabilities, it is a good idea to be selling something instead. Personally I recently sold down $170K of stocks and paid down debt with most of it. I may be wrong and the stocks I sold may continue ever upwards just like Toronto RE. The thing is, they had a good recent run. One of them is a long term position that I added at $38 less than a year ago and sold it back at $64, (of course if I had waited 3 or 4 days I could have gotten $69). 70% in under a year made on funds borrowed at 3% is pretty sweet. On the balance of probabilities, is this stunning good fortune likely to repeat next year and give me another 70% gain, or is another outcome likely, say staying the same, or even backtracking a bit? No, on the balance of probabilities, it seems to me in the stock market it is closer to sell season than buy season. As much as I like this company, it being my largest holding, ~20% of the position was culled. Yet, I may be wrong.

hboy54


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## rebel_ins (Apr 6, 2009)

To add to what hboy54 said, here is a link to a Bloomberg article that provides an interesting perspective on last week's optimistic reports about the Canadian economy:
https://www.bloomberg.com/news/arti...res-as-business-dries-up-canada-economy-watch

The article concludes with:


> Canada’s economy today is one reliant on heavily indebted consumers and policy-induced stimulus. The odyssey continues.


Of course, much of the debt alluded to in the above quote is related to real estate.


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## mossman1 (Feb 22, 2017)

OP, It will be very difficult to find a detached in that price range in the GTA. Though I guess Oshawa now classifies as one, that's probably your best bet. Likely won't find anything closer. Guelph and Kitchener area is up and coming, and might still have some in that price range. Though buying a 3 bedroom, garaged house (i.e. brick bungalow) I don't think will be easy. It'll likely have to be 2 bedroom, or some other less then ideal quality.


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## My Own Advisor (Sep 24, 2012)

"_Frankly right now, I am not keen on much of anything. Locking in 2% in GICs for 5 years seems silly. Toronto RE seems silly. Buying stocks at current lofty valuations seems silly.

Maybe on the balance of probabilities, it is a good idea to be selling something instead. Personally I recently sold down $170K of stocks and paid down debt with most of it. I may be wrong and the stocks I sold may continue ever upwards just like Toronto RE. The thing is, they had a good recent run. One of them is a long term position that I added at $38 less than a year ago and sold it back at $64, (of course if I had waited 3 or 4 days I could have gotten $69). 70% in under a year made on funds borrowed at 3% is pretty sweet."_

I'm not like hboy54 (willing to sell my stocks) but I am starting the process of keeping much more cash on hand. I think some darker days are coming. If they don't come, I'll buy some stocks here and there or pay down debt. If they do come, I'll be ready to invest. TFSA maxed so can't invest there. My RRSP is maxed so only my wife's account to contribute to, and we're doing that. 

Everything is like hboy says - a bit silly now. 

Interest rates staying low, housing values (TO, VanCity) through the proverbial roof, stocks flying high - everyone in massive debt - none of this is making much sense to me. I'll stay invested but it's going to be great in a few years when I have no mortgage to worry about.

Re: OP - pay attention to AR words. _"The message is the '90s RE crash in GTA took a long time to recover. Why do you think it is different this time? Doesn't take much explanation to figure that out." _ One of the pillars of investing is an understanding of market/investing history. Those who fail to learn from the past are destined to repeat the same mistakes.


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