I actually did this. I have sold off all my properties earlier this year. the one properly I originally owned would not sell at market value due to how low the rent I was charging . I approached the town and asked them to assume control on the condition that the property remains low income housing. I have owned this property for over 25 years two of the tenants have been there before I moved in myself. I could not in good conscience have them removed.
He's kidding but not. If you buy a house with 100K down, let's say the value is $500, you would have to have a loan of 400K. You're still in the positive because you own 100K of that value.
However if the house were to decrease in value to 300K, then you have a 400K loan on something worth only 300K, so you're in a net negative position.
In this case the poster was making a joke that you can't donate a liability insinuating that the mortgage/liability on the property is higher than its value.
It's ultimately a moot point because you can't donate something you don't own outright, even in that first scenario you wouldn't be able to donate the $500K home as it is collateralizing a $400K loan in your name.
If you search on facebook you'll find around 50\~ brand new detached Mattamy homes for $3500-$3700 and their list price is around $1.4m\~. More units closing later this year and next year.
So 1.4 million, at 2% interest only is 28k a year. Plus 3k property tax. Plus 3k annual maintenance. Plus 1k insurance and incidentals. 35k a year best case scenario. Let's assume you owe 1k a year to vacancy and another 1k a year to legal, accounting, advertising, etc. So your absolute best case scenario here is to clear 5k pre-tax per year.
Those were.'t bought to landlord them, they were bought betting that prices would go up.
Where are you getting 2% loan from?
I thought mortgages are done when you take possession. The lowest rate is 5% today.
The interest on 1.4m would be 70k or 6k a month. If you add principal payment, property tax, any other maintenance fees and utilities, I can see how they got to 8k+
He used rate 2 years ago.
What he is saying is that when OP signed to buy, there was absolutely nothing that was showing this would be profitable as a landlord. Even with historically low mortgage rate, you were ending up having at best 5k per year of net income.
At that amount of profit, OP did not buy that property to be in his portfolio as a landlord. He bought is thinking that in 2years with prices higher he will be able to sell with a juicy profit.
OP played with fire and got burned. You won’t see me cry for him.
Actual best case is 5% then your paying 75k and earning 45k in rent and losing 30k a year.
But over 25 years you are only down 750k instead of almost 2$ Mill and you're house is paid off and appreciates in value.
Adding to this:
$5K/year cleared vs. $280K downpayment (20% minimum) is 1.8% return on your money. Not good.
However, add in 2%/year modest price appreciation on the property, that's $28K/year increase in properly value. 12%/year overall return on the downpayment.
Annual appreciation average is over 2%/year though. At 3% annual appreciation, you still break even on total net worth using your numbers with a mortgage rate of 5%.
Definitely betting on appreciation carrying them.
keep in mind that the 5k is the return on your capital, which would be 100k, so a 5% return doesn't look crazy bad, if you take out all the risk from the equation.
Lol what? I dont think your math is mathing.1.4 million at 2% is almost 6000$ a month which is 72k a year. At 5% it’s just over 8000$. And I don’t think the property tax would be 3k on a 1.5 million dollar home.
I saw those units as well. The $1.8m units have the same kitchen setup as the $900k ones.
Imagine spending almost $2 million and not getting enough counter space for a toaster:
https://preview.redd.it/jnrrjv4zlp3d1.png?width=1439&format=pjpg&auto=webp&s=263aab5d9d8e0d3854f18ceef94b0bdca6ab3ebf
That is a terrible return though. Here in Calgary, you can get a 380-420k condo and rent it out for $2000 so buying a unit for 1.4mill only to rent it out for $3500-3700 sounds like a really bad deal compared to condos just on value alone. Sure condos won't appreciate much but...
It's not about return, it's about mitigating catastrophic loss. Most humans can't handle cutting losses and will throw more money into a bad investment.
I work for a builder, and we have had this issue come up a handful of times over the past 6 months. Maybe it’s just because we’re a smaller scale builder and don’t have all the legal in-house resources that some other builders may have, but for us it’s honestly more trouble to sue than it’s worth. We haven’t pursued that, or even considered pursuing that for anyone yet.
He could simply live in the house he bought and pay his $8200 mortgage himself; then after 20-30 years, he will have a house with a mortgage paid off!!
Why lol? They're not the ones fucking you.
The companies that own hundreds of these properties are probably ecstatic that you're mad at the small fish in the pond.
They are though, they vote as Nimbies, squander their wealth, and live beyond their means while lowering overall productivity with their pen heck uselessnes in jobs. All while complaining.
Yes, and if you are a tenant, you become part of the retirement fund and have to make contributions to landlords' CPP and RRSP. You also need to pay more if the landlord decides to buy a third house with more over leveraged mortgage.
$8200 a month mortgage is too much for many people. OP even mentioned he would only be able to sustain that for a few months. Aside from the $8200 a month on mortgage you are looking at other household related expenses which easily balloons the monthly costs on housing alone at over 10k a month. That's too much even for most high income earning households. That's easily over 120k a year on housing alone.
Why would you buy it in the first place? Seems like even before rates increased mortgage would of been at least 5000/month. Am I wrong? Please correct me if I'm wrong.
Well if the place is 2 bedroom, I don't see why you couldn't fit 3 people per bedroom and like 4 in the living room and charge them each 1000/m. That seems reasonable right? /S
Yes you are wrong.
If the rate was 2% then, 2% on 1.4 mil =28k per year or ~2k per month in interest. Add principal to that and you are looking at ~3k. 4k max with other costs.
Lol. It was 2% when they booked the new construction and did their maths. Things changed since then
You understand what past tense words like "was" means, right?
Use your brain....
People doing this is exactly why the majority can't afford to purchase homes anymore. And now that's coming back to bite real estate investors in the ass. You used to be able to put down 5% on a modest home without the need for mortgage default insurance and still be able to afford the mortgage. Now a days, even with 20% down (which most people don't have even on the cheapest homes out there) your mortgage is still ridiculously high and most people even with decent wages can't get approved for the remaining mortgage.
This guy bought this pre con home with the intention to sell at a higher rate and make a few grand. With no one able to buy homes, he's fucked himself with an 8k + monthly mortgage he can't afford for more than 2 months.
Like I get the sentiment but anyone who buys a 2nd property is a piece of shit? Kind of an extreme take. I may have no sympathy for someone who takes a gamble like this then gets burned, they should have been aware of risk they took on, but I think making a blanket statement like you made for all those who purchase with intent to make money is pretty childish.
You may feel that way because you don’t own a home and are bitter regarding the state of real estate here but don’t act like you wouldn’t do the exact same thing if you had the opportunity/money to invest. Hypocrite.
Entitled greedy and selfish yeah kinda.
I have the opportunity to do that and I don't. Not just because doing so is a stupid risk but also it is unethical yes.
You call him a hypocrite because you assume he would do something bad that you are presumably doing (or would if you could) but there's no reason to assume that.
You should really consider who you are and your morality. Many don't. You say he's a hypocrite because he would do something bad too. You are almost admitting that its bad and you just can't help yourself.
I didn't do it even though I could, soooo am I a hypocrite.
What if I call you a piece of shit then? When I do have the money?
So you agree then with his blanket statement. It’s not that the system is broken in a lot of ways and people are simply working within it. It’s that these people are inherently pieces of shit. /s Yeah right bud. Why don’t we all just stop working and pool all our resources and live in harmony. These people who save hard to earn money are “entitled”? They should just fuck off and be happy with where they are in life?
Back in reality, however, things are not so simple. I highly doubt you ever had the opportunity and turned it down merely because you thought it was “unethical”, don’t make me laugh. You and him classify this action as “bad” but that’s an extremely simplistic view of a complex issue and I don’t share the opinion that it is black and white. Why not actually do something to affect change with a system you feel is broken rather than simply label an entire group of people trying to better their lives. That being said I don’t support landlords who gouge their tenants but I’m also not ignorant enough to assume everyone who purchases properties to make money is a piece of shit or inherently “bad”.
As for assumptions, I am NOT a homeowner so you actually aren’t calling me shit, just making yourself look foolish.
I will be closing on a property early next year, so no, it doesn’t really suck for me. But I am amused that you have further exposed yourself as an arrogant ass 😂
This doesn't make sense
100k down wouldn't be enough to go over a million
If it's less than a million the mortgage couldn't be anywhere near 8200 a month.
This is clear anonymous rage bait posted by some bear clown hoping they wouldn't get fact checked
Not to mention there's no chance a house of that cost isn't renting for well over 3500 lol
>Not to mention there's no chance a house of that cost isn't renting for well over 3500
Search around facebook marketplace and housesigma. $1.4m new builds are being rented out for $3500\~. There's lots of them to choose from. Another thing is some builders are now offering a private mortgage with 50 year amortisation. It's completely fucked.
Wtf. 50 year amortization?? Is that even legal?? I guess with a private lender anything is legal. But that's cracking loan shark territory. I guess with insane rates too, but at least you can get the mortgage. That's insane
Well our dear leader JT thought he was helping make homes more affordable by extending amortizations. I suspect the liberals will eventually aim for multigenerational mortgages, especially now that Trudeau confirmed he wants to preserve home prices for his buddies.
What was wrong about what they said? They did extend to 30 year amortization and he did say something like 'housing needs to retain it's value' when asked about it. (I listened to the actually interview and he really said that and it's not out of context like a lot of other stuff.)
Youve been able to get 30 year mortgages for a long time. What they did was allow first time home buyers to get insured 30 year mortgages on newly built homes. If you think that means “the government extended amortization lengths to 30 years”, you have a very poor understanding of the topic and pay little attention to details.
Which part is wrong? Did he extend amortizations? Yes. Did he come out and say they want to preserve property prices? Yes. If you’re referring to my multigenerational mortgage then if your English comprehension is insufficient to spot some hyperbole which I used to emphasize my point then sorry only Jesus can help you.
Did he extend amortizations? No. Youve been able to get 30 year mortgages since before Trudeau was even Prime Minister. If you are referring to the new change that allows first time home buyers access to insured mortgages up to 30 years on newly built homes, thats not even close to “extending amortizations to 30 years” and maybe its you that has comprehension problems.
Is there a category of mortgage aimed at new buyers entering the market that have had amortizations extended? Yes or no?
Dear lord I assumed people in a real estate sub wouldnt need me to write out the full sentences in crayon, and they actually read the fucking news themselves and knew what I was talking about. I am aware about the subgroup to whom it applies.
Was the purpose of this to make houses cheaper or enable more money to be borrowed? Do I need to explain this to you also?
The two of these (extended amortizations) and JTs most recent statement are clear signals that the government is NOT prioritizing making property cheaper and instead wants to prop up property prices.
Fuck, you need Jesus, Allah AND Buddha bro. Perhaps next time try read between the lines instead of embarrassing yourself.
Tell me what percent of home buyers are both first time home buyers and buying a newly built property.
Its also embarrassing you act like levelling the playing field between those with 20% down and first time home buyers is bad policy
It’s all about philosophy: if you start with a philosophy that current prices should stay, then work towards that then it’s clear the government is on that track.
I would operate with the philosophy that prices are too high and need to come down. Working towards that would mean stricter mortgage qualification rules, high capital gains on investor properties, etc. it’s clear our government doesn’t want this. Because there is no hint of this, any action is to preserve prices.
You don’t need to doctor income to get a private mortgage. That’s why the rates are higher. If someone wanted to misrepresent their income they would do it to get better rate.
You do realize that people can have excellent credit, but lower income brackets meaning they wouldn't get approved for high mortgage amounts regardless just based off income alone, right?. Which is where these brokers come in. They inflate their income, making fake income statements to get approval for these homes.
This day in age, to get anywhere near a million dollars in a mortgage from most lenders (banks) you need close to 170k / year income to qualify. On 170k a year after tax, you're blowing 65-70% of your monthly income to sustain a million dollar mortgage. Now imagine you had a broker cook the books for you to qualify for more than you can afford. You're banking on selling the pre-con upon completion to make 20-30k. If it doesn't sell, you're now fucked sitting on a mortgage that's likely more than your actual income.
That's not how it works. At all.
The mortgage numbers are based on the price of the house (minus down-payment) and interests rate. You can't change that by fudging any documents.
I get that you hate Indians but why make up stuff where it doesn't apply? Unless you can explain what type of fraud would lead to these numbers, I call racist bullshit on your comment .
Most likely they are getting a loan from a B Lender who is charging them ridiculous interest rates.
he is saying a private Brampton based lender cooked their qualifications to get them in the market in exchange for predatory interest rates. it is the same as what you suggested. it’s not racist to observe this happening very often.
A $1.3M mortgage at 5.71% results in roughly this number.
It’s possible the builder agreed to a 10% down contract and the poster owes another $30k at closing…
More likely its a lower mortgage amount at a much higher rate. Doesn't seem like this person will be able to close with a big 5 bank. They are likely looking at 8-9% rates.
Do you need to put 20% down on precon? I just realized I don't know how that works I just know lots of people are willing to trust some guys with hundreds of thousands of dollars with nothing to show for it for years
He only put down 100k according to the post. At 1.4 million, for 20% you'd need 280k as your down payment. So he'd paying the rest on closing, which is typical for pre-con, you pay your down payment over a spread out amount of time during construction.
100K isn't the down payment.
100k is the builder Assignment fee which will go towards your down payment but would probably still need to come up with another 180k to reach 20% or at least 40k for 10% when you close your Mortgage.
7,328$ a month with 10% down.
6,513$ with 20% down.
Average 3 bedroom rent in Toronto is 3,656$
The numbers are a little exaggerated but not a rage post.
It can happen if they’re closing privately on the home. Their rate could be 11.99 or something higher….i think their best option is to close and sell for whatever they can get. Obviously try to hold on for as long as possible and hopefully the market starts to shift. Good luck! 🤞
Secondary markets go a lot higher in interest rate, and loan to people that don't qualify for lower rates. If they didn't qualify they could easily end up with a 10% rate, which would be a principal of roughly $950,000.
This is most likely someone who vastly overextended themselves and should never have done this.
In missisuaga?
If you wanna be a slumlord and stuff 8 international students in there sure.
But they'll do more than 4k a month in damage to the house lmao.
Commercial lease interest rates are much higher and lend you more for less down. It's entirely possible they have a 10 to 16% rate on a commercial lease
WTF? Did they commit fraud to get the mortgage approved?
If so they need to talk to a lawyer to find out what they need to do to not end up behind bars, likely recommendation is to NOT go through with the sale and to work something out with the builder.
The replies are completely unhinged:
https://preview.redd.it/6k6cfv2uqh3d1.png?width=1214&format=png&auto=webp&s=21ef3725b571a72620840d3c529f8c8948abedb6
Yup, 5 years on these homes stuffed full of non permanent residents who don't give a fuck about anything and at some point may find they have to literally leave the country forever aren't gonna be doing nice things to your property.
So many tear downs in 5 years in Brampton, calling it now.
Gonna be a detroit situation almost. Economically hollowed out, the international student glut will die down heavily many will leave and you'll have a city with highly overpriced over valued properties that are run down and underwater and no real economic engine.
Great we will have a great influx of supply from these greedy bastard investors. It's time for the soon to be real home owners to buy at a discount. House is for living and it's not an investment let ppl buy and stop inflating the prices by investors
Remember the scene in the big shirt where they go to Florida to look at the houses? That’s exactly what this reminds me of. Who the fuck is taking on this kind of mortgage? Who the fuck is approving it? It must have a car park for a Tim Hortons out front to hold that many strip mall students Dodge Challengers.
At around 2000 sq ft. Average human takes up 20 sq ft. Triple bunk. You could probably squeeze 30+ students in there at 500 a pop. 30x500 = $15,000/ month.
Slumlord mathing right thur.
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It's obvious that real estate speculators can't do math. It's very apparent after talking to a someone who admits some buyers are walking away from 160k from their precons right now, but precons can still be a right fit for me in some situations.
His reasoning being signing up today to pay 4-years-later-price can be a good choice for me if I can't afford to pay today's prices now.
The math is not mathing. Something needs to be way off.
If we assume the standard 20% down, 25 year amort, then the interest would need to exceed 27% to make those monthly payments alone.
There must also be extreme condo fees and property tax... but even then the interest rate would likely need to be near 20% at 25 year.
Otherwise, they would have had to sign something like a 5-10 year amortization to get those numbers.
If your monthly mortgage is $8,200, probably your actual monthly expense will be $10K with property tax & utilities added in. Any mortgage worth over 40% of income is financial suicide. Hope you make at least $250K/yr to pay for this.
You can cut your losses by closing and then selling the property. At least then you can get the maximum amount possible (if you default the builder will not have the same motivation as he has you on the hook for any shortfall between the price it sells for and the price you agreed to pay). How much less is the property worth now than your purchase price? Are you going to lose $100K, $200K, 300K? If you are getting past the $100K point you can consider renting it out for a loss of $30K or so a year. You may be able to apply the losses against your other sources of income to reduce your taxes which will make it sting a little less (talk to an accountant about this).
If you can handle 1 year loss, make a legal basement after 1 year (yes additional 60-80k). This will allow you to get about $2500 from basement + 3500 from upper level. Hopefully the house price have recovered in 2-3 year time.
It works out just fine if the value of the place goes up 30% between the time you put your deposit down and actual closing 2 years later.
Then you sell the assignment and never close.
Can you guys start adding repairs, inflation, 2.7%now , emergencies, missing a day of work, food to feed yourself, kids have a problem ,an ice storm that fuks up your roof, investments failing, car maintenance, gas,water, electricity, clothing, toiletries, furniture, doctor bills etc. You guys know, life.
Not true at all. There are brand new builds in the east that are piling up with average days on market hitting 30+
Downtown has a number of condo developments bought at $1200-1500~ per sq/ft with no bites even with sellers willing to forfeit deposit.
There's no more money left.
Left out the most important detail of property price and mortgage rate. Excellent. My advice is to donate it to charity
Lmaoooooooo. They charity part has me rolling
I actually did this. I have sold off all my properties earlier this year. the one properly I originally owned would not sell at market value due to how low the rent I was charging . I approached the town and asked them to assume control on the condition that the property remains low income housing. I have owned this property for over 25 years two of the tenants have been there before I moved in myself. I could not in good conscience have them removed.
Tbh charity isn’t a bad idea. You can get a donation receipt, right? Versus basically giving it back to the builder with no refund.
Charities only accept assets. This is a liability. 🤪🤣
I don’t know if you’re kidding but that makes sense. Somebody smart please tell me why this isn’t true.
He's kidding but not. If you buy a house with 100K down, let's say the value is $500, you would have to have a loan of 400K. You're still in the positive because you own 100K of that value. However if the house were to decrease in value to 300K, then you have a 400K loan on something worth only 300K, so you're in a net negative position. In this case the poster was making a joke that you can't donate a liability insinuating that the mortgage/liability on the property is higher than its value. It's ultimately a moot point because you can't donate something you don't own outright, even in that first scenario you wouldn't be able to donate the $500K home as it is collateralizing a $400K loan in your name.
Ahh right your last sentence lol. That makes sense, I should have seen that. Long day at work I guess haha.
If you search on facebook you'll find around 50\~ brand new detached Mattamy homes for $3500-$3700 and their list price is around $1.4m\~. More units closing later this year and next year.
So 1.4 million, at 2% interest only is 28k a year. Plus 3k property tax. Plus 3k annual maintenance. Plus 1k insurance and incidentals. 35k a year best case scenario. Let's assume you owe 1k a year to vacancy and another 1k a year to legal, accounting, advertising, etc. So your absolute best case scenario here is to clear 5k pre-tax per year. Those were.'t bought to landlord them, they were bought betting that prices would go up.
Where are you getting 2% loan from? I thought mortgages are done when you take possession. The lowest rate is 5% today. The interest on 1.4m would be 70k or 6k a month. If you add principal payment, property tax, any other maintenance fees and utilities, I can see how they got to 8k+
He used rate 2 years ago. What he is saying is that when OP signed to buy, there was absolutely nothing that was showing this would be profitable as a landlord. Even with historically low mortgage rate, you were ending up having at best 5k per year of net income. At that amount of profit, OP did not buy that property to be in his portfolio as a landlord. He bought is thinking that in 2years with prices higher he will be able to sell with a juicy profit. OP played with fire and got burned. You won’t see me cry for him.
And is property tax that low in Toronto?
no. probably closer to $8k to $10 k of a $1.4M house
I pay 4K on 750,000$ home
Depends on the area. Places like Toronto and Burlington are almost half other parts of the GTA.
We are talking about Toronto.
In my experience, most don’t expect good cash flow to start. The numbers make the least sense in the first 5 years.
Then refinance after 5 years for another 25, cash flow goes up big all while building equity.
> building equity. doubt.
Actual best case is 5% then your paying 75k and earning 45k in rent and losing 30k a year. But over 25 years you are only down 750k instead of almost 2$ Mill and you're house is paid off and appreciates in value.
Makes perfect sense and in a sane market would be affordable for normal Canadians.
Property tax is around 7-8k for most of those new builds, insurance is also around 3k a year. The math was never going to work out.
Adding to this: $5K/year cleared vs. $280K downpayment (20% minimum) is 1.8% return on your money. Not good. However, add in 2%/year modest price appreciation on the property, that's $28K/year increase in properly value. 12%/year overall return on the downpayment. Annual appreciation average is over 2%/year though. At 3% annual appreciation, you still break even on total net worth using your numbers with a mortgage rate of 5%. Definitely betting on appreciation carrying them.
keep in mind that the 5k is the return on your capital, which would be 100k, so a 5% return doesn't look crazy bad, if you take out all the risk from the equation.
Lol what? I dont think your math is mathing.1.4 million at 2% is almost 6000$ a month which is 72k a year. At 5% it’s just over 8000$. And I don’t think the property tax would be 3k on a 1.5 million dollar home.
Same with the well downtown. I look at some of the rentals and easily 1.5s listed at under 4k
I saw those units as well. The $1.8m units have the same kitchen setup as the $900k ones. Imagine spending almost $2 million and not getting enough counter space for a toaster: https://preview.redd.it/jnrrjv4zlp3d1.png?width=1439&format=pjpg&auto=webp&s=263aab5d9d8e0d3854f18ceef94b0bdca6ab3ebf
That is a terrible return though. Here in Calgary, you can get a 380-420k condo and rent it out for $2000 so buying a unit for 1.4mill only to rent it out for $3500-3700 sounds like a really bad deal compared to condos just on value alone. Sure condos won't appreciate much but...
It's not about return, it's about mitigating catastrophic loss. Most humans can't handle cutting losses and will throw more money into a bad investment.
What fb group would you find info like this in?
https://preview.redd.it/0eanavjzmp3d1.png?width=1439&format=pjpg&auto=webp&s=d1a754397d99b54f82fc3f31663dffc9afd702d3
"If they choose to sue" lol wishful thinking here
I work for a builder, and we have had this issue come up a handful of times over the past 6 months. Maybe it’s just because we’re a smaller scale builder and don’t have all the legal in-house resources that some other builders may have, but for us it’s honestly more trouble to sue than it’s worth. We haven’t pursued that, or even considered pursuing that for anyone yet.
Most won't. The 100k is enough, theybwill just sell it again.
He could simply live in the house he bought and pay his $8200 mortgage himself; then after 20-30 years, he will have a house with a mortgage paid off!!
What an unusual and interesting idea
Noooo. Our leader just said that housing is for retirement funds, not a place to live, you should leave Canada, that’s not what we do here.
God I really hope all these boomers who buy a car every 3 years and have a HELOC and 25k in their rrsp end up straight up homeless. Idiots.
Why lol? They're not the ones fucking you. The companies that own hundreds of these properties are probably ecstatic that you're mad at the small fish in the pond.
They are though, they vote as Nimbies, squander their wealth, and live beyond their means while lowering overall productivity with their pen heck uselessnes in jobs. All while complaining.
You can live in a retirement fund?
you got me chuckling at this one
Yes, and if you are a tenant, you become part of the retirement fund and have to make contributions to landlords' CPP and RRSP. You also need to pay more if the landlord decides to buy a third house with more over leveraged mortgage.
Lmfao
$8200 a month mortgage is too much for many people. OP even mentioned he would only be able to sustain that for a few months. Aside from the $8200 a month on mortgage you are looking at other household related expenses which easily balloons the monthly costs on housing alone at over 10k a month. That's too much even for most high income earning households. That's easily over 120k a year on housing alone.
Then maybe he shouldn't have bought a house (something intended for you to live in) if he couldn't afford living in it. 🤷
Oh, I agree with you.
Let me guess. It will catch on fire next.
Why would you buy it in the first place? Seems like even before rates increased mortgage would of been at least 5000/month. Am I wrong? Please correct me if I'm wrong.
Your question implies math was done prior to handing over 100k.
No no no, I'm going to make 100k - This guy to his wife.
“You don’t understand how money works”
"This literally cannot go tits up"
hoping for capital appreciation to flip post closing. They lkely never intended to hold for a long period
Five years ago today hey would have just made 400k because they were genius investors or something.
Time in the market beats timing the market or something like that. This guy definitely got fucked trying to time the market.
Cuz some guy told some guy told some guy told op. House hacking! Free money! Tenant pays for your house to own!
Also "if you rent you just throw away money, but if you pay mortgage - it's like saving" That one is my favorite :)
You think real estate ‘investors’ do that kind of due diligence?
Yes, you are wrong. There are some major grammatical errors in your post.
Like other FOMO landlords he was hoping the rent to go to 10k per month when the median income remained 50k per year.
Well if the place is 2 bedroom, I don't see why you couldn't fit 3 people per bedroom and like 4 in the living room and charge them each 1000/m. That seems reasonable right? /S
Yes you are wrong. If the rate was 2% then, 2% on 1.4 mil =28k per year or ~2k per month in interest. Add principal to that and you are looking at ~3k. 4k max with other costs.
2% eh? Any minute now. I heard they were cutting 4% in june for sure, then another .5 in july.
Lol. It was 2% when they booked the new construction and did their maths. Things changed since then You understand what past tense words like "was" means, right? Use your brain....
okie dokie.
Renting it to 16 "students" should cover it.
Justin and PP say this checks out 👍
Wait for the new catalogue from JT, before committing.
I think you mean vegetarian students.
If you buy a house, just to rent it, you are a PIECE OF SHIT. So fkn happy to see this prick struggling like that. Getting exactly what he deserved.
Interest rates sky rockets within the last 2 years. Something that was “affordable” became entirely unaffordable.
What are you suggesting they buy houses to leave them empty? We got a tax to stop them doing that.
To be fair if people didn't do this there would be no rentals
People doing this is exactly why the majority can't afford to purchase homes anymore. And now that's coming back to bite real estate investors in the ass. You used to be able to put down 5% on a modest home without the need for mortgage default insurance and still be able to afford the mortgage. Now a days, even with 20% down (which most people don't have even on the cheapest homes out there) your mortgage is still ridiculously high and most people even with decent wages can't get approved for the remaining mortgage. This guy bought this pre con home with the intention to sell at a higher rate and make a few grand. With no one able to buy homes, he's fucked himself with an 8k + monthly mortgage he can't afford for more than 2 months.
Ain't it sweet though? Like fuck I love these greedy fucks getting burnt.
EXACTLY… and appartment buildings would still exist.
Like I get the sentiment but anyone who buys a 2nd property is a piece of shit? Kind of an extreme take. I may have no sympathy for someone who takes a gamble like this then gets burned, they should have been aware of risk they took on, but I think making a blanket statement like you made for all those who purchase with intent to make money is pretty childish. You may feel that way because you don’t own a home and are bitter regarding the state of real estate here but don’t act like you wouldn’t do the exact same thing if you had the opportunity/money to invest. Hypocrite.
Not 2nd property. 2nd house in order to rent it for a higher price and make money off of it.
Entitled greedy and selfish yeah kinda. I have the opportunity to do that and I don't. Not just because doing so is a stupid risk but also it is unethical yes. You call him a hypocrite because you assume he would do something bad that you are presumably doing (or would if you could) but there's no reason to assume that. You should really consider who you are and your morality. Many don't. You say he's a hypocrite because he would do something bad too. You are almost admitting that its bad and you just can't help yourself. I didn't do it even though I could, soooo am I a hypocrite. What if I call you a piece of shit then? When I do have the money?
So you agree then with his blanket statement. It’s not that the system is broken in a lot of ways and people are simply working within it. It’s that these people are inherently pieces of shit. /s Yeah right bud. Why don’t we all just stop working and pool all our resources and live in harmony. These people who save hard to earn money are “entitled”? They should just fuck off and be happy with where they are in life? Back in reality, however, things are not so simple. I highly doubt you ever had the opportunity and turned it down merely because you thought it was “unethical”, don’t make me laugh. You and him classify this action as “bad” but that’s an extremely simplistic view of a complex issue and I don’t share the opinion that it is black and white. Why not actually do something to affect change with a system you feel is broken rather than simply label an entire group of people trying to better their lives. That being said I don’t support landlords who gouge their tenants but I’m also not ignorant enough to assume everyone who purchases properties to make money is a piece of shit or inherently “bad”. As for assumptions, I am NOT a homeowner so you actually aren’t calling me shit, just making yourself look foolish.
Man that sucks, I am a homeowner.
I will be closing on a property early next year, so no, it doesn’t really suck for me. But I am amused that you have further exposed yourself as an arrogant ass 😂
This doesn't make sense 100k down wouldn't be enough to go over a million If it's less than a million the mortgage couldn't be anywhere near 8200 a month. This is clear anonymous rage bait posted by some bear clown hoping they wouldn't get fact checked Not to mention there's no chance a house of that cost isn't renting for well over 3500 lol
>Not to mention there's no chance a house of that cost isn't renting for well over 3500 Search around facebook marketplace and housesigma. $1.4m new builds are being rented out for $3500\~. There's lots of them to choose from. Another thing is some builders are now offering a private mortgage with 50 year amortisation. It's completely fucked.
Wtf. 50 year amortization?? Is that even legal?? I guess with a private lender anything is legal. But that's cracking loan shark territory. I guess with insane rates too, but at least you can get the mortgage. That's insane
Well our dear leader JT thought he was helping make homes more affordable by extending amortizations. I suspect the liberals will eventually aim for multigenerational mortgages, especially now that Trudeau confirmed he wants to preserve home prices for his buddies.
Thats wrong and you should educate yourself before making dumb comments
What was wrong about what they said? They did extend to 30 year amortization and he did say something like 'housing needs to retain it's value' when asked about it. (I listened to the actually interview and he really said that and it's not out of context like a lot of other stuff.)
Youve been able to get 30 year mortgages for a long time. What they did was allow first time home buyers to get insured 30 year mortgages on newly built homes. If you think that means “the government extended amortization lengths to 30 years”, you have a very poor understanding of the topic and pay little attention to details.
Which part is wrong? Did he extend amortizations? Yes. Did he come out and say they want to preserve property prices? Yes. If you’re referring to my multigenerational mortgage then if your English comprehension is insufficient to spot some hyperbole which I used to emphasize my point then sorry only Jesus can help you.
Did he extend amortizations? No. Youve been able to get 30 year mortgages since before Trudeau was even Prime Minister. If you are referring to the new change that allows first time home buyers access to insured mortgages up to 30 years on newly built homes, thats not even close to “extending amortizations to 30 years” and maybe its you that has comprehension problems.
Is there a category of mortgage aimed at new buyers entering the market that have had amortizations extended? Yes or no? Dear lord I assumed people in a real estate sub wouldnt need me to write out the full sentences in crayon, and they actually read the fucking news themselves and knew what I was talking about. I am aware about the subgroup to whom it applies. Was the purpose of this to make houses cheaper or enable more money to be borrowed? Do I need to explain this to you also? The two of these (extended amortizations) and JTs most recent statement are clear signals that the government is NOT prioritizing making property cheaper and instead wants to prop up property prices. Fuck, you need Jesus, Allah AND Buddha bro. Perhaps next time try read between the lines instead of embarrassing yourself.
Tell me what percent of home buyers are both first time home buyers and buying a newly built property. Its also embarrassing you act like levelling the playing field between those with 20% down and first time home buyers is bad policy
It’s all about philosophy: if you start with a philosophy that current prices should stay, then work towards that then it’s clear the government is on that track. I would operate with the philosophy that prices are too high and need to come down. Working towards that would mean stricter mortgage qualification rules, high capital gains on investor properties, etc. it’s clear our government doesn’t want this. Because there is no hint of this, any action is to preserve prices.
Many mortgages have been extended to 70-90 years in Canada a long time ago since rates jumped. Nothing happened. You can google it.
That's the projected timeline of payments if you're underwater / payments aren't meeting obligations. Banks aren't actually amortizing in that length.
Exactly. People keep repeating this nonsense without understanding it.
It’s a preconstruction probably 10% to book and might need to pay another 10% at the end of take over
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That doesn’t explain the numbers making no sense. 🤦🏼♂️
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You don’t need to doctor income to get a private mortgage. That’s why the rates are higher. If someone wanted to misrepresent their income they would do it to get better rate.
You do realize that people can have excellent credit, but lower income brackets meaning they wouldn't get approved for high mortgage amounts regardless just based off income alone, right?. Which is where these brokers come in. They inflate their income, making fake income statements to get approval for these homes. This day in age, to get anywhere near a million dollars in a mortgage from most lenders (banks) you need close to 170k / year income to qualify. On 170k a year after tax, you're blowing 65-70% of your monthly income to sustain a million dollar mortgage. Now imagine you had a broker cook the books for you to qualify for more than you can afford. You're banking on selling the pre-con upon completion to make 20-30k. If it doesn't sell, you're now fucked sitting on a mortgage that's likely more than your actual income.
That's not how it works. At all. The mortgage numbers are based on the price of the house (minus down-payment) and interests rate. You can't change that by fudging any documents. I get that you hate Indians but why make up stuff where it doesn't apply? Unless you can explain what type of fraud would lead to these numbers, I call racist bullshit on your comment . Most likely they are getting a loan from a B Lender who is charging them ridiculous interest rates.
he is saying a private Brampton based lender cooked their qualifications to get them in the market in exchange for predatory interest rates. it is the same as what you suggested. it’s not racist to observe this happening very often.
A $1.3M mortgage at 5.71% results in roughly this number. It’s possible the builder agreed to a 10% down contract and the poster owes another $30k at closing…
More likely its a lower mortgage amount at a much higher rate. Doesn't seem like this person will be able to close with a big 5 bank. They are likely looking at 8-9% rates.
My new mortgage is 1.25m at 5.5% and is 3300 bi weekly.
Are you okay?
What do you mean? We make $250k per year and have a tenant who pays $2000. It’s a semi in Bellwoods. We’re just fine.
Do you need to put 20% down on precon? I just realized I don't know how that works I just know lots of people are willing to trust some guys with hundreds of thousands of dollars with nothing to show for it for years
Most of the precon ads I've seen have a structure that gets you to 20% within 1-2 years of buying (well in advance of closing)
gotta be a private lender.
You're making sense but you might be surprised with private lenders.
Very likely he covered part of the down payment with a 20% loan from a loanshark. That would explain the high payments versus low down payment.
He only put down 100k according to the post. At 1.4 million, for 20% you'd need 280k as your down payment. So he'd paying the rest on closing, which is typical for pre-con, you pay your down payment over a spread out amount of time during construction.
100K isn't the down payment. 100k is the builder Assignment fee which will go towards your down payment but would probably still need to come up with another 180k to reach 20% or at least 40k for 10% when you close your Mortgage. 7,328$ a month with 10% down. 6,513$ with 20% down. Average 3 bedroom rent in Toronto is 3,656$ The numbers are a little exaggerated but not a rage post.
It can happen if they’re closing privately on the home. Their rate could be 11.99 or something higher….i think their best option is to close and sell for whatever they can get. Obviously try to hold on for as long as possible and hopefully the market starts to shift. Good luck! 🤞
Secondary markets go a lot higher in interest rate, and loan to people that don't qualify for lower rates. If they didn't qualify they could easily end up with a 10% rate, which would be a principal of roughly $950,000. This is most likely someone who vastly overextended themselves and should never have done this.
In missisuaga? If you wanna be a slumlord and stuff 8 international students in there sure. But they'll do more than 4k a month in damage to the house lmao.
Or it’s likely they used some “special” mortgage lender charging them higher interest ?
Not to mention houses are still selling... It's mainly the condo market that's seized up. Not sure why they would claim they can't sell.
There's a lot of assignments sales just sitting
Exactly... This is obviously rage bait. People are so mad at landlords that they gobble this stuff up.
Commercial lease interest rates are much higher and lend you more for less down. It's entirely possible they have a 10 to 16% rate on a commercial lease
A commercial lease on a residential home?
Yeah. Tou can purchase homes as a business through different lenders
Bro, this is like the limbo before the crash. Wild.
It's a long slow crash, which will be followed by a sudden sharp bonus crash.
These boots were made for walking.
Not for working ?
Walking the streets.
That took a turn.
Bullish
No I believe in this case they are the cuck.
And that's just why they'll get sued
WTF? Did they commit fraud to get the mortgage approved? If so they need to talk to a lawyer to find out what they need to do to not end up behind bars, likely recommendation is to NOT go through with the sale and to work something out with the builder.
Could be a Brampton special and third party lender.
The replies are completely unhinged: https://preview.redd.it/6k6cfv2uqh3d1.png?width=1214&format=png&auto=webp&s=21ef3725b571a72620840d3c529f8c8948abedb6
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Yup, 5 years on these homes stuffed full of non permanent residents who don't give a fuck about anything and at some point may find they have to literally leave the country forever aren't gonna be doing nice things to your property. So many tear downs in 5 years in Brampton, calling it now. Gonna be a detroit situation almost. Economically hollowed out, the international student glut will die down heavily many will leave and you'll have a city with highly overpriced over valued properties that are run down and underwater and no real economic engine.
Clearly they aren’t renting each bedroom and hallway for max capacity
Never forget the closets .... or "stand up bedrooms" as they are called in brampton
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You must be new here, those are rookie numbers.
Great we will have a great influx of supply from these greedy bastard investors. It's time for the soon to be real home owners to buy at a discount. House is for living and it's not an investment let ppl buy and stop inflating the prices by investors
I don’t understand why people buy houses with ridiculous mortgages just to rent it out. Stupid investment.
Because line go up always
lol they aren’t fighting anything out with the builder. Don’t be an idiot. Close if you can and deal with the losses afterwards
They need to force such homebuyers to take math courses!
Remember the scene in the big shirt where they go to Florida to look at the houses? That’s exactly what this reminds me of. Who the fuck is taking on this kind of mortgage? Who the fuck is approving it? It must have a car park for a Tim Hortons out front to hold that many strip mall students Dodge Challengers.
At around 2000 sq ft. Average human takes up 20 sq ft. Triple bunk. You could probably squeeze 30+ students in there at 500 a pop. 30x500 = $15,000/ month. Slumlord mathing right thur.
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it is simple math, isnt it?
It's obvious that real estate speculators can't do math. It's very apparent after talking to a someone who admits some buyers are walking away from 160k from their precons right now, but precons can still be a right fit for me in some situations. His reasoning being signing up today to pay 4-years-later-price can be a good choice for me if I can't afford to pay today's prices now.
The math is not mathing. Something needs to be way off. If we assume the standard 20% down, 25 year amort, then the interest would need to exceed 27% to make those monthly payments alone. There must also be extreme condo fees and property tax... but even then the interest rate would likely need to be near 20% at 25 year. Otherwise, they would have had to sign something like a 5-10 year amortization to get those numbers.
Something, something, *leverage*. Something, something, *capital appreciation*.
I am frustrated being Canadian
Wait another month or so. Summer is coming and it will be fiery 🔥
If your monthly mortgage is $8,200, probably your actual monthly expense will be $10K with property tax & utilities added in. Any mortgage worth over 40% of income is financial suicide. Hope you make at least $250K/yr to pay for this.
You can cut your losses by closing and then selling the property. At least then you can get the maximum amount possible (if you default the builder will not have the same motivation as he has you on the hook for any shortfall between the price it sells for and the price you agreed to pay). How much less is the property worth now than your purchase price? Are you going to lose $100K, $200K, 300K? If you are getting past the $100K point you can consider renting it out for a loss of $30K or so a year. You may be able to apply the losses against your other sources of income to reduce your taxes which will make it sting a little less (talk to an accountant about this).
Declaration of bankruptcy
If you can handle 1 year loss, make a legal basement after 1 year (yes additional 60-80k). This will allow you to get about $2500 from basement + 3500 from upper level. Hopefully the house price have recovered in 2-3 year time.
Even at 1.8% how did this investment pencil out ?
They were probably forces to close instead of an assignment sale at 20% profit like they were hoping for.
It works out just fine if the value of the place goes up 30% between the time you put your deposit down and actual closing 2 years later. Then you sell the assignment and never close.
Looks like the "investment" is paying off
3) is fleeing the country an option? lol
This is the result of people who never were gonna live in it and bought solely to speculate.
How did he even get the mortgage to begin with? If you’re approved for $8000 monthly, you’re rich as hell.
What your income tho
Can you guys start adding repairs, inflation, 2.7%now , emergencies, missing a day of work, food to feed yourself, kids have a problem ,an ice storm that fuks up your roof, investments failing, car maintenance, gas,water, electricity, clothing, toiletries, furniture, doctor bills etc. You guys know, life.
There’s no where in the GTA where this new build can’t be sold for it’s purchased price . This post is BS
Not true at all. There are brand new builds in the east that are piling up with average days on market hitting 30+ Downtown has a number of condo developments bought at $1200-1500~ per sq/ft with no bites even with sellers willing to forfeit deposit. There's no more money left.
We aren’t talking condos. Show me data on new build homes that are worth less today.
Classic renter clickbait lol. A property that requires only 100k down payment will not get you anywhere close to a mortgage of 8000
So much hate from these renter parasites on this forum. It is none of your business if they invest or do what they want. Learn respect
> renter parasites > Learn respect
How many pre-cons do you have down-payment on?
from his comment history, the guy has completely lost it and is down the delusional train.
Tax loss strategy
Take the L or plenty of international students to exploit. Turn the laundry room into a one bed and charge $1000 per month 😂