Presale Condo Investment : BrentwoodFIVE vs Gilmore Place

[VarBreStr18]

Originally Posted by cornholio

Let me put on my logic hat.

I think you just showed your cards. Your agenda here is not to get advise but rather to give it...

And why would someone give advice like this when not solicited? In sneaky way on-top of it.

Looks to me GM never asks advice about the market. It just spinned off that way.
GM is comfidant about the market. GM just want opinion about which project to buy , that's all.

[Alex Mackinnon]

Originally Posted by GilmoreStation

There is no way you will ever see any 2-bedroom condo that is less than 5 year old near transit in the 500's ever again in Burnaby (unless if it's super close to a cemetery)

Nor will you ever see any 1-bedroom in the 300's for buildings under 5 year old near skytrain in Burnaby ever again

By that logic, diversify and buy two. If your logic holds true on the first statement and these are safe investments, then having two separate buildings in two different (ish) areas is effectively diversifying your portfolio and reducing your risk.

[GilmoreStation]

That would be great, except that I won't qualify for that much mortgage. So I will have to determine which one of the two will generate faster returns in the medium term (5-8years).

[rickvug]

Originally Posted by GilmoreStation

That would be great, except that I won't qualify for that much mortgage. So I will have to determine which one of the two will generate faster returns in the medium term (5-8years).

I'm sorry, this is just incredibly naive and dangerous for your personal finances. The fact that you look to be stretched to qualify says it all. Despite past experience in Vancouver might tell you, real estate is not some get rich scheme where "anyone can do it". It is tied to all sorts of macro and micro-economic factors that one should try to understand.

Buy a home primarily to live in. If you must invest in real estate have a long time horizon and keep a careful eye on your cap rate (rate of return). Your worst case should be that you're earning a steady rate of return and you can simply hold on to it. We're coming out of a stretch of amazing returns at a time when interest rates are rising (for real this time!). In 5-8 years interest rates will almost certainly be a good deal higher than they are now, bringing prices down with it. Affordability might stay the same or actually get worse while prices come down. People will just be paying a higher percentage of their mortgage in interest. If you're looking at supply and demand dynamics you can also see a large surge in starts in the past year. This is great and hopefully will moderate price growth for the health of the region as units complete.

[GilmoreStation]

As long as you can get the unit rented, your tenant will pay off your mortgage for you. And it's mostly a passive investment too.

[Alex Mackinnon]

Originally Posted by GilmoreStation

As long as you can get the unit rented, your tenant will pay off your mortgage for you. And it's mostly a passive investment too.

So you think being a landlord is a more passive investment than owning something liquid like a stock index?

[WarrenC12]

Originally Posted by Alex Mackinnon

So you think being a landlord is a more passive investment than owning something liquid like a stock index?

And he's assuming rent will cover mortgage payments + strata fees + property tax, etc.

[SkyboxInvestment]

Brentwood has shot up and it looks like until a wave of completions in 2021 hits the markets it will continue to rise a bit, though SOLO and higher end Amazing Brentwood (delayed) projects are going for $900/sq ft.

Fact is vacancy is low and quality tenants are having a tough time finding a good longterm home. Burnaby Metro/Brentwood rates are $1600-1800 for under 5 year old high rises which covers up to $450K in mortgage at current 2.2% var 5 year rates.

Even lower end developers like Thind is pricing Lumina at $850/ft at the lowest levels.

Disclosure:
Investor, have units in Burnaby
Also insider on developments such as Lumina Brentwood

[Alex Mackinnon]

Originally Posted by SkyboxInvestment

Fact is vacancy is low and quality tenants are having a tough time finding a good longterm home. Burnaby Metro/Brentwood rates are $1600-1800 for under 5 year old high rises which covers up to $450K in mortgage at current 2.2% var 5 year rates.

Disclosure:
Investor, have units in Burnaby
Also insider on developments such as Lumina Brentwood

Disclosure, you won't get those rates when you complete

[Jebby]

Originally Posted by SkyboxInvestment

Fact is vacancy is low and quality tenants are having a tough time finding a good longterm home. Burnaby Metro/Brentwood rates are $1600-1800 for under 5 year old high rises which covers up to $450K in mortgage at current 2.2% var 5 year rates.

Does it cover strata and property taxes, though? What about regular maintenance of the unit?

And what will interest rates be in 5 years? Are you willing to be they'll be the same as they are now?

[Cypherus]

Originally Posted by GilmoreStation

That would be great, except that I won't qualify for that much mortgage. So I will have to determine which one of the two will generate faster returns in the medium term (5-8years).

Also be aware of taxable consequences that start making your returns lower than expected:

Buying a property for immediate resale upon completion will result in business income which 100% of the profit is included into your income, as opposed to 50% of the capital gain. You are engaging in an adventure or concern in the nature of trade. CRA is successfully reassessing a lot of property flips as business income lately by focusing on the facts (i.e. a taxpayer who has a family of 4 buys a one bedroom condo and claims it was his principle residence; taxpayer buys a home then say he had to sell it immediately due to a feng shui violation in its design - even though he had performed a thorough walkthrough of the home prior to closing).

Also be aware that the federal government has hinted at increasing the capital gains inclusion rate from 50% to 75% for homes not designated as a principle residence. Expected for 2018 or future years, the taxable consequences of such a change can make your investment start looking like a GIC.

[WBC]

Originally Posted by WarrenC12

And he's assuming rent will cover mortgage payments + strata fees + property tax, etc.

Actually, when you put all things on paper, even with a 30 year mortgage the rent does not cover mortgage payments, property tax, strata fees, insurance, repairs, etc. It's just that people in general glamorize this and don't fully account for expenses and eyeball the whole mortgage payment = rent.

In addition, rent is fully taxable income which many apparently "forget" which means that you should subtract 20-40% from rent to pay the CRA. And if you rent the place the sale is subject to capital gain tax.

So to sum it up you will be running your investment at a loss for many years to come praying that interest rates not go up, that tenants don't ruin your place, that the building does not run into a large special levy and hoping that properties continue to appreciate at 5-10% a year indefinitely...Isn't it just easier to invest with Madoff?

And sure if your bought in 2003 and sold this year, you made a lot of money...But you could have made a lot of money on Nortel shares too.

[BlueVancouver]

The bubble has gotten larger and larger. When.. not if, the investor money decides to stop due to unforseen circumstances, they will unload units like we've never seen before. Most people that buy condos these days are investors looking to make a quick buck or rent out their units. Normal working people can no longer afford even 1 bedroom units anymore unless they live in Surrey or Langley.

[GeeCee]

Please use the real estate thread: http://forum.skyscraperpage.com/showthread.php?t=193748

[szechuansean]

Originally Posted by BlueVancouver

The bubble has gotten larger and larger.

https://globalnews.ca/news/2915301/c...ices-in-china/

7 times more visa applicants, 7 times more people coming from china, 7 times more capital flowing in the the not to distant future.

[Alex Mackinnon]

Originally Posted by szechuansean

https://globalnews.ca/news/2915301/c...ices-in-china/

7 times more visa applicants, 7 times more people coming from china, 7 times more capital flowing in the the not to distant future.

News that's only 15 months old...

[szechuansean]

Originally Posted by Alex Mackinnon

News that people may have missed or be unaware of.

[GilmoreStation]

It looks like Gilmore Place's first tower will be selling at the same time Solo District's third tower is selling. How does this two towers compare and which one should an investor buy?

[excel]

.

[Alex Mackinnon]

Neither unless they like to throw away money?