3/15/2023 0 Comments Merry clickmas cheats![]() ![]() Compared to the selling of liquid assets, flogging condos is a complete gong show. Below is a real example of what you can do at a Toronto condominium development, a potential 349% gain over 10 years.”Īs I’ve said before, if this was a pitch for an ETF or an IPO (initial public stock offering), anyone making such claims would be out of business, shut down by the regulators. “Behave like the successful and wealthy and use this buying opportunity to your advantage. “This (Toronto) is the only big city in the world where all of the fundamentals are positive,” Lamb tells his flock. In fact, with 63,000 more units in the pipeline, 5,500 resale condos currently for sale and 17,000 vacant, it’s a safe bet capital losses are more likely. Remove that from the equation, and you’re left with only the capital gain on the value of the unit, which in this market is probably phantom. Trouble is, to have that $6,890 repaid, you have to subsidize the tenant for $160 in rent plus put up $85,000 in cash which, at a 7% return if invested elsewhere, would yield almost $6,000. The rental income is negative, but Lamb’s guaranteed return adds in a $13,596 annual capital gain (at a time when condo prices are falling), plus repayment of some of the mortgage principal ($6,890 in year one). Wohoo! How could anyone walk away from that? Hang on to it for ten years, and the return on invested cash is a gigantic 314%. So, back to that one bedroom-plus-den condo renting for $1,800 in the heart of 416.Īccording to Lamb pitch to naive investors, buying this baby and renting it out (at a loss) will give you an annual yield of 23.9%. His weapon against a gathering storm of fear is simple. But lately there’s more than a tinge of desperation in his message. His rise from salesguy flogging cheesy waterfront boxes two decades ago to developer deity, TV star and the coolest guy in the room is legendary. He has amassed significant wealth, and works at showing it. His marketing sets the tone for an entire industry. Tens of thousands of them, imperiling the entire real estate market in cities like Vancouver, Calgary, Montreal and Toronto as legions of buyers assume liabilities they never expected, and discover losses they never imagined. ![]() ![]() In short, it’s a massive leap of faith requiring significant cost/benefit analysis.Īnd how are these things being sold? On emotion and misinformation. Factors materially affecting your unit’s value – like a homeless dude in the lobby or a leaky underground garage – are beyond your ability to change. Worse, if the building needs new plumbing in 15 years, you could face a special assessment of gargantuan proportions. ![]() If the pipes on the 15th floor burst, then your 10th floor unit is toast. Why the hell would anyone do it? Especially in light of what I told you yesterday – condo fees (and taxes) can and will rise frequently (over which you have no control) and modern buildings are being thrown up with little regard to long-term structural integrity.Īfter all, buying a condo is not like scoring a house. Yes, spend $85,000 and then pay $13 more a month to live in the same unit. Then the monthly cost would be $1,218 for the mortgage, plus $312 for condo fees and $283 in property taxes. It costs $1,800 to rent a one bedroom-plus-den apartment in a swishy downtown condo in Toronto. ![]()
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