I agree. This is a prime example of what we call "speculation". This phenomenon has driven price to skyrocket about 3xs in about 7 years. Supply issue is not only the issue.
Borrowing money to invest is always a mistake. You never hear stories like this for people who invest with cash. Leverage is greed, and frequently is the death of so many bad investments.
I think they were stupid more than greedy. I feel sorry for them. They are humans, maybe they have kids. They messed up. What kind of nasty person *wouldn’t* feel sorry for them?
@@Imsosmrt1999Maybe the type of 'nasty person' who isn't buy a home for their family because they refuse to purchasing a 5x+ leveraged property at a high price point during a speculative frenzy because they know the consequences can be catastrophic. Sensible people have been sitting out and watching masses of useful idiots make millions without understanding the risks (ie. That a 20% decline in value can wipe out your 100+k down payment entirely when you're 5x leveraged and a 20% decline would still have prices at ~8x income or whatever the number is). If your equity gets wiped out and you want to move you are basically starting back from 0 so you have lost your entire freedom. Have compassion for the person who unknowingly gambled their money away, but I have far more compassion for the families and individuals who are suffering from the astronomical prices brought about by this mania in which this person tried to participate and which they tried to profit off of. They were hoping for even HIGHER prices. 😂😂😂 Thats something people need to be held accountable for.
Unfortunately I know someone in the identical situation almost to the dollar - he had been successful in the past- Remember past performance does not guarantee future results
@@deezed150 Residential real estate is a “market”. All market’s go both up, and down. Sentiment has clearly changed. The 2022 tulip mania is over. If you’ve bet the bank on the stock market, I hope you have your stop positions in place.
What you described at the beginning of the video is a prime example of what we call “speculation”. Although we have a shortage in housing supply, however, the main issue causing prices to go 3xs in about 7 years is speculation. Far too long, government is keeping a blind eye on this. Hard working Canadians has zero protection when it comes to speculation. Another example is when you have a FOMO buyer go to a middle class neighborhood, making crazy offer and change the value of homes in the entire neighbourhood overnight despite all datas that show that the average income is $65k in that neighborhood as an example. Thanks for sharing the story.
If the prices went up 3xs in 7 years then that is fact and it was good speculation. There is no shortage of houses. Look online. Lots of inventory not like 2017 where there was barely any inventory.
@@moosiani1the problem created by speculation is like playing lottery with guaranteed winning numbers and creating a lala land/ get rich quick on the shoulder of future generations as they are the ones holding the bags. Government should not let such behaviour to be the norm.
There's no blind eye, the government of Canada is literally encouraging this type of behaviour with REPO and REVERSE-REPO facilities. The BoC could keep treasuries around 4%, but the banks would have to pay out 8-9% in GICs and HISAs for the mess they created.
@@moosiani1 Lots of inventory gained from buyers walking away from downpayments/ not qualifying for mortgages based on new appraisals as the 2021-22 values were beyond inflated/ foreclosures, etc...
Timber framed detached houses in GTA should not exceed 1.5m. Guess interest rate isn’t dropping in the next 5yrs. Govt is mopping excess fund in the streets.
1.5 m? We are being ripped off in canada mainly gta. Americans laugh at us paying millions for miniature doll houses. In texas or many states you can buy mansions for half million. Better weather, better economy, better everything, so why are we paying with our lives for these match boxes in the second largest country in the world? It just doesn't make sense regardless of whatever logic is presented. Natural resources, land, everything is abundant, only thing is, canada is not a real country, Canadians are not a real nation. We live in someone's property, we are making it better for them, we are only workers in a mine which belongs to some people we never see!
The question is how did he purchased 2 properties ? How was he able to. He had the down payment that's understood. But when you buy home from a builder they need a pre approval letter from the bank. These days fake pre approvals are available in the market from banking mobile mortgage reps for $500. Canada has a problem of financial fraud I.e mortgage income document fraud. I hear lots of stories and I think doing things in a legit ways can save fortune sometimes.
Speculation at its best. These people are going bankrupt plain and simple. The builders are not going to look the other way. If they have a house they are coming for it.
They were cash flow negative out of the gate on that investment property? Did the agent even bother to do their cash flows? Who established market rents? What was the capital appreciation average for the last 5 years wherever this property was located??
But when people make decisions based on their greed only, they also have to accept that the reality may be different than their ultimate motive. That's life.
I have worked in R. E. law. NEVER!!!!!! /Never buy a new build until the property is built. In the case of a newly built condo, never buy until the condo is registered as a condo. The buyer has to pay the closing costs on the new builds. Those costs include all the improvement fees to develop the property. If you don't have the closing costs, you lose the property.
@lbw1325 I am guessing you have never examined a new build contract? Closing costs are built into the contract. Not only that, but purchasers must move in and pay occupancy fees until the condo is registered. Occupancy fees do not count towards your mortgage payment. You are right. I am not a lawyer. Notwithstanding, I have worked at a law firm that concentrated on new builds. AND! I have been instructed, examined, and been examined in real estate law. Never buy a new build condo.
@@samirpatel4248if that were true we wouldn’t have internet, cell phone monopolies and pay higher prices than most places. Also wouldn’t have bent over backwards in the lockdown. Too many people willingly took that fake vaccine
This looks like this couple walking in a well shown with hired fake buyers! I still cannot understand why some people let their emotions dictate their actions on such an important decision like buying a property!
Thanks for sharing this story. Something for others to learn from. Invest in stocks, at least you only lose what you put in. As you said, in new construction real estate, unfortunately you don’t really have anyone that is looking out for your best interests (access to unbiased expertise).
That plan was a bad plan. They got suckered by a sales pitch. Trouble is it’s not a hot tub at the CNE, it’s a friggin house!!! I feel so badly for folks like that, but they made adult decisions without a backup plan.
This is a very stressful situation for the couple, God forbid, but hope they learned a valuable lesson from this costly experience. But they should have noticed that that the prices can't go higher and higher forever.
People have no clue how many transactions I have worked on. My advice is for people to read their new build contract. Builders can cancel the contract for any reason. If prices go up, builders cancel contracts and tell people that if they want that condo, they have to pay more money. The other side of the coin is that when values lower, the builder doesn't care. There is a new build contract and the purchaser has to come up with the money. Listen to this guy. The best the purchaser can hope for is to lose $300,000.00. Without being sued for the difference.
As a mortgage broker i had to deal with these stupid ideas from clients and the deposits lost over the years is in the millions especially these stupid micro condos and condo hotels that no one finances! The problem are the realtors who continue to promote this idea. No wonder why realtors are getting sued into oblivion right now. This idea is so stupid because these people are buying properties without the capacity to qualify for a mortgage and they're putting in offers on MULTIPLE properties which negatively impacts sellers who are trying to get out of this hell hole
A presentation and then signed up with an ORACLE. Sounds like timeshares?? Trust No One especially if it sounds too good. How much do you value your hard earned take home pay??
Maybe they can buy another condo to sell on assignment and reinvest the profits from that one to recoup their losses. It only takes one fool and they’re back in the game! They can use the other half of the profits to buy another condo to live in and from the expected appreciation on close they could put a down….
Santo - you are trying to be a little too kind here. The buyer signed two sales contracts for two brand new houses on speculation - knowing that he could not close on EITHER of them - unless he could flip one on assignment for a big profit. You don't say specifically but you characterized the 300K in deposits as simply a loss. Its worse than that my friend... I bet you a Starbucks coffee, the money was BORROWED!!! They still owe the money that they are now forfeiting. I remain gobsmacked that our government as represented by OSFI and our banks turn a blind eye to ordinary unsophisticated people making multi-million dollar speculative bets using 100% leverage. I am an accredited investor and I needed that accreditation to invest in certain private equity investments deemed more risky... but hey - if its residential real-estate... go ahead and bet millions of other's people's money, with no accreditation necessary - because you know... RE always goes up !!!
Guy was a real estate lawyer so he knew the score.... also prob wasn't borrowed money but yes he still didn't have a brain... also his biz must have plummeted since who would take advice from the guy
Maybe Fake ID people run away..Real ID real person. No one wants to be loose theirs money big game 300k. This is not true .maybe. need actives? Becareful listen
Ha! "Everyone has a plan until they get punched in the mouth!" Mike Tyson.
“…in the mouth”.
Sounds like these type of sale schemes need to be investigated and regulated to stop these schemes taking people in.
I agree. This is a prime example of what we call "speculation". This phenomenon has driven price to skyrocket about 3xs in about 7 years. Supply issue is not only the issue.
Wow people lost money on the speculative investment?!? I am appalled!
Who the hell buys a house and considers the future value. A house used to be to live in.
Greed is good
Borrowing money to invest is always a mistake. You never hear stories like this for people who invest with cash. Leverage is greed, and frequently is the death of so many bad investments.
great report.thanks
People get excited with the prospect of a new home. This tragic situation is exactly the big risk you are taking with pre-construction .
They gambled and they lost. Decisions have consequences. Be greedy and reap the rewards of it.
I don't feel sorry for them at all
I think they were stupid more than greedy. I feel sorry for them. They are humans, maybe they have kids. They messed up. What kind of nasty person *wouldn’t* feel sorry for them?
@@Imsosmrt1999They wanna invest in property? Build an apartment building and manage it.
@@Imsosmrt1999Maybe the type of 'nasty person' who isn't buy a home for their family because they refuse to purchasing a 5x+ leveraged property at a high price point during a speculative frenzy because they know the consequences can be catastrophic.
Sensible people have been sitting out and watching masses of useful idiots make millions without understanding the risks (ie. That a 20% decline in value can wipe out your 100+k down payment entirely when you're 5x leveraged and a 20% decline would still have prices at ~8x income or whatever the number is).
If your equity gets wiped out and you want to move you are basically starting back from 0 so you have lost your entire freedom.
Have compassion for the person who unknowingly gambled their money away, but I have far more compassion for the families and individuals who are suffering from the astronomical prices brought about by this mania in which this person tried to participate and which they tried to profit off of. They were hoping for even HIGHER prices. 😂😂😂 Thats something people need to be held accountable for.
Unfortunately I know someone in the identical situation almost to the dollar - he had been successful in the past- Remember past performance does not guarantee future results
Wild wild west only is the beginning great video so
“Not out of the woods yet” LOL! We are very likely going to see 2017 prices before we return to peak 2022 prices, which could take several years.
Not true at all
@@xxrudebouyxx1363 Prove it.
Not a chance - On this I will bet the bank
@@deezed150 Residential real estate is a “market”. All market’s go both up, and down. Sentiment has clearly changed. The 2022 tulip mania is over.
If you’ve bet the bank on the stock market, I hope you have your stop positions in place.
I was betting/ stating that we would not see 2017 housing prices I have no idea about house appreciation going forward though
@@bbdj2779
What you described at the beginning of the video is a prime example of what we call “speculation”. Although we have a shortage in housing supply, however, the main issue causing prices to go 3xs in about 7 years is speculation. Far too long, government is keeping a blind eye on this. Hard working Canadians has zero protection when it comes to speculation. Another example is when you have a FOMO buyer go to a middle class neighborhood, making crazy offer and change the value of homes in the entire neighbourhood overnight despite all datas that show that the average income is $65k in that neighborhood as an example. Thanks for sharing the story.
If the prices went up 3xs in 7 years then that is fact and it was good speculation.
There is no shortage of houses. Look online. Lots of inventory not like 2017 where there was barely any inventory.
@@moosiani1the problem created by speculation is like playing lottery with guaranteed winning numbers and creating a lala land/ get rich quick on the shoulder of future generations as they are the ones holding the bags. Government should not let such behaviour to be the norm.
There's no blind eye, the government of Canada is literally encouraging this type of behaviour with REPO and REVERSE-REPO facilities. The BoC could keep treasuries around 4%, but the banks would have to pay out 8-9% in GICs and HISAs for the mess they created.
@@jwg9338 Its clear to me that these kind of behaviors will lead to widespread bankruptcy, poverty and despair like we've never seen before in Canada.
@@moosiani1 Lots of inventory gained from buyers walking away from downpayments/ not qualifying for mortgages based on new appraisals as the 2021-22 values were beyond inflated/ foreclosures, etc...
Timber framed detached houses in GTA should not exceed 1.5m. Guess interest rate isn’t dropping in the next 5yrs. Govt is mopping excess fund in the streets.
1.5 m? We are being ripped off in canada mainly gta. Americans laugh at us paying millions for miniature doll houses. In texas or many states you can buy mansions for half million. Better weather, better economy, better everything, so why are we paying with our lives for these match boxes in the second largest country in the world? It just doesn't make sense regardless of whatever logic is presented. Natural resources, land, everything is abundant, only thing is, canada is not a real country, Canadians are not a real nation. We live in someone's property, we are making it better for them, we are only workers in a mine which belongs to some people we never see!
The question is how did he purchased 2 properties ? How was he able to. He had the down payment that's understood. But when you buy home from a builder they need a pre approval letter from the bank. These days fake pre approvals are available in the market from banking mobile mortgage reps for $500. Canada has a problem of financial fraud I.e mortgage income document fraud. I hear lots of stories and I think doing things in a legit ways can save fortune sometimes.
Who the hell has 300k to drop down as a downpayment for a house? Especially in ontario canada!
It doesn’t work out because if greed.
Speculation at its best. These people are going bankrupt plain and simple. The builders are not going to look the other way. If they have a house they are coming for it.
Should have put $300,000 into a GIC @ 5.50% it would be earning them $1350/month the first year.
Serves them right.
The sales numbers are astonishing low.
They were cash flow negative out of the gate on that investment property? Did the agent even bother to do their cash flows? Who established market rents? What was the capital appreciation average for the last 5 years wherever this property was located??
But when people make decisions based on their greed only, they also have to accept that the reality may be different than their ultimate motive. That's life.
I have worked in R. E. law. NEVER!!!!!! /Never buy a new build until the property is built. In the case of a newly built condo, never buy until the condo is registered as a condo. The buyer has to pay the closing costs on the new builds. Those costs include all the improvement fees to develop the property. If you don't have the closing costs, you lose the property.
You are clearly not a lawyer
@lbw1325 I am guessing you have never examined a new build contract? Closing costs are built into the contract. Not only that, but purchasers must move in and pay occupancy fees until the condo is registered. Occupancy fees do not count towards your mortgage payment. You are right. I am not a lawyer. Notwithstanding, I have worked at a law firm that concentrated on new builds. AND! I have been instructed, examined, and been examined in real estate law. Never buy a new build condo.
@@ShadeSlayer I’ve read and handled far more transactions than you. Just sayin’ you should be careful about giving out advise. Good luck
Why did they go to the bank..not a private broker
You dig the hole
Lye in it!
2 properties who can afford 2 properties when most people here cant afford 1 one ONE HOUSE
Guys stop buying for atleast next 6 months, the price will drop by itself..
People on RUclips arnt buying. Maybe 3% of them.. the rest day dream
Looool yeaaa u wish
Exactly my thoughts but buyers if united then it will be debt free world where they dont want to live
@@samirpatel4248if that were true we wouldn’t have internet, cell phone monopolies and pay higher prices than most places. Also wouldn’t have bent over backwards in the lockdown. Too many people willingly took that fake vaccine
If someone looted money from their country and they wanted to clean, 😊they won't stop buying
This looks like this couple walking in a well shown with hired fake buyers!
I still cannot understand why some people let their emotions dictate their actions on such an important decision like buying a property!
Thanks for sharing this story. Something for others to learn from. Invest in stocks, at least you only lose what you put in. As you said, in new construction real estate, unfortunately you don’t really have anyone that is looking out for your best interests (access to unbiased expertise).
I would invest into GIC's in your TFSA
Market is a place where people deceive each other. Canada is the biggest MARKET for RE.
oh dear. What a shame
That plan was a bad plan. They got suckered by a sales pitch. Trouble is it’s not a hot tub at the CNE, it’s a friggin house!!! I feel so badly for folks like that, but they made adult decisions without a backup plan.
Wow greed greed and more greed ate them up like does for everyone us but you learn,
This is a very stressful situation for the couple, God forbid, but hope they learned a valuable lesson from this costly experience. But they should have noticed that that the prices can't go higher and higher forever.
People have no clue how many transactions I have worked on. My advice is for people to read their new build contract. Builders can cancel the contract for any reason. If prices go up, builders cancel contracts and tell people that if they want that condo, they have to pay more money. The other side of the coin is that when values lower, the builder doesn't care. There is a new build contract and the purchaser has to come up with the money. Listen to this guy. The best the purchaser can hope for is to lose $300,000.00. Without being sued for the difference.
As a mortgage broker i had to deal with these stupid ideas from clients and the deposits lost over the years is in the millions especially these stupid micro condos and condo hotels that no one finances! The problem are the realtors who continue to promote this idea. No wonder why realtors are getting sued into oblivion right now. This idea is so stupid because these people are buying properties without the capacity to qualify for a mortgage and they're putting in offers on MULTIPLE properties which negatively impacts sellers who are trying to get out of this hell hole
A presentation and then signed up with
an ORACLE. Sounds like timeshares??
Trust No One especially if it sounds too good. How much do you value your hard earned take home pay??
Try a credit union.
The salesperson is most likely a licensed (unscrupulous) real estate agent.
Karma for these house investors
If I was the builder, I'd take them to court for breach of contract. Why should the builder take the lost when he doesn't share in any gain?.
I smell a divorce coming to this couple.
Hope not...if they are young ...its a lesson
Wrong advisor realtor.
This is what I call biting more than you can chew.
So a realtor fucked them over. What a surprise
Maybe they can buy another condo to sell on assignment and reinvest the profits from that one to recoup their losses. It only takes one fool and they’re back in the game!
They can use the other half of the profits to buy another condo to live in and from the expected appreciation on close they could put a down….
Every one of these big loss stories is on new houses, not condos. Condos are barely priced above cost of construction, not so for houses.
Santo - you are trying to be a little too kind here. The buyer signed two sales contracts for two brand new houses on speculation - knowing that he could not close on EITHER of them - unless he could flip one on assignment for a big profit. You don't say specifically but you characterized the 300K in deposits as simply a loss. Its worse than that my friend... I bet you a Starbucks coffee, the money was BORROWED!!! They still owe the money that they are now forfeiting.
I remain gobsmacked that our government as represented by OSFI and our banks turn a blind eye to ordinary unsophisticated people making multi-million dollar speculative bets using 100% leverage. I am an accredited investor and I needed that accreditation to invest in certain private equity investments deemed more risky... but hey - if its residential real-estate... go ahead and bet millions of other's people's money, with no accreditation necessary - because you know... RE always goes up !!!
Guy was a real estate lawyer so he knew the score.... also prob wasn't borrowed money but yes he still didn't have a brain... also his biz must have plummeted since who would take advice from the guy
😂
easy make easy lose
Maybe Fake ID people run away..Real ID real person. No one wants to be loose theirs money big game 300k. This is not true .maybe. need actives? Becareful listen
Money laundering
Greed is good, until it isn’t
Nobody cries when they make money. All the idiots cry when they loose money. Good life experience - next time you wont be so greedy