I’m most amazed at how low the maintenance fees are. Seems like the average is $450-500 on a one bedroom. Some older buildings I’ve seen can go up to $900 or more. Of course missing in the calculation is the mortgage insurance costs. Usually these debates end up being about the same in most calculations, no clear winner. The problem is most people who rent don’t invest. Most people who own don’t either so fortunate that their home can be an appreciating asset. I like to think of owning as living rent free as usually the case a lot of people don’t end up making any real money after transaction costs but generally the appreciation covers what they would have paid to rent.
I bought a luxury condo in Toronto but I rent it out to executives. Think most people rent condos because they can't afford the down payment plus there's word that the government wants to charge a tax when we sell at a profit. Let's see. Good video.
Fair point, but rounding down in both cases works for the purposes of speculation Condos average 6% over the last 45-years and nearly 8% over 10-years, and a strong argument we'll continue to see similar growth as the past decade due to the sheer housing shortage we're faced with in comparison to population growth Again entirely speculative in either case
Stocks are good investment for sure. what differentiates real estate investment from stock investing is the leverage. Yes, you can borrow money to invest in stock market but most of the time, you won't get the same amount of money that you could borrow when you invest in real estate. Even if you can, you will be able to do it with higher cost (ex. higher interest). Real estate investing is the game of leverage and because the bank or lenders use your real estate property as collateral, you can get much more money with less interest rate and therefore, maximize your ROI. Sure, market can look ugly short term but if you buy a good property and hold it long term, you will get pretty nice return. but then again, no asset is superior to others and that's why I invest in both stocks and real estate.
@@UragilWorld the problem with this comparison is they aren’t the same. Real estate is illiquid and comes with large transaction fees and long settlement dates. The other thing people never discuss is leverage works both ways. We can all pretend markets only go up but they don’t. Leverage kills on the way down.
You can buy stocks in a tfsa and rsp account both of which you don’t pay capital gains on and your dividends don’t get taxed either. Stocks appreciate at a much faster rate and a higher roi.
also not to mention...this is assuming that people are STARTING with the 60k downpayment. most people begin with zero...at least the people i know. and then they decide if they want to buy a house or other investment forms from ZERO not from 60k. just thinking out loud here, i love your videos!
Sort of a moot point in a way because you need a downpayment to buy property in canada period Most first-time buyers I meet get it from a few sources: 1) Savings - if they live at home and have a decent income, much harder for a renter to do this 2) Investments - lots of first-time buyers I meet have been putting a % of their paycheques into stocks etc which grew over the years 3) help from parents - naturally, this is a big one in Toronto
1. You're extremely goodlooking. 2. How many people honestly have $60000 up front for a mortgage? 3. You discussed building maintenance fees, but how about internal unit maintenance? Broken dishwasher, broken fridge, renovations, etc. 4. In theory, buying makes sense...At the end of the eight years, nobody actually buys a cheaper, uglier condo. Everyone buys the more expensive home afterward. 5. This is a really specific, expensive example...$3400 monthly LOL. Like -- most people should be spending 1/4 or 1/3 on their monthly payments max...I guess if someone is making 10k/month salary OF COURSE it makes sense to buy a home. 6. How about interest costs after the 8 years?
Thx for the comment - Regarding the example being expensive, absolutely. It actually would have been better to use a 500K condo as an example because at the lower price points the difference in expense between renting vs buying is smaller. Couple of other points 1) condos don't just stop appreciating when they're 8 years old - they continue to increase in value, look at 15 year old builds in the entertainment district or 30 year old builds in yorkville and you'll note they keep appreciating - as the market does 2) $3400 monthly is a lot for sure, you can get into a reasonably affordable 500K condo for about 2K a month in mortgage with minimum down of 25K, plus another 600 a month in taxes and maintenance fees for 2600-2800 a month 3) In order to afford that 500k condo, you need a household income around ~100K or help from parents or savings to bring down payment up to 20%. Realistically, this is Toronto - if you're not making 100K or close to it, you're not a property buyer. Each year the income needed to purchase will increase, and if under that entry level limit, ones focus should be on increasing income rather than buying property Final point - in the last 12 months, the avg renter in canada has added 5K to their net worth while the average homeowner has added 66K For 90%+ of canadians, the easiest path to financial freedom and to beating the stock market & retiring with a healthy balance is Real Estate
owning a 500 sq condo for 720k sounds crazy rather just rent for half the price somewhere else and put that 200k down payment in stocks. whos gonna be buying a 500sq ft condo in 10 years for 1mil? when they can buy a brand new condo for the same? but why buy a condo with huge fees.
Condos are terrible long term principal residences. Add in the bad quality of construction in the city and those fees will sky rocket. Plus there’s a potential insurance crisis over the horizon that will shoot up fees.
Which area do you prefer the most for longterm investment. Will live in it for next 3 years and then rent out. Islington and Bloor, Kipling and Bloor or Humber Bay Shores?
Can’t go wrong with any of the 3, but entirely dependant on price. If getting at today’s fair market value, Kipling + bloor is the most undervalued of the 3
Does this case scenario assume cash flow negative investments? Because most properties are producing negative numbers in some cases up to $500-$600 a month? Also Who exactly is going to purchase the $1,000,000 asset in 5 years (assuming another pandemic) I am having trouble offloading mine!
This is a unit you're purchasing for a primary residence - an investment would require 20% down, and would be less cash flow negative. As for who would purchase it at $1M in 8 years.... people would be saying the same 8 years ago "who would purchase at 718K in 8 years" Same 8 years before that, and 8 years before that - and so on.
@@Precondo at 20% down, alot of the units are still producing negative numbers you would have to put closer to 30% down. I think condo market is going to hit a ceiling though, NOTHING goes up and up forever. Could be wrong. Good luck to all the investors
@@Precondo agree this would be assuming that a 1 bedroom condo is worth 1 million in 8 years. Sometimes it takes a while but eventually people will start wondering if a 1 bedroom should really be heading towards 1 million or even be worth 700+k today #fomo
I’m most amazed at how low the maintenance fees are. Seems like the average is $450-500 on a one bedroom. Some older buildings I’ve seen can go up to $900 or more. Of course missing in the calculation is the mortgage insurance costs. Usually these debates end up being about the same in most calculations, no clear winner. The problem is most people who rent don’t invest. Most people who own don’t either so fortunate that their home can be an appreciating asset. I like to think of owning as living rent free as usually the case a lot of people don’t end up making any real money after transaction costs but generally the appreciation covers what they would have paid to rent.
You should put timestamps in your videos bro it's good advice but hard to scrub thru to the info I need
Great idea. Thanks
I bought a luxury condo in Toronto but I rent it out to executives. Think most people rent condos because they can't afford the down payment plus there's word that the government wants to charge a tax when we sell at a profit. Let's see. Good video.
Great content Jordon! Keep it coming!
Loved it! short and sharp.
S&P500 appreciates at 9-10% if you reinvest the dividends
Fair point, but rounding down in both cases works for the purposes of speculation
Condos average 6% over the last 45-years and nearly 8% over 10-years, and a strong argument we'll continue to see similar growth as the past decade due to the sheer housing shortage we're faced with in comparison to population growth
Again entirely speculative in either case
Stocks are good investment for sure. what differentiates real estate investment from stock investing is the leverage. Yes, you can borrow money to invest in stock market but most of the time, you won't get the same amount of money that you could borrow when you invest in real estate. Even if you can, you will be able to do it with higher cost (ex. higher interest). Real estate investing is the game of leverage and because the bank or lenders use your real estate property as collateral, you can get much more money with less interest rate and therefore, maximize your ROI. Sure, market can look ugly short term but if you buy a good property and hold it long term, you will get pretty nice return. but then again, no asset is superior to others and that's why I invest in both stocks and real estate.
@@UragilWorld the problem with this comparison is they aren’t the same. Real estate is illiquid and comes with large transaction fees and long settlement dates. The other thing people never discuss is leverage works both ways. We can all pretend markets only go up but they don’t. Leverage kills on the way down.
Don't forget that the equity you take out from the sale of your primary home is not taxed like your stock earnings would be. Buying > Renting.
100%! Ability to re-fi and re-invest with Real Estate without paying capital gains is huge
You can buy stocks in a tfsa and rsp account both of which you don’t pay capital gains on and your dividends don’t get taxed either. Stocks appreciate at a much faster rate and a higher roi.
I can move every few years and rent new condos and always have new modern units plus end up with 500 k after 25 years for retirement
500k isn't enough to retire
The average maintenance fees are over $700/month. You're one flood away from a Special Assessment as an owner as well.
also not to mention...this is assuming that people are STARTING with the 60k downpayment.
most people begin with zero...at least the people i know. and then they decide if they want to buy a house or other investment forms from ZERO not from 60k.
just thinking out loud here, i love your videos!
Sort of a moot point in a way because you need a downpayment to buy property in canada period
Most first-time buyers I meet get it from a few sources:
1) Savings - if they live at home and have a decent income, much harder for a renter to do this
2) Investments - lots of first-time buyers I meet have been putting a % of their paycheques into stocks etc which grew over the years
3) help from parents - naturally, this is a big one in Toronto
This is a great exercise!
1. You're extremely goodlooking.
2. How many people honestly have $60000 up front for a mortgage?
3. You discussed building maintenance fees, but how about internal unit maintenance? Broken dishwasher, broken fridge, renovations, etc.
4. In theory, buying makes sense...At the end of the eight years, nobody actually buys a cheaper, uglier condo. Everyone buys the more expensive home afterward.
5. This is a really specific, expensive example...$3400 monthly LOL. Like -- most people should be spending 1/4 or 1/3 on their monthly payments max...I guess if someone is making 10k/month salary OF COURSE it makes sense to buy a home.
6. How about interest costs after the 8 years?
Thx for the comment - Regarding the example being expensive, absolutely. It actually would have been better to use a 500K condo as an example because at the lower price points the difference in expense between renting vs buying is smaller.
Couple of other points
1) condos don't just stop appreciating when they're 8 years old - they continue to increase in value, look at 15 year old builds in the entertainment district or 30 year old builds in yorkville and you'll note they keep appreciating - as the market does
2) $3400 monthly is a lot for sure, you can get into a reasonably affordable 500K condo for about 2K a month in mortgage with minimum down of 25K, plus another 600 a month in taxes and maintenance fees for 2600-2800 a month
3) In order to afford that 500k condo, you need a household income around ~100K or help from parents or savings to bring down payment up to 20%. Realistically, this is Toronto - if you're not making 100K or close to it, you're not a property buyer. Each year the income needed to purchase will increase, and if under that entry level limit, ones focus should be on increasing income rather than buying property
Final point - in the last 12 months, the avg renter in canada has added 5K to their net worth while the average homeowner has added 66K
For 90%+ of canadians, the easiest path to financial freedom and to beating the stock market & retiring with a healthy balance is Real Estate
owning a 500 sq condo for 720k sounds crazy rather just rent for half the price somewhere else and put that 200k down payment in stocks. whos gonna be buying a 500sq ft condo in 10 years for 1mil? when they can buy a brand new condo for the same? but why buy a condo with huge fees.
Condos are terrible long term principal residences. Add in the bad quality of construction in the city and those fees will sky rocket. Plus there’s a potential insurance crisis over the horizon that will shoot up fees.
Which area do you prefer the most for longterm investment. Will live in it for next 3 years and then rent out. Islington and Bloor, Kipling and Bloor or Humber Bay Shores?
Can’t go wrong with any of the 3, but entirely dependant on price.
If getting at today’s fair market value, Kipling + bloor is the most undervalued of the 3
Does this case scenario assume cash flow negative investments? Because most properties are producing negative numbers in some cases up to $500-$600 a month?
Also Who exactly is going to purchase the $1,000,000 asset in 5 years (assuming another pandemic) I am having trouble offloading mine!
This is a unit you're purchasing for a primary residence - an investment would require 20% down, and would be less cash flow negative.
As for who would purchase it at $1M in 8 years.... people would be saying the same 8 years ago "who would purchase at 718K in 8 years"
Same 8 years before that, and 8 years before that - and so on.
@@Precondo at 20% down, alot of the units are still producing negative numbers you would have to put closer to 30% down. I think condo market is going to hit a ceiling though, NOTHING goes up and up forever. Could be wrong.
Good luck to all the investors
@@ociplays5221 Negative cash flow at 20% is normal in Manhattan, Hong Kong, etc - no different here - Yield tends to go down as appreciation goes up
@@Precondo agree this would be assuming that a 1 bedroom condo is worth 1 million in 8 years. Sometimes it takes a while but eventually people will start wondering if a 1 bedroom should really be heading towards 1 million or even be worth 700+k today #fomo
@@leapfrog_george Hope the bubble bursts soon
Great content Jordon! Keep it coming!