Rental property.

[Big Grey Wolf]

When I had rental property a few years back always had good modest return. When I had property manager when out of country all my profit was gone to them. If you want decent return need to manage it yourself or invest somewhere else.

[fishtank]

Originally Posted by Tfng

Thanks ryeguy21. I have only roughly looked at the numbers. I would be leaving about 100k of equity in the house and I'm shopping in the 350k area.

My costs would be cmhc, interest on the rental mortgage as well as the mortgage payment, taxes, incidental repairs.

My roi would likely be minimal I would think. I'd have to be banking on appreciation to make any great gains other than keeping the mortgage paid.

It sounds like I need to do some homework.

I've done some research into rental pricing and seems at today's rates the rental should be paid off in ten years.

interest rate are going up and rental price are falling , i can see that lots of rental property are ending up for sale . i can see 3 on my block.

[Dean2]

Originally Posted by Big Grey Wolf

When I had rental property a few years back always had good modest return. When I had property manager when out of country all my profit was gone to them. If you want decent return need to manage it yourself or invest somewhere else.

In my experience very true. Paying someone 9-10% to manage your property is generally as much or more than the actual net return on many rentals, and certainly would be higher than the net return on anything bought in the last three years here in Edm or Calgary.

As to the question, keep existing property or sell, it is very simple to figure out. Add up property taxes, insurance, annual mortgage interest (remortgage the house to the max before you buy the next one so you recover as much equity as you can and have as much of your interest tax deductible as possible.), $2,000 for repairs. Divide by 12. Can you get that much a month for rent? Can you rent the top floor and bottom floor separately? If total rent does not at least equal basic expenses you are better off selling.

[Badgerbadger]

In my experience, renters are either young and moving ahead with their lives so will leave once they have a stable base, or people who have to rent because they can't get their lives together enough to have assets who you will want to leave as they are nothing but hassle.

Invest your money in Gamehost (V.GH) as its dividend is about 6.5% now, and you don't have to deal with renters or repairs or renovations or taxes or power/water bills.

[patriot1]

DON'T DO IT!!!

I say this based on experience. My company cleans up dozens of rental properties each month that were abandoned and destroyed by tenants. From first timer private landlords who may be inexperienced with the screening process to reputable management companies who cross all T's and dot all I's believe me irresponsible tenants slip through all cracks. And the landlord tenant act is disgustingly in favour of the tenant so you may end up having to house a deadbeat for months only to incur huge repair/reno costs once they finally leave... from dog *** all over the place to concrete poured in the washing machine, drug paraphernalia, syringes, filthy sex toys I have seen most of it and believe me there is no end to the lengths an irresponsible tenant will go to not only to get a free ride but to express their bitterness towards ultimately buying your property for you... I know I post a lot of stupid stuff and what not but believe me this is one topic where I know what I'm talking about. I strongly strongly advise against renting out properties.

[CMichaud]

I have always liked the idea of buying farm land.

Rent it out for crop or grazing, hunt it in the fall. The following is a bit dated (Apr 2016)

https://www.albertafarmexpress.ca/20...tinue-to-soar/

[lmtada]

X2. Not now. Interest rates increasing, home prices dropping. Have patience. Plus government will stress test soon.

http://www.greaterfool.ca/2017/07/25/youre-kidding/

Originally Posted by patriot1

DON'T DO IT!!!

I say this based on experience. My company cleans up dozens of rental properties each month that were abandoned and destroyed by tenants. From first timer private landlords who may be inexperienced with the screening process to reputable management companies who cross all T's and dot all I's believe me irresponsible tenants slip through all cracks. And the landlord tenant act is disgustingly in favour of the tenant so you may end up having to house a deadbeat for months only to incur huge repair/reno costs once they finally leave... from dog *** all over the place to concrete poured in the washing machine, drug paraphernalia, syringes, filthy sex toys I have seen most of it and believe me there is no end to the lengths an irresponsible tenant will go to not only to get a free ride but to express their bitterness towards ultimately buying your property for you... I know I post a lot of stupid stuff and what not but believe me this is one topic where I know what I'm talking about. I strongly strongly advise against renting out properties.

[Tfng]

Thanks for the input guys. I haven't made a decision yet.

Edit- Are the tenancy laws better in Sask? I could sell this one and buy in Sask.

Patriots story is not so appealing.

[CBintheNorth]

Originally Posted by 79ford

From a renters perspective the market is glutted, i kinda want to move to take full advantage of the glut but sorting through thousands of ads for rentals is quite the task.... i fail to see the benefit of buying near the top of the housing market while the rental market is dropping.

There are sooo many rental adds on kijiji or where ever that it just isnt really feasible to go through all of them.

Oil is only at 50$, by no means is alberta going to roar anytime soon especially with the ndp around and trudeau in power,lol

When you buy your own home for long term ownership the only money you are losing is the interest on the mortgage, the property taxes, and 1 or 2 things you may have had included in rent. You will get most of that back in inflation though.
When you rent you are losing 100% of your monthly costs. Poof. Gone.
Considering that rent is usually 75% of what the average mortgage costs, you SHOULD be able to see why purchasing your own home makes sense. But judging by most of your posts I can see why you think it does not.

OP, unless you are capable of being truly ruthless, hard-nosed, and LOVE a good fight (In court. Which you will lose.), I suggest any other means of investment. Just my $.02 based on 10 years owning rentals.
If you do decide to jump in someone already gave you the best advice- don't get attached to the place AT ALL.
Good luck.

[MyAlberta]

I kinda like the buy low sell high concept. I question if rental is a good 'holding' strategy to get from the low to the high. I stumbled across a potential property in Sherwood Park that I am considering pursuing. Anyone have rental in the Park? I see some nice upgrades going on in the older sections that should increase values.

[CMichaud]

Re Saskatoon...

http://www.msn.com/en-ca/money/topst...cid=spartanntp

Saskatoon’s housing market continues to display evidence of overbuilding, overheating and price acceleration leading to “sustained downward pressure” on home prices, according to a new report from Canada’s mortgage insurer.

That means there is “strong evidence of problematic conditions” in Saskatoon, the Canada Mortgage and Housing Corp. (CMHC) said in its latest housing market report.

[The Elkster]

Originally Posted by CBintheNorth

When you buy your own home for long term ownership the only money you are losing is the interest on the mortgage, the property taxes, and 1 or 2 things you may have had included in rent...
.

That is simply not true. There is tonnes of maintenance and replacement that goes into a house if you want it to maintain value relative to the market.

Houses are great forced savings plans as most people are simply not disciplined enough to proactively save free cash. Its also the only way most people can access any real leverage. However as an absolute investment they aren't as good as most people think. If you factor in ALL costs over the life of owning and net that off the profit then annualize the returns it generally isn't very good at all. Just about everything from roof to windows to appliances to light fixtures to plumbing to flooring have to be replaced over time. How about irrigation and yard maintenance costs? how about realtor and transfer fees on either end of a sale? When most people calculate their houses profit generally all they look at is how much the bought and sold for. Very misleading indeed. Forget the 10's or 100's or thousands you cumulatively spent additionally over the course of ownership for upkeep and reno's, fees and taxes.

[Dean2]

Originally Posted by The Elkster

That is simply not true. There is tonnes of maintenance and replacement that goes into a house if you want it to maintain value relative to the market.

Houses are great forced savings plans as most people are simply not disciplined enough to proactively save free cash. Its also the only way most people can access any real leverage. However as an absolute investment they aren't as good as most people think. If you factor in ALL costs over the life of owning and net that off the profit then annualize the returns it generally isn't very good at all. Just about everything from roof to windows to appliances to light fixtures to plumbing to flooring have to be replaced over time. How about irrigation and yard maintenance costs? how about realtor and transfer fees on either end of a sale? When most people calculate their houses profit generally all they look at is how much the bought and sold for. Very misleading indeed. Forget the 10's or 100's or thousands you cumulatively spent additionally over the course of ownership for upkeep and reno's, fees and taxes.

In almost any market the rent you pay on a home is designed to cover the owners mortgage payments, taxes, insurance and ongoing maintenance/reno costs plus 7-9% return on equity. Only in a depressed market is a landlord willing to rent for less than these costs, and as soon as the market will bear it, rent increases to this point, plus a 7-9% profit.

Unless you are renting are far inferior house than what you would buy, or are renting because the market is at the peak and you expect it to come down significantly then the argument that renting is cheaper and you can invest the left over money is just plain wrong. You ARE paying off someone else's mortgage on an asset that over any 20 year period in the past 80 years is appreciating in value. You get no long term return for your rental payments.

Since you have to live somewhere, buy the LEAST expensive home that is suitable to you, pay it off as quick as possible, and invest all your spare cash in income earning investments. That is the way to maximise your returns.

[The Elkster]

Originally Posted by Dean2

In almost any market the rent you pay on a home is designed to cover the owners mortgage payments, taxes, insurance and ongoing maintenance/reno costs plus 7-9% return on equity. Only in a depressed market is a landlord willing to rent for less than these costs, and as soon as the market will bear it, rent increases to this point, plus a 7-9% profit.

Unless you are renting are far inferior house than what you would buy, or are renting because the market is at the peak and you expect it to come down significantly then the argument that renting is cheaper and you can invest the left over money is just plain wrong. You ARE paying off someone else's mortgage on an asset that over any 20 year period in the past 80 years is appreciating in value. You get no long term return for your rental payments.

Since you have to live somewhere, buy the LEAST expensive home that is suitable to you, pay it off as quick as possible, and invest all your spare cash in income earning investments. That is the way to maximise your returns.

No argument on your last line. That is the best way to go to be responsible and diversified.

But I think the claims that rent always adjust to total costs plus profit is not completely accurate and i'm sure if you talk to many Calgary rental owners right now they would agree. Over a long period of time maybe but if one buys at the wrong time that formula can be totally out of wack. A time of relatively high house prices combined with an economic downturn, job loss and plenty of rental options as a result, with house values likely decline in the coming while as a result of higher interest rates and overbuilding in many regions. I think there is a time to buy for rentals but IMO now is absolutely not the time.

Also ALOT of headaches to earn the rental money given the rights that renters are afforded. Plus I believe the tax men have been cracking down on claiming rents as income. That is a significant issue that could eat profits and more. I believe many people only manage to profit because they don't claim the income...just hope you don't get caught. There are many ways to get caught including disgruntled renters.

[CMichaud]

Aren't rental properties also subject to capital gains when sold?

[lmtada]

Elkster is correct. Prices are crashing. Realtor associations are falsifying information on media. It's a farce. Buyer beware. Acreages are 10-15% lower this year than last year, Before negotiations. 7-9% return on equity, Lol. To much house porn for you.


http://www.greaterfool.ca/2017/07/27/knee-jerks/

[wildwoods]

Wow shocking how many see buying and holding real estate as a bad investment. Ask anyone in Edmonton who bought and held pre 2005 how they did on their income properties. Or anyone on the left coast right now. Real estate is not the be all to end all when it comes to investing. It's a great piece to have in your portfolio if you do it right ie positive flow while building equity. I'm guessing a lot of folks wish they had purchased in the desirable infill areas a couple years ago. Great ROI with upwards of 10-15 offers on 50' plus lots. Timing and location indeed are everything though. Takes guts to watch the market, know it and pull the trigger. It's definitely not for everyone....
Reiterate (or redundant lol)- great portfolio diversification piece if you're cut out for it. And remember:

A properly bought horse is already half sold
Late night ramblings.... carry on