Real Estate

Investor Sentiment

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  • Mar 20th, 2017 3:48 pm
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[OP]
Member
Sep 16, 2009
262 posts
83 upvotes

Investor Sentiment

Wondering if there are any investors on this board who have had a real estate investment in toronto since before 2010 and what their thoughts are as the chatter on RE bubble grows louder. I mean, its been a good ride so far but might not make sense to hold forever and take gains off the table? Not so much because there is an imminent crash, but perhaps growth is better in other Real estate pockets going forward?
20 replies
Jr. Member
Jun 24, 2011
158 posts
60 upvotes
West Lafayette, Indi…
It's not easy to liquidate RE. Takes a least a few months to prepare and the closing costs are enormous. Might just wait it out.
Penalty Box
Nov 18, 2014
660 posts
538 upvotes
Toronto, ON
I would be out but the penalties for breaking mortgage and RE costs and ultimately land transfer taxes to buy back in are way too steep.
[OP]
Member
Sep 16, 2009
262 posts
83 upvotes
rkanwar109 wrote:
Mar 17th, 2017 11:03 am
I would be out but the penalties for breaking mortgage and RE costs and ultimately land transfer taxes to buy back in are way too steep.
My penalty to break is minimal - mortgage is not with a big 5 with egregious terms. Land Transfer tax is not charged on sales. This is an investment property - living in another house.
IndustrialKid wrote:
Mar 17th, 2017 11:02 am
It's not easy to liquidate RE. Takes a least a few months to prepare and the closing costs are enormous. Might just wait it out.
Closing costs are there no matter when you sell. One has to pay buyers agents commission and at least 1% to your selling agent. Thats just the cost of doing business though - does it really matter if gains are a big as they have been over the last 7-8 years.

I suppose the key thing is, at what point do people sitting on profits capitulate.
Penalty Box
Nov 18, 2014
660 posts
538 upvotes
Toronto, ON
oasis2002 wrote:
Mar 17th, 2017 11:16 am
My penalty to break is minimal - mortgage is not with a big 5 with egregious terms. Land Transfer tax is not charged on sales. This is an investment property - living in another house.



Closing costs are there no matter when you sell. One has to pay buyers agents commission and at least 1% to your selling agent. Thats just the cost of doing business though - does it really matter if gains are a big as they have been over the last 7-8 years.

I suppose the key thing is, at what point do people sitting on profits capitulate.
Land transfers are there for when you buy back in :)
[OP]
Member
Sep 16, 2009
262 posts
83 upvotes
rkanwar109 wrote:
Mar 17th, 2017 11:27 am
Land transfers are there for when you buy back in :)
If Its an investment property, so one doesnt have to buy back in - especially if you think you are taking profits - that defeats the purpose. If one does reinvest in real estate (arguably well outside GTA/GVA) then its just the cost of doing business.
Sr. Member
Jul 14, 2002
881 posts
236 upvotes
oasis2002 wrote:
Mar 17th, 2017 11:16 am
My penalty to break is minimal - mortgage is not with a big 5 with egregious terms. Land Transfer tax is not charged on sales. This is an investment property - living in another house.



Closing costs are there no matter when you sell. One has to pay buyers agents commission and at least 1% to your selling agent. Thats just the cost of doing business though - does it really matter if gains are a big as they have been over the last 7-8 years.

I suppose the key thing is, at what point do people sitting on profits capitulate.
looking to time the market? ;)
Deal Addict
Nov 22, 2004
1106 posts
161 upvotes
As the adage for any investment goes - It's never a bad idea to take profits off the table. If you're reaching a point where you're thinking about the top more frequently then you might just feel more comfortable selling the property and cashing out. At least that'll be in your pocket and not on paper.

More often than not, I see investors in two camps - those who sell quickly after pocketing some gains then watch the rise from the sidelines wishing it would fall, and those that ride the wave to the top then clamour in as the values begin to drop and it becomes a race to the exits.
Heatware: 9-0-0
Realtor @ Royal LePage United Realty – Read my reviews
Deal Addict
May 31, 2007
4022 posts
1123 upvotes
I would expect poor returns going forward, if buying at today's price. No way will this keep going 20-30% ever year. Good risk management is prudent even if you sell a secondary property early, better to manage risk and don't have all your eggs in one basket. Rental property today? = Cash flow NEGATIVE. Don't count on appreciation to save you, when your bleed red. Also there is rumour next week's budget (themed "tax the rich") will hike capital gains tax, and that includes the sale of your rental property. CRA looking at possibly a principal residence housing tax too, (due to house flippers and foreign buyers parking money tax free) and CRA will make mandatory to put your house sale on tax return so they can record and have data.

Remember these two things:
1. RE takes a LONG time to correct. Possibly a decade or more.
2. Liberals love making new taxes (and they need it unfortunately)
Jr. Member
Jan 3, 2017
148 posts
111 upvotes
Clueless Fox wrote:
Mar 17th, 2017 2:04 pm
As the adage for any investment goes - It's never a bad idea to take profits off the table. If you're reaching a point where you're thinking about the top more frequently then you might just feel more comfortable selling the property and cashing out. At least that'll be in your pocket and not on paper.

More often than not, I see investors in two camps - those who sell quickly after pocketing some gains then watch the rise from the sidelines wishing it would fall, and those that ride the wave to the top then clamour in as the values begin to drop and it becomes a race to the exits.
You forgot about camp #3. Those that buy and hold and don't care at all about market correction because their rental properties are never being let go as the income generated in 25 years when they are paid off makes retirement a breeze!
Deal Addict
Nov 22, 2004
1106 posts
161 upvotes
fryguy1987 wrote:
Mar 19th, 2017 12:06 am
You forgot about camp #3. Those that buy and hold and don't care at all about market correction because their rental properties are never being let go as the income generated in 25 years when they are paid off makes retirement a breeze!
lol, touché!
Heatware: 9-0-0
Realtor @ Royal LePage United Realty – Read my reviews
[OP]
Member
Sep 16, 2009
262 posts
83 upvotes
fryguy1987 wrote:
Mar 19th, 2017 12:06 am
You forgot about camp #3. Those that buy and hold and don't care at all about market correction because their rental properties are never being let go as the income generated in 25 years when they are paid off makes retirement a breeze!
Yeah but wouldn't it make sense to flip over those profits into much higher yielding assets - say real estate elsewhere? Toronto rental yield is currently stupidly low.
Sr. Member
Jul 14, 2002
881 posts
236 upvotes
oasis2002 wrote:
Mar 17th, 2017 12:34 pm
Who isnt? Grinning Face With Smiling Eyes
IMO, I am watching China as the trigger. A lot of cheap credit over there, has made it's way worldwide and influenced local cheap credit to boost up their local markets.
How their government handles their next RE downturn will have implications on the RE market worldwide.
Deal Fanatic
User avatar
Mar 31, 2008
9200 posts
1092 upvotes
Toronto
Jungle wrote:
Mar 17th, 2017 2:18 pm
I would expect poor returns going forward, if buying at today's price. No way will this keep going 20-30% ever year. Good risk management is prudent even if you sell a secondary property early, better to manage risk and don't have all your eggs in one basket. Rental property today? = Cash flow NEGATIVE. Don't count on appreciation to save you, when your bleed red. Also there is rumour next week's budget (themed "tax the rich") will hike capital gains tax, and that includes the sale of your rental property. CRA looking at possibly a principal residence housing tax too, (due to house flippers and foreign buyers parking money tax free) and CRA will make mandatory to put your house sale on tax return so they can record and have data.

Remember these two things:
1. RE takes a LONG time to correct. Possibly a decade or more.
2. Liberals love making new taxes (and they need it unfortunately)
How about those who bought last month, only to see comparables this month already jump 10%. Closing isn't even until another month or two? That type of activity is what's keeping people buying in. Or those that bought last year. Who's to say this won't last another 2 years. So those foolish and risky now will still be cushioned? The hope is the sooner one can get in before any peak, the more 'safer' they are. The extreme example being those who took great risk and leverage to get in 2010. Housing can crash 50% or more and they'll just be where they started off. But now, there is 7 years of principal paydown to add further cushion.

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