Feedback Appreciated

What is the goal? Growth or yield?

Studies have shown that dumping it all in is better than DCA

Buy all in

Yolo all in

Your plan sounds good....agreed about the leverage part which you're not getting on your index portfolio. Congrats on building up a good size portfolio! The challenge currently is finding cash flow neutral properties, especially with precon. If rents catch up then you should be okay. Even though prices have increased there are always opportunities. Freehold townhomes are a good option basically anywhere around the GTA. That strategy has worked well and will continue to in my opinion.

Oneshot112 wrote: ↑VGRO

I disagree.

If prices continue increasing even at moderate rates (which they should unless inflation magically disappears but we all know how that goes) the other challenge buying in slowly is every year that same pot of money buys you less (even if your index portfolio grows). Approx. 5 years ago $750k would get you a nice brand new townhome in the GTA, now its a 1 or 1+Den condo with parking. In 5 years from now I don't think $750k will get you much.

If you already have 3 precons closing I would say diversify, the markets are down atm and I believe they will bounce back up. Since you have a conservative risk tolerance I would go with some Canadian Bank Stocks, I would not ignore how low the US market is now though. If you want to tack on a few more precons, I would go with a few DT projects since the delta is so low between precons in the 905 and DT core.

MS

techVcondo wrote: ↑ Makes sense regarding the DT Projects,

I am fully invested in stock and have a mix of individual stocks and index funds so I am pretty solid on my stock strategies (Have been investing since 2006 and my individual holdings have been market over that time)

Then it sounds like you are very well off If you are interested in Pre-cons just keep close tabs to the thread we have on this forum, buy early in sales stage. Do your analysis with comparisons for similar new resale unit, dont really look at the price/psf alone thats how people get scared off and make the mistake of not buying or buying the wrong project. In the case of RE/precons cheaper is not always better.

techVcondo wrote: ↑ I don't disagree with this, should have given some more info that I have 3 precons already purchased closing between 2024-2027, and my primary house is worth around 3m and my mortgage is around 1.5m, so i do have some exposure to real estate.

It is important from a risk management side of things that I am prepared for the worst case scenario as I have no reason to risk it all in some sort of black swan. (aka buy 10+ units immediately, take a ton of notional leverage, and they are all underwater at closing)

Yeah sounds like you're in more than a comfortable spot. You also have to figure out how many units you want to manage as a landlord....it can be time consuming but still manageable if they are newer units. If you are looking to scale into multifamilies, duplexes etc. that could also be an option but they come with more work even if you hire property managers.

Appreciate the feedback.

just stick to REIT

Buying more condos (as a form of being leveraged exposure) vs being liquid? Be liquid. You already have plenty of RE risk.

At least let RE cool or become stagnant before buying unless you are a RE professional picking undervalued properties. Everything is overpriced.

Sounds like you are coming to the board for validation of a choice already made...probably due to the fact that as an active/sound investor you are realizing that RE market is rapidly losing its momentum and you are now less sure of your decision, and you want to hear its not going to worsen, or maybe other options.

The truth is that on March 15th, 2020, the US fed, fearful the world was ending, effectively put rates to zero...while also stating it would stay there indefinitely,they initiated massive QE, printed free money and supercharged the economy like we have never seen, the Canadians, as we do, followed suit...and it shot RE and the wider market to the moon.

...that is until December 15th, 2021

Thats when the fed walked it all back, admitting they overshot, backing off the word 'transitory' for the inflation they created, announced an immediate wind down of QE, to cease in March 2022, at which point rates would go up...multiple times.

And just like in March 2020, the response in December 2921 was immediate, with the end of QE and an admission of an out of control inflation situation that would need hikes to attempt to cure, growth and tech stocks immediately started to nosedive.

...and now, with the first of the multiple rate hikes realized in March, RE has started to screech its tires the past few weeks, with growth slowing down to a crawl, and now even marginally dropping in some areas.

So what is going to happen after another 5 or 6 hikes to come, as the fed clearly has laid out?

...well, I think you know, even the 'yolo'ers know, and they are warming up the chestnut of 'if you hold RE long enough it all works out', which is true, but it's not sound investing, because that kind of thinking is true for almost all investment classes.

I know I am saying this on a RE board, and I'm going to hear about my stupidity and why I'm wrong, but taking on multiple, new RE positions right now, imo, isn't a wise decision.

The wider markets react to news, and once it believes it has the whole picture in its back pocket, it thinks about what comes next and moves accordingly.

For RE, it's going to be awhile before it sees the end, its not a place there is clarity so its not a good place to open new positions right now

For the SE, it's washing out now, so you are (again imo) better to go there after it settles out; specifically after the May US fed meeting..that will mark back to back rate decisions in the US after the end of QE in March and new rate hikes/inflation data...so there will then be a lot of directional clarity, and the market will have priced in that environment.

... in other words, tech has been obvious/terrible since December, and after two more fed meetings, the bottom will likely be baked in at that point...so post May 5th seems like a good day to re-open up exposure in tech again.

So, if you feel the need to invest to outpace what you can get now in fixed/secure securities, that seems like a sound play to get a good return percent on say, a ~fifth of your portfolio to blend into the whole...while keeping the rest of your liquid assets high and dry.

3mil can buy you a nice house in a good neighborhood in GTA; as you brought 3 pre-con if you later sell that is subjected to tax since they aren't your PR. If you keep them as rental I suppose it can work out for long term appreciation assuming u can get good rent/tenants.

But since you make good $ with entrepreneurship opportunities is there any particular reason why you couldn't do that again and scale up/out? e.g. turn that 3mil+ into 30mil+ assuming it isn't super risky or anything.

techVcondo wrote: ↑ My plan is just condos, and using a property manager. I don't have time to spend on the actual operational part, will want it to be as turnkey as possible.

Appreciate the thoughts everyone.

If you're going to look at hiring a property manager, and you're looking for diversification, I would sprinkle the money to different cities across North America rather than putting all your eggs in the same geographic market.

This time last year, with your budget, you could have bought three blocks of freehold Town Homes (4 units per block) in Edmonton. But $3M would still buy you two block today, but you have to act quickly, as builders there have been increasing prices 10-15% per month since January and they are running low on inventories.

And if you already have an ITIN or SSN and still need to file a return with Uncle Sam, why not buy some RE in the US as they tend to have a higher yield than Canada?

Wouldn't touch precon, I'd buy residential RE with land in key areas over that time horizon to de-risk.

If you want to be more hands off at expense of returns, I'd mix it up with resale condos and residential.

Executing on this for a doctor client now, doing mix of residential and some industrial for easier mgmt. 10+ year holds.