Real Estate

Negative cash flow - Blame the policy?

  • Last Updated:
  • Jun 9th, 2018 12:16 pm
[OP]
Member
Feb 13, 2018
495 posts
539 upvotes

Negative cash flow - Blame the policy?

I see so many of you saying government costed the -ve cash flow.
But what the policy did was simply cap the rent to inflation. No one is forcing you to buy a negative cash flow properly to begin with.

The policy didn't force you to lower the rent, you know you will be in cash flow negative when you bought the so called investment property. It's simply ridiculous that people sign up for 1 millions mortgage to generate 3000 negative cash flow monthly.

Realtors love it, Banks love it, but why would people get a 800k loan and bleed so much money monthly is beyond me.
9 replies
Deal Expert
User avatar
Jan 27, 2004
50521 posts
14867 upvotes
ONTARIO
hurts the investors... but I don't think theres that many investors out there for housing. PEople usually buy a house to live in... Condo's on the other hand are investor owned. But also a high proportion are primary residence. Even at the 50% ish (forgot the exact number) of condo owners being investors... I imagine that if anyone has a primary residence and decides to get a condo the side, can probably manage with the negative cash flow. And if they can't they should just flip it & go back to their primary home...

Its usually people who try to use the equity in their primary residence from what i've seen.
[OP]
Member
Feb 13, 2018
495 posts
539 upvotes
yes. I think many used HELOC to finance their life and investment. I kind of think we are bailing them out as the Fed clearly is keeping the rate artificially low for those leveraged.
Deal Addict
May 9, 2017
1230 posts
1324 upvotes
rfdchan wrote: I see so many of you saying government costed the -ve cash flow.
But what the policy did was simply cap the rent to inflation. No one is forcing you to buy a negative cash flow properly to begin with.

The policy didn't force you to lower the rent, you know you will be in cash flow negative when you bought the so called investment property. It's simply ridiculous that people sign up for 1 millions mortgage to generate 3000 negative cash flow monthly.

Realtors love it, Banks love it, but why would people get a 800k loan and bleed so much money monthly is beyond me.
I don't' hear people complaining about buying a negative cash flow property. I'm not saying it's smart...people can have there own views about capital appreciation.

I hear people complaining about not being able to pass on reasonable costs to tenants if they can't pass on reasonable expense increases to tenants.

There is a big difference.
[OP]
Member
Feb 13, 2018
495 posts
539 upvotes
You don't see because people won't tell, but you just need simple math and average intelligent to tell.

You can also tell from all those distressed posts here

Simple math, 1 million detached is about 2 to 3000 negative cash in suburbs.
Deal Addict
Jul 3, 2007
4090 posts
4566 upvotes
Toronto
policy had nothing to do with negative cash flow, stupid people overpaying for properties did though.....

especially condos....
Deal Expert
Feb 29, 2008
19394 posts
17859 upvotes
Tarrana & The Ri…
Sigh. You can tell who has hurt feelings. I'd say majority of the landlords our are positive cash flow. The issue with the 1.8% cap is that costs go far beyond 1.8% and the landlord has now been forced into owning subsidized housing. Now if the government capped taxes, interest rates, hydro etc at 1.8% I'd be all for it. You see, before this stupid policy, plenty of landlords didn't raise rents every year and when they did it was minimal. So this was a problem that really didn't need addressing, just a minor tweak. But now rents and home prices are higher.... So again, what was the point of the cap? Stupid policy.

Landlords who bought recently and didn't work out the numbers would have been screwed with or without a cap. You clearly have an axe to grind and can read the hurt with every post. Landlords didn't price you out.
Last edited by JayLove06 on Jun 9th, 2018 11:35 am, edited 1 time in total.
Deal Addict
May 9, 2017
1230 posts
1324 upvotes
joepipe wrote: policy had nothing to do with negative cash flow, stupid people overpaying for properties did though.....

especially condos....
Exactly
[OP]
Member
Feb 13, 2018
495 posts
539 upvotes
The bungol site is nice, it actually calculates the negative cash flow for you.
Buyers are in denial phase still.
Those who are stubborn/stuck will face more losses next few years as interest rate normalizes.
Deal Addict
Jan 17, 2006
2422 posts
2626 upvotes
Toronto
I dont see people complaining about buying investments condos, more like bragging about it.

I see a lot of people without any RE complaining about
affordability and high rent and predicting immenent crash.

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