Real Estate

Ottawa and Surrounding Area Real Estate market discussion

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Sr. Member
Aug 22, 2016
626 posts
408 upvotes
darXider wrote: i have a question about the total cost of home ownership: i've been checking several properties online in the range of 600k-800k. for example, redfin.ca has a payment calculator that gives you the total monthly payment (mortgage, property tax, home insurance, and mortgage insurance), according to which, a typical house with a monthly mortgage of ~ $2500 would have an extra ~ $1100 per month just for property tax, home insurance, and mortgage insurance, which brings up the total monthly payment to ~ $3600. i have found several houses that have been sold recently and are being rented by the current owner, but the rent price is much lower than the total monthly payment according to these calculators online. i understand that the down payment and mortgage interest rate are big factors in determining the final cost, but playing with these parameters in the calculator doesn't change the overall picture. how can one generate positive cash flow when the total monthly cost of home ownership (which includes property tax, etc.) is more than the rent?
I would change the calculation a bit. Of that $2500 mortgage payment, I would take only the interest portion. If utilities are paid by the tenant, I will take them out.
property tax, home insurance, and mortgage insurance totalling to 1100 is a bit higher, IMO it should be around $700. For a 800K house even if the owner is able to rent the house for about $2000K+utilities the owner should be in net positive. There are recurring costs of maintaining the house to keep it in good condition.
Sr. Member
Jul 15, 2019
724 posts
588 upvotes
I cannot understand this listing

https://www.realtor.ca/real-estate/2203 ... ckland-twp

It's going for $539,900, however, you can buy this exact model pre-construction for $424,900... it also looks to have almost no upgrades.

I am really looking forward to seeing what happens with this listing. It's being listed by purple bricks, so I can only assume they listed it themselves and it's way off.
Jr. Member
Aug 15, 2007
160 posts
62 upvotes
freeman93 wrote: I cannot understand this listing

https://www.realtor.ca/real-estate/2203 ... ckland-twp

It's going for $539,900, however, you can buy this exact model pre-construction for $424,900... it also looks to have almost no upgrades.

I am really looking forward to seeing what happens with this listing. It's being listed by purple bricks, so I can only assume they listed it themselves and it's way off.
I agree, this looks like the Chambord model elevation 1 from Longwood which is selling for the price you stated. The only thing I can see the owner did was pay for all the appliances, and air conditioning. The closet doors might be an upgrade? I donno, but nothing to justify the price difference except it's move in ready and hopefully construction issues were fixed with Tarion already. Not even sure if it has a fence installed. I'd be interested in seeing if this is what market price dictates in Rockland.
Deal Addict
Sep 2, 2009
2978 posts
3020 upvotes
Ottawa
arbytor wrote: I would change the calculation a bit. Of that $2500 mortgage payment, I would take only the interest portion. If utilities are paid by the tenant, I will take them out.
property tax, home insurance, and mortgage insurance totalling to 1100 is a bit higher, IMO it should be around $700. For a 800K house even if the owner is able to rent the house for about $2000K+utilities the owner should be in net positive. There are recurring costs of maintaining the house to keep it in good condition.
I always hated ignoring cashflow though. If you have a mortgage where you can leverage every principal payment, it makes more sense
Sr. Member
Jul 15, 2019
724 posts
588 upvotes
golfyfan wrote: I agree, this looks like the Chambord model elevation 1 from Longwood which is selling for the price you stated. The only thing I can see the owner did was pay for all the appliances, and air conditioning. The closet doors might be an upgrade? I donno, but nothing to justify the price difference except it's move in ready and hopefully construction issues were fixed with Tarion already. Not even sure if it has a fence installed. I'd be interested in seeing if this is what market price dictates in Rockland.
I don't think the closet doors are an upgrade, they look like the standard ones to me. Do you know of a site we can see sold rockland listings? Redfin for which I use in Ottawa, doesn't seem to go out to Rockland.
Jr. Member
Aug 15, 2007
160 posts
62 upvotes
freeman93 wrote: I don't think the closet doors are an upgrade, they look like the standard ones to me. Do you know of a site we can see sold rockland listings? Redfin for which I use in Ottawa, doesn't seem to go out to Rockland.
Yep, you can sign up to this link and will give you access to rockland as well as ottawa and surrounding areas. https://www.findottawarealestate.ca/nei ... d-sold.cfm

The only thing I see in Morris village for a 3 bedroom is one sold for $499k in the last 3 months, but it's a custom home to be built at 173 Onyx Crescent, Clarence-Rockland, Ontario.
Deal Guru
User avatar
Jun 28, 2003
12183 posts
5650 upvotes
Ottawa
arbytor wrote: I would change the calculation a bit. Of that $2500 mortgage payment, I would take only the interest portion. If utilities are paid by the tenant, I will take them out.
property tax, home insurance, and mortgage insurance totalling to 1100 is a bit higher, IMO it should be around $700. For a 800K house even if the owner is able to rent the house for about $2000K+utilities the owner should be in net positive. There are recurring costs of maintaining the house to keep it in good condition.
I would respectfully ask you to re-consider your math because there are a lot of posters here who are new to real estate and we don't want to give any misleading information.

I am going to lay it out in point form so everyone can follow. Using your example

1. Purchase price = $800K

2. Downpayment = $160K = 20% for investment property

3. Mortgage Amount = $640K

4. Mortgage payment using current excellent rate of 5 year closed variable rate at 2.2% and 30 years amortization and accelerated bi-weekly schedule = $2,426.82/month ($1,213.41/2 weeks)

5. Home Insurance for Rental Property of this size = $70/month ($840)

6. Property tax (conservatively estimate at 0.75% of purchase price) = $6,000 = $500/month

7. Total Expense = 4 + 5 + 6 = $2,996.82/month, rounding up to $3K/month

8. Total Revenue = $2K/month in rent

9. Net Cash Flow = 8 - 7 = - $1K/month

10. If you have to pay interest for the amount that you borrow in #2 for the downpayment (HELOC or line of credit) and/or property management fee (typically 10% of rent/month) then you will dig yourself an even bigger hole. And if the interest rate goes up then boy oh boy...
Deal Addict
Nov 13, 2013
4523 posts
3685 upvotes
Ottawa
canabiz wrote: I would respectfully ask you to re-consider your math because there are a lot of posters here who are new to real estate and we don't want to give any misleading information.

I am going to lay it out in point form so everyone can follow. Using your example

1. Purchase price = $800K

2. Downpayment = $160K = 20% for investment property

3. Mortgage Amount = $640K

4. Mortgage payment using current excellent rate of 5 year closed variable rate at 2.2% and 30 years amortization and accelerated bi-weekly schedule = $2,426.82/month ($1,213.41/2 weeks)

5. Home Insurance for Rental Property of this size = $70/month ($840)

6. Property tax (conservatively estimate at 0.75% of purchase price) = $6,000 = $500/month

7. Total Expense = 4 + 5 + 6 = $2,996.82/month, rounding up to $3K/month

8. Total Revenue = $2K/month in rent

9. Net Cash Flow = 8 - 7 = - $1K/month

10. If you have to pay interest for the amount that you borrow in #2 for the downpayment (HELOC or line of credit) and/or property management fee (typically 10% of rent/month) then you will dig yourself an even bigger hole. And if the interest rate goes up then boy oh boy...
Insurance and property taxes are much higher but so is rent. Not many $800k places that only fetch $2k a month in rent. Maybe somewhat dated SFH in far suburbia.
Deal Guru
User avatar
Jun 28, 2003
12183 posts
5650 upvotes
Ottawa
fogetmylogin wrote: Insurance and property taxes are much higher but so is rent. Not many $800k places that only fetch $2k a month in rent. Maybe somewhat dated SFH in far suburbia.
I was only responding to a snippet from arbytor post. It is possible he made a typo and meant $3K in rent instead.

Even with $3K in rent, you can clearly see the landlord is barely staying afloat. I didn't even consider any potential vacancy and/or renos/fix and I understand all of this can be claimed as business expense.

The point that I am trying to make is it's not all peaches and cream being a landlord. There seems to be some serious misconceptions, among new and seasoned real estate investors, out there and all I can say is you have to crunch your own numbers to see if it makes sense, before pulling the trigger. You can't rely on rumours, innuendos, and opinions, no matter how well-intentioned they can be.
Deal Addict
Nov 26, 2004
4460 posts
4122 upvotes
canabiz wrote: I was only responding to a snippet from arbytor post. It is possible he made a typo and meant $3K in rent instead.

Even with $3K in rent, you can clearly see the landlord is barely staying afloat. I didn't even consider any potential vacancy and/or renos/fix and I understand all of this can be claimed as business expense.

The point that I am trying to make is it's not all peaches and cream being a landlord. There seems to be some serious misconceptions, among new and seasoned real estate investors, out there and all I can say is you have to crunch your own numbers to see if it makes sense, before pulling the trigger. You can't rely on rumours, innuendos, and opinions, no matter how well-intentioned they can be.
A few years ago, I did some calculation. A very rough rule that I still follow is for every $100k worth of property, I need $600 worth of rents to be cashflow neutral, and that would include allowances for repairs and vacancy. Using this rule, for a $800k property, it will need to generate around $4800 per month in rent to be consider a worthwhile investment. After all, I don't think one should discount the "cost" of their downpayment.

That is why I consider those who are buying now are taking on government responsibilities. They are essentially providing "subsidized" housing to their tenants. What is really sad is you get politicians and tenants right groups painting the mom and pop landlords as blood sucking evil people who prey on hard working tenants. That is why I am no longer looking for rentals in Ontario.
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
William W wrote: A few years ago, I did some calculation. A very rough rule that I still follow is for every $100k worth of property, I need $600 worth of rents to be cashflow neutral, and that would include allowances for repairs and vacancy. Using this rule, for a $800k property, it will need to generate around $4800 per month in rent to be consider a worthwhile investment. After all, I don't think one should discount the "cost" of their downpayment.

That is why I consider those who are buying now are taking on government responsibilities. They are essentially providing "subsidized" housing to their tenants. What is really sad is you get politicians and tenants right groups painting the mom and pop landlords as blood sucking evil people who prey on hard working tenants. That is why I am no longer looking for rentals in Ontario.
Great rule of thumb, although I would say with today's extremely low interest rates you can get away with lower. My personal rule of thumb is more like $500 per $100k (assuming no condo fees of course--those need to be subtracted from rent for cashflow purposes). All of my properties are currently higher than this, but it's the lowest I would consider.

I agree that arbytor's calculation's seem off, however they did mention that they look at interest portion of the mortgage only--implying they are OK with negative cashflow as long as equity is still being built from the mortgage being paid down. This would mean a much lower rent would be considered acceptable. (arbytor's numbers are still off in this scenario but it is closer.)

While I personally don't quite feel comfortable with this strategy, I do have to recognize that investors getting in today have a very hard time finding cashflow-positive properties, so some people will feel ok with a purchase as long as the rent covers expenses + mortgage interest (and not necessarily the mortgage principal). A riskier way to invest for sure but I believe this is the mindset of many Toronto investors...
Jr. Member
Jun 14, 2020
110 posts
105 upvotes
If the builder has built a home to specifications, but in exactly a mirror images to the sketches agreed at signing, is this legit?? Ie front door on left instead of right, garage on opposite site, etc. I am upset about this because I wasn’t informed but am not sure if they can just say “sorry ya we switched it but it’s the same thing”. To me it’s not the same but I am not sure if I have a leg to stand on. Thanks.
Sr. Member
Jul 15, 2019
724 posts
588 upvotes
gohabsgo1 wrote: If the builder has built a home to specifications, but in exactly a mirror images to the sketches agreed at signing, is this legit?? Ie front door on left instead of right, garage on opposite site, etc. I am upset about this because I wasn’t informed but am not sure if they can just say “sorry ya we switched it but it’s the same thing”. To me it’s not the same but I am not sure if I have a leg to stand on. Thanks.
Did they not give you the site plan? I don't see how they can switch it after the proposed plan, because garage doors generally are next to each other, so it remains consistent. Are you positive you didn't have a reverse lot? It would be in your purchase of sale agreement. However, everything in purchas of sale agreements are in the builders favour and they always say subject to changes.
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
gohabsgo1 wrote: If the builder has built a home to specifications, but in exactly a mirror images to the sketches agreed at signing, is this legit?? Ie front door on left instead of right, garage on opposite site, etc. I am upset about this because I wasn’t informed but am not sure if they can just say “sorry ya we switched it but it’s the same thing”. To me it’s not the same but I am not sure if I have a leg to stand on. Thanks.
Unfortunately yes, they can do this (it happens all the time actually, several of my new builds were mirror images). It will most definitely be in the fine print of any agreement you signed so there is nothing you can do. It's unfortunate they did not make this clear to you however. Just curious, is there a reason this bothers you? Personally I never really minded either way.
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
Actually I just plugged the numbers into a mortgage calculator and apologies to arbytor--you are correct that a $2000 rent would indeed cover expenses if you are happy to pay down the mortgage principal yourself (by my calculations the break even is at about $1800, plus maintenance/repair and vacancy so maybe $2k is fine). However, you'd end up bleeding about $1200/month. Sure this all goes toward paying down the mortgage and building equity, but personally I definitely wouldn't be happy to put in $160k of my money (20% downpayment, opportunity costs associated with this too) and still need to pay $1200/month of my own money just to "break even" (remember that in this case you can't even say your tenants are "paying down your mortgage for you" because in effect you are the one paying down that mortgage, the tenants are just covering the extra expenses/interest). You'd really be banking on RE appreciation and speculating on real estate to make this anywhere close to worth your while.
Sr. Member
Aug 22, 2016
626 posts
408 upvotes
canabiz wrote: I would respectfully ask you to re-consider your math because there are a lot of posters here who are new to real estate and we don't want to give any misleading information.

I am going to lay it out in point form so everyone can follow. Using your example

1. Purchase price = $800K

2. Downpayment = $160K = 20% for investment property

3. Mortgage Amount = $640K

4. Mortgage payment using current excellent rate of 5 year closed variable rate at 2.2% and 30 years amortization and accelerated bi-weekly schedule = $2,426.82/month ($1,213.41/2 weeks)

5. Home Insurance for Rental Property of this size = $70/month ($840)

6. Property tax (conservatively estimate at 0.75% of purchase price) = $6,000 = $500/month

7. Total Expense = 4 + 5 + 6 = $2,996.82/month, rounding up to $3K/month

8. Total Revenue = $2K/month in rent

9. Net Cash Flow = 8 - 7 = - $1K/month

10. If you have to pay interest for the amount that you borrow in #2 for the downpayment (HELOC or line of credit) and/or property management fee (typically 10% of rent/month) then you will dig yourself an even bigger hole. And if the interest rate goes up then boy oh boy...
I agree with your calculation for net positive cashflow. I am just pointing out that a investor that is just looking to flip the house will think from the perspective that only the interest portion of the monthly mortgage payment is loss. So, for a 800K house though the monthly mortgage payment is $2,426.82/month, the interest portion is about $1300/month to this amount you add the home insurance+property tax+any other insurances to protect mortgage. This should be $2000/month.
Jr. Member
Jun 14, 2020
110 posts
105 upvotes
jk9088 wrote: Unfortunately yes, they can do this (it happens all the time actually, several of my new builds were mirror images). It will most definitely be in the fine print of any agreement you signed so there is nothing you can do. It's unfortunate they did not make this clear to you however. Just curious, is there a reason this bothers you? Personally I never really minded either way.
This may seem silly but to me it changes how I imagined my home and the "feel". I wish this had been clear to me when I signed as there were lots in my preferred orientation available. I didn't even imagine this was a possibility. Oh well I guess that's how these things go sometimes...
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
gohabsgo1 wrote: This may seem silly but to me it changes how I imagined my home and the "feel". I wish this had been clear to me when I signed as there were lots in my preferred orientation available. I didn't even imagine this was a possibility. Oh well I guess that's how these things go sometimes...
Ah ok, fair enough. I guess the only thing to do now is try to focus on envisioning the new home instead...perhaps it will grow on you by the time you move in.
Member
Jan 19, 2017
431 posts
121 upvotes
canabiz wrote: I would respectfully ask you to re-consider your math because there are a lot of posters here who are new to real estate and we don't want to give any misleading information.

I am going to lay it out in point form so everyone can follow. Using your example

1. Purchase price = $800K

2. Downpayment = $160K = 20% for investment property

3. Mortgage Amount = $640K

4. Mortgage payment using current excellent rate of 5 year closed variable rate at 2.2% and 30 years amortization and accelerated bi-weekly schedule = $2,426.82/month ($1,213.41/2 weeks)

5. Home Insurance for Rental Property of this size = $70/month ($840)

6. Property tax (conservatively estimate at 0.75% of purchase price) = $6,000 = $500/month

7. Total Expense = 4 + 5 + 6 = $2,996.82/month, rounding up to $3K/month

8. Total Revenue = $2K/month in rent

9. Net Cash Flow = 8 - 7 = - $1K/month

10. If you have to pay interest for the amount that you borrow in #2 for the downpayment (HELOC or line of credit) and/or property management fee (typically 10% of rent/month) then you will dig yourself an even bigger hole. And if the interest rate goes up then boy oh boy...
yes, that's exactly what i was trying to say when i asked my question on this subject. thank you for clearly stating all the parameters.
Deal Guru
User avatar
Jun 28, 2003
12183 posts
5650 upvotes
Ottawa
darXider wrote: yes, that's exactly what i was trying to say when i asked my question on this subject. thank you for clearly stating all the parameters.
No worry, I just like to lay everything on the table in black and white to see all my options so I can make an informed decision.

You don't have to worry too much about fancy schmancy terms like Cap Rate, ROI (Return on Investment), Debt Service Charge Ratio etc when you first start out but it does help to maintain a little spreadsheet so you can punch numbers in and see if something makes sense.

I kept my example simple but there are other costs and revenues associated with being a landlord such as utilities (if there are no separate meters for multi-family), snow removal/landscaping for costs and parking for additional revenue.

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