Real Estate

Why would you buy this condo?

  • Last Updated:
  • Oct 22nd, 2020 12:14 am
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24 replies
Sr. Member
Jan 5, 2020
530 posts
586 upvotes
Can't say whether or not this buyer got a good deal. But this buyer is more sane than any precon buyer right now.

Maybe the buyer bought for self use or maybe they put in a huge down payment.
Newbie
Jul 9, 2020
17 posts
9 upvotes
It sold around the beginning of August; before the price drops (for condos) started becoming apparent.

Looking back now, bad deal was bad. Obviously the buyer had no idea what was going to happen in the next couple months.

Anyway, I think the prices will climb back but only after a year or so.
[OP]
Newbie
Apr 24, 2017
22 posts
44 upvotes
$580k mortgage at 25 years plus all other costs such as maintenance and taxes comes to about $2500. They're trying to rent it out for $1900. Even at 30 years amortization you're looking at paying $2300 as the landlord.
Sr. Member
Jan 5, 2020
530 posts
586 upvotes
mazda31509 wrote: $580k mortgage at 25 years plus all other costs such as maintenance and taxes comes to about $2500. They're trying to rent it out for $1900. Even at 30 years amortization you're looking at paying $2300 as the landlord.
Maybe they dont have a mortgage. There's a lot of wealth out there
Deal Expert
User avatar
Jan 27, 2004
43650 posts
6908 upvotes
T.O. Lotto Captain
Because of price increases. $600/month loss isnt too bad. Because after one year the price will go up 10%.
10% of $580,000 is $58,000. That easily makes up for the $600/month loss.
Compound that by another 10% the following year... thats another $63,000!
Sr. Member
Jan 15, 2010
539 posts
460 upvotes
Toronto
Literally speculating (gambling) on price appreciation, as most investors have been doing in this market for a while now. Either that or money laundering and they don't even care about the purchase price.
Deal Addict
User avatar
Apr 12, 2013
1578 posts
530 upvotes
Markham
Not sure why anyone would spend 1000 per sqft in that location when you can get the same in DT for even cheaper. I guess it does come with parking, I like this area too.
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Jr. Member
Apr 6, 2019
139 posts
26 upvotes
GTA
mazda31509 wrote: https://condos.ca/toronto/the-park-club ... 5-C4839514

Condo was bought for $580k and now the landlord has it up for rent for $1900.

What's the logic there? Bleeding about $600-$700 a month, at 25 year amortization including all fees
Totally agreed. At 580k plus maintenance fee, this is a crappy investment. Loads of better opportunities around.
Member
Mar 2, 2017
391 posts
479 upvotes
Markham
mazda31509 wrote: https://condos.ca/toronto/the-park-club ... 5-C4839514

Condo was bought for $580k and now the landlord has it up for rent for $1900.

What's the logic there? Bleeding about $600-$700 a month, at 25 year amortization including all fees
Just because it's cashflow negative doesn't mean it's negative ROI. Based on those numbers (if rented) it will cover all expenses and interest portion of mortgage, effectively breaking even.

That said, people have been doing this for a while speculating on appreciation.

Not saying this is worth doing or that it's a good 'investment', simply giving you the reasoning of the people who do this.

There are MUCH better ways to park 580k though, this is a pretty bad example of how to do it.
Realtor, Investor, CPA
Deal Fanatic
Feb 22, 2011
7296 posts
7771 upvotes
Toronto
mazda31509 wrote: https://condos.ca/toronto/the-park-club ... 5-C4839514

Condo was bought for $580k and now the landlord has it up for rent for $1900.

What's the logic there? Bleeding about $600-$700 a month, at 25 year amortization including all fees
How do you know they are keeping the tenant? New owner can evict for personal use. If they like the building, unit and that price is fair to them it's really irrelevant what others think.
Deal Addict
Dec 20, 2018
3890 posts
3107 upvotes
mazda31509 wrote: https://condos.ca/toronto/the-park-club ... 5-C4839514

Condo was bought for $580k and now the landlord has it up for rent for $1900.

What's the logic there? Bleeding about $600-$700 a month, at 25 year amortization including all fees
You don't expect rent to go up over 25 years? The tenant will be paying the tmi and some of the principal as well and after 25 years , no more mortgage and it just generates cash flow less tmi

This is not even to taking into capital gains into account over this same period
Newbie
Feb 10, 2017
86 posts
56 upvotes
Negative cash flow doesn't mean its a negative ROIC.

E.g if you net 10k a year on 40k down and 7k top up from negative cashflow

ROIC
Y1: 10/47=21%
Y2: 10.2/54=19%
....
Y10: 12/110=11%

All else being equal and potential of appreciation = potential for special assessment

I'd argue this is would be still be a decent diversification to most investment portfolios. I'd compare "negative cash flow" to the reinvestment risk of dividends and interest.
Jr. Member
Feb 8, 2017
161 posts
55 upvotes
webester wrote: Totally agreed. At 580k plus maintenance fee, this is a crappy investment. Loads of better opportunities around.
Could you list some here? I have cash im sitting on and need to invest asap

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