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Vancouver Off-Topic / Current EventsThe off-topic forum for Vancouver, funnies, non-auto centered discussions, WORK SAFE. While the rules are more relaxed here, there are still rules. Please refer to sticky thread in this forum.
From what I hear HSBC only takes clients with money, you must be rich.
Does anyone do the Smith manoeuvre? Given that interest rates are going up, you basically get to write off all that interest you pay. Then all in on Tesla?
For the guys interested in buying rentals, what are you thoughts on Reits? I think they took a bashing in the last few years and with housing costs/ rents rising they should be seeing better returns? Also a lot more diversified than throwing all your eggs on one tenant and much much more liquid. Plus you don't have to manage anything.
I prefer MIC's over REITS. REITS have a lot of exposure to retail business which I feel is a tough business to be in versus online stores. So the risk of vacancy is higher.
MIC's just lend out money to people, which I feel is a better business model.
From what I hear HSBC only takes clients with money, you must be rich.
Does anyone do the Smith manoeuvre? Given that interest rates are going up, you basically get to write off all that interest you pay. Then all in on Tesla?
Smith Manoeuvre is a leveraged play, even though they specifically say it's not leveraged (I read their book). I would say the risk is too high to do it, but like all leveraged positions, the reward is really high.
Definitely no on the all in on TSLA and i'm one of the biggest TSLA bulls out there.
edit; I think you should only consider the Smith Manoeuvre if you have a good grasp on personal finance and economics. A lot of friends who don't even manage their own portfolio were considering the SM.. This isn't a basic strategy, it's quite complex with increased risk.
This sounds great. Until interest rates climb significantly, and prices start to fall. Then when they appraise your house and its worth less than your mortgage amount, and they cant renew or refinance you, and you cant pay the extra lump sum or complete the stress test.
Then you foreclose on your house and live in a cardboard box under the granville street bridge.
Its not just one thing that causes someone to foreclose on their house, its usually a cascade of multiple factors. Climbing interest rates and lower appraised values are the two most common factors to people not being able to renew or refinance.
Fair enough. We have different opinions on how high-interest rates will climb and how much prices will fall (as well as the other factors that will impact affordability), and I don't expect to see our banks foreclosing on our homes in significant numbers.
REITS have a lot of exposure to retail business which I feel is a tough business to be in versus online stores. So the risk of vacancy is higher.
MIC's just lend out money to people, which I feel is a better business model.
You are not quite clear on what a REIT is.
A REIT is simply a structure for Canadians to invest fractionally into real estate investments. Mentally, you can think of it somewhat like a mutual fund for real estate for a simple comparison.
Therefore, just like mutual funds, while the wrapper is the same, what is inside the package can be quite different. Specifically for REITs, every flavor under the sun exists - only residential, only industrial, only retail, mixes of all of the above, etc.
It's not correct to say "REITs have a lot of exposure to retail business" because many REITs have exactly 0 exposure to retail real estate. Some do, but many do not.
I don't have any opinion on REITs versus MICs, and personally do not invest in either, but wanted to clear up that detail.
-Mark
__________________ I'm old now - boring street cars and sweet race cars.
I just basically call the gov bluff right now cuz you damn well know they can't afford such high interest considering how much debt they have plus risk collapsing the economy. They want to solve inflation? Build that damn pipe line + refinery right now. Stop giving Ukraine money and weapons, spend that on a damn refinery.
I cannot believe how mismanaged our resources are. Do you think any other oil producing country will have such high gas prices?! The solution is literally in their face, tell Alberta to pump more oil build a damn refinery, sell oil to their buddies in Europe, China, USA ??? Profit
all in on anything is such a horrible idea no matter what it is.
even if it does sort of work once or twice, eventually it will fail and you will be broke.
also if you feel like you can go all in once then be satisfied and then play conservatively after that, that doesnt work either. once a degenerate gambler always a degenerate gambler.
Fair enough. We have different opinions on how high-interest rates will climb and how much prices will fall (as well as the other factors that will impact affordability), and I don't expect to see our banks foreclosing on our homes in significant numbers.
I'm not expecting a lot of it either, but the issue is there is some stupid people out there who live way too far out of their means, and have not been in the market during an inflationary period or when prices start to taper off.
If you entered the market from 2009 to now, you've essentially been immune to issues, you could extend yourself to the brink of ruin and because prices were always rising and interest was always trending down it didn't matter. This has pulled a lot of people way too far into a market that could implode on them.
I'm imagining the young couple with a kid or two, making a combined 100-150k a year that stretched themselves with a million dollar mortgage. Unless that person is extremely smart with their money, rates rising to 5% would be crippling. Especially when you tandem that with ridiculous gas prices, food prices going out of control and just general cost of living increases that are surely going to be ongoing.
I'm not expecting a lot of it either, but the issue is there is some stupid people out there who live way too far out of their means, and have not been in the market during an inflationary period or when prices start to taper off.
If you entered the market from 2009 to now, you've essentially been immune to issues, you could extend yourself to the brink of ruin and because prices were always rising and interest was always trending down it didn't matter. This has pulled a lot of people way too far into a market that could implode on them.
I'm imagining the young couple with a kid or two, making a combined 100-150k a year that stretched themselves with a million dollar mortgage. Unless that person is extremely smart with their money, rates rising to 5% would be crippling. Especially when you tandem that with ridiculous gas prices, food prices going out of control and just general cost of living increases that are surely going to be ongoing.
Hi that's me
(Not quite that extreme, but kind of the gist of things. Made a gamble on a house because well, we needed space)
I'm imagining the young couple with a kid or two, making a combined 100-150k a year that stretched themselves with a million dollar mortgage. Unless that person is extremely smart with their money, rates rising to 5% would be crippling. Especially when you tandem that with ridiculous gas prices, food prices going out of control and just general cost of living increases that are surely going to be ongoing.
Do people actually have a $1Mil mortgage with $72 - 105Kish a year net? That's crazy. That's only around $6 - 8.8K a month. I imagine they'd have to rely on the basement suite helping an extra $1-2.5K/month and you're not reporting rental income.
The monthly payment on a million dollar mortgage would be around $3,900 depending on what interest rate. This imaginary couple would save less per month, but I think it would still be manageable if they were townhouse-horny enough
Last edited by ssjGoku69; 06-08-2022 at 05:56 PM.
Reason: typo
Just keep doing what you are doing and stay on top of it.
TD's easyweb gives an overview of your mortgage situation. My pay off term is now at 38yrs
I need to lump sum next month. I would have done some earlier but I had car insurance, home insurance, and property tax all in the span of 2 months.
Ha. Same. I'm at 459 months now (38 years, 3 months) and I'm 8 months into my mortgage. To get it back to the original amortization I have to increase my payments by ~18% ($1000). Haha. Looking forward to 2 more rate increases.
Edit: If I lump sum to get it back to 30 years (minus the 8 months I'm in already) I have do a $245k lump sum today. hahahahahahah.
Can someone really swing a $1M mortgage on 100k? That doesn't seem doable to me. $6k - $3.9k = $2.1k for everything else. My grocery bill for a family of 4 is like $1200/mo, utilities $400, car insurance x2 $250 = $1850. That leaves you $250/mo for everything else, clothes, gas, house/car maintenance....
__________________ 1991 Toyota Celica GTFour RC // 2007 Toyota Rav4 V6 // 2000 Jeep Grand Cherokee
1992 Toyota Celica GT-S ["sold"] \\ 2007 Jeep Grand Cherokee CRD [sold] \\ 2000 Jeep Cherokee [sold] \\ 1997 Honda Prelude [sold] \\ 1992 Jeep YJ [sold/crashed] \\ 1987 Mazda RX-7 [sold] \\ 1987 Toyota Celica GT-S [crushed]
Quote:
Originally Posted by maksimizer
half those dudes are hotter than ,my GF.
Quote:
Originally Posted by RevYouUp
reading this thread is like waiting for goku to charge up a spirit bomb in dragon ball z
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Originally Posted by Good_KarMa
OH thank god. I thought u had sex with my wife. :cry:
You won't get approved, to get a one million mortgage you need pretty much 200k income. So I'm assuming with that level of income you have some savings or a back up plan. And most likely if you have a million mortgage, you own a detached so you most likely worse case scenario have a basement income. As why else will you take on that much debt to buy a detached in the first place. I just looked at one million mortgage, at 5y fixed at 4.59% over 30y you are paying $5095, assuming you get like $1500 in rent. $3500 mortgage isn't bad on a $200k income households.
The monthly payment on a million dollar mortgage would be around $3,900 depending on what interest rate. This imaginary couple would save less per month, but I think it would still be manageable if they were townhouse-horny enough
Wow, interest rate is cheap $3.9K at sub $1.49% interest for a $1Mil mortgage. That's easy with dual income $100K/year salaries. Even doable with around $120 - 150K individual salary and rent 1 room out.
You won't get approved, to get a one million mortgage you need pretty much 200k income. So I'm assuming with that level of income you have some savings or a back up plan. And most likely if you have a million mortgage, you own a detached so you most likely worse case scenario have a basement income. As why else will you take on that much debt to buy a detached in the first place. I just looked at one million mortgage, at 5y fixed at 4.59% over 30y you are paying $5095, assuming you get like $1500 in rent. $3500 mortgage isn't bad on a $200k income households.
That's actually pretty easy $5,100/month with basement rental + 6K/Month net per couple for a detached home. That's why I suspect detached quickly went from $1M > $1.3M > $1.8M now for a 1990's build.
50% of your income to your mortgage isn't that bad if they other 50% is like $6 - 8K+ remaining lol. Rather have lower mortgage and retire earlier though.
Don’t forget rental income is taxed. $2k monthly basement rental the landlord pockets only $1,000-1,300 depending on tax bracket and how much expenses claimed.
Cash flow wise, detached with 2 suites (1997-2010) Vancouver specials at $4-5k monthly mortgage is much better than a townhouse with expensive strata. The challenge is coming up with the $500k-$800k downpayment.
1 bedroom suites are also much easier to rent out than 2 bedroom suites.
I saw a newer early 2010s house with 2 suites and a laneway. It could easily generate $1k + $1k + $1.6k = $3.6k a month! This suddenly make a $2.5-3M home more affordable.
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Quote:
Originally Posted by Hondaracer
I know someone who got 900k+ on 100k annual income, 3rd party lender
TD, Scotia, HSBC were willing to extend $950K on an $80K income 2 years back. Granted, in healthcare with some expectation of higher future earnings, but still - if I were the bank I'd assume nothing is a guarantee.
Don’t forget rental income is taxed. $2k monthly basement rental the landlord pockets only $1,000-1,300 depending on tax bracket and how much expenses claimed.
Cash flow wise, detached with 2 suites (1997-2010) Vancouver specials at $4-5k monthly mortgage is much better than a townhouse with expensive strata. The challenge is coming up with the $500k-$800k downpayment.
1 bedroom suites are also much easier to rent out than 2 bedroom suites.
I saw a newer early 2010s house with 2 suites and a laneway. It could easily generate $1k + $1k + $1.6k = $3.6k a month! This suddenly make a $2.5-3M home more affordable.
The write-offs are substantial if you've got a $1m mortgage - interest is between $30-40k/yr (3-4% mortgage) in the early going so if you're renting out a third of your space you've got ~$12k to offset the $24k of rental income already. Add in $2k for property tax and insurance write-offs and you're only paying taxes on $6k of rental income so maybe $3k of taxes on $24k. There's other ways to offset rental income as well but it starts getting complicated at this point.
I'm imagining the young couple with a kid or two, making a combined 100-150k a year that stretched themselves with a million dollar mortgage. Unless that person is extremely smart with their money, rates rising to 5% would be crippling. Especially when you tandem that with ridiculous gas prices, food prices going out of control and just general cost of living increases that are surely going to be ongoing.
Maybe, but maybe not.
Everyone on RS is a baller, but there are also a lot of younger households that own detached housing who have no business owning detached housing. Lots of ethnic families pool their resources together to ensure that they can keep up with their payments - eating meals at the grandparents, "free" childcare, and other life hacks to save a few dollars here and there.
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