Quote:
Originally Posted by Traum
I'm surprised to hear that, Mark. Between helping my parents manage their rental apartment, and later my own over the past 10+ years, we've never had a situation where the rental income wasn't able to cover our costs. The only exception was when my parents decided to put in some extra money to pay down the mortgage, but that was purely something they chose to do, instead of being required to do.
Density in the Tri-Cities is definitely going up though, and I know great efforts have been expended to increase density in Port Moody, so I understand your concerns to minimize your RE exposure in those areas.
|
No apartment these days will cover its costs if you take a 75% mortgage of the cost to buy it. People who bought a unit 10 years ago and are financing based on an old value may "cover their costs" but that's only because they are not actually considering the right calculation - they need to consider its value today since that is the opportunity cost of renting it (if you sell, you'd sell at today's value, not at the price you paid 10 years ago).
My condo would likely rent for $2250 a month, maybe a little more. When you consider a strata fee of $300, that means the max mortgage my place would support is approx $400K (3.5%, 30 years).
On the other hand, we will list it at $699K and expect we will get something in that ballpark. To rent the place and have it cover its costs, it will cost me $300K in cash today which I would have to otherwise keep locked up in my place to just barely break even. That's not an attractive tradeoff for me which is why we are selling.
-Mark