The [Toronto Star] story had a central theme: renters are victims. Screwed. And the investors who own those condos are the screwees. […]
Of course, as I’ve proven time and again, reality is something quite different. Most investor-landlords are lucky to break even on their condos, usually in negative cash flow because market rents simply can’t cover financing, condo fees and taxes – let alone give a return on invested equity. In other words, someone like KLM renting a unit for $1,625 is being subsidized by the delusional twit who actually owns the place, even with a mortgage at sub-3%. They’re also avoiding the looming disaster of a condo market meltdown – a story now getting almost daily coverage.
How could a smart young professional not figure this out? Unless she has zero real estate knowledge?
As I walked through the airport, powered up my phone and checked out the latest anguished comments to this tormented blog, I suddenly realized who Kerri Lynn McAlister really is. She’s a plant.
[…]
As it turns out, KLM is also a newspaper writer and industry spokesperson.
h/t Colby Cosh
Don’t really follow. This isn’t just a story about newer condos not being covered by rent increase protections?
I don’t think many people know this; I certainly didn’t.
Trouble Right Here In River City!!
New downtown condos remind one of cruise ships.
Tight accommodations that tend to encourage hitting
nearby fun spots.
I used to own 2 homes.
I paid inflated insurance coverage just to have the one I didn’t live in(Calgary) unoccupied because you have to rent to anyone who offers to rent these days and they can trash your home costing you several times the amount you could ever get in rent just to repair the damage, and you can’t evict these people in the winter(law) because it’s cold outside and you can’t sue them for the gratuitous damage because they’re renters, duh, and they don’t own anything.
Yes, really.
You either do the landlord thing BIG and somehow win on the margins of multiple homes(row houses/condos) or you go home and don’t bother at all.
The only alternative is government housing projects…ask Chicago and Detroit about this sort of option, they’re the experts.
I owned three houses at one point because I usually moved between three locations – but I ended up in a fourth where I couldn’t buy; go figure. Being a landlord (a nasty term these days) is a mug’s game. House repairs, high insurance, nasty letters from a city thousands of miles away because the tenants partied too loudly – and then they skipped leaving an empty oil tank. Luckily, even though they were in arrears on the rent, they left in winter when I couldn’t evict them anyway. After re-occupying one of the houses, I took 1,200 staples out of the living room wall. I sold two of the houses and the government declared itself a partner and took half the increased value as capital gains. Don’t rent to anybody! That said, it looks like KLM was trying to scare renters into buying and getting one of the mortgages she pushes; that is getting pretty close to fraudulent.rw5ezz
Gee! Maybe they need rent control! 🙂 (If you don’t think economics can be funny, read Thomas Sowell on how rent controls usually end up screwing the poorest renters (or would-be renters).
And here I thought the Star’s central theme is that readers are victims.
The way to invest in real estate is through real estate investment trusts. They are easy to buy and sell as they trade like stocks, most pay from 4 to 8 percent dividends and have enjoyed very nice capital gains over the past decade.
Video: Watch George W. Bush Speak at the Dedication of His Presidential Library
http://commoncts.blogspot.com/2013/04/video-interview-with-george-w-bush-on.html
I bought a condo 20 years ago as a long term investment, renting it out to help cover the expense in the hope that it would break even till paid for. Ideally it might make a few extra dollars when rents started going up.
After 7 years I signed it off back to the seller. Not bad enough that I was losing $150/month right off the top, the association fees were rising faster than I could raise the rent, I was having ridiculous tenant turnover… 8 months average, which turned out to be typical for the complex… and each tenant left the place a disaster, costing even more in time and expense. Add to that the repairs….
In the U.S. there are laws which give renters rights, some vary state-to-state, some good, some bad. Section 8 complicates things further, with the only real guarantee being that you’ll get some of your rent… and eviction is a nightmare. But the bright side? As a taxpayer I was subsidizing myself. Such a deal.
Rental property can be a very severe headache… time and expense wise… and I know, having been on both sides of the equation.
So that is where Garth Turner landed….
The only thing dumber than renting a condo is buying one. Condos are the Yuppie version of trailer courts.
This story is true in that those who are owners of low rent multi-dwelling investment property are the real “victims”. Low return on investment (after the overhead of damage, maintenance and frequent rent default is factored in)is the norm. Add to this the interference of government with rent control and negating damage deposits and rent due deadlines, and you find yourself with a losing investment that is hard to sell off. I had friends who were trapped in this endless cycle of high maintenance low profit rental property.
The only real hope is to cross a few palms on city council with silver and have them take the white elephant off your hands as a public housing project. Maybe government thinks it’s in the business of losing money but the private sector is not. I really don;t know who would buy these low rent rental properties but you have to be a glutton for loss to do it.
Minuteman has it right. Only invest in rental housing thru REITs. Even then I prefer commercial real estate. I suppose a duplex might work if you lived in the unit next door.
When the crap hits the fan and interest rates are forced up just imagine the collapse in housing. People cannot afford mortgages of 4% let along 6%. A big factor in why governments continue to pump money into the economy. They realize it is a house of cards but are so far behind they have no alternative. They’ll ride the horse until it drops.
Many of my clients have done very well buying and renting real estate.
The two key factors are Time and Time.
Time to buy and hold the properties – paying for the principle and then relevering to buy more. Starting early – before you turn forty/forty-five – is essential in order to have the multiplier effect work
The second time is the time to manage the properties – taking the time to find good properties, then find and keep on top of the tenants, and finally the time to maintain them.
That most real estate owners show little to know profit is the whole point. While one is accumulating properties the use of leverage and the attendant borrowing costs reduce the taxable rental income whilst realizing – hopefully – capital gains on the property over the long run. Only a the owners approach retirement do they slow down buying more property and begin taking surplus rent cash flow as profit instead of relevering.
Sure there are lots of tales of woe from those who played in the rental business, but almost everyone I have come across who did – lost/gave up because they lacked the two items above.
That is not to say that one can’t lose their shirts in RE. In fact much of the urban Canadian market is ripe for huge crash in much the same way that the bond market is.
my father was a landlord as was I. I would never, ever be a landlord after our experiences with tenants and the laws protecting tenants and punishing landlords for the stupid idea that they want to keep the tenants from wrecking the places.
“Trying to scare renters into buying and getting one of the mortgages she pushes”
Because for people worried about being able to afford rent increases the natural next step is to take on a mortgage?
Not for the renters I know, myself included.
Ah, the crooked liberal media strikes again…
It you check out this website
http://www.causepimps.ca/FMTA/fmta.html and in particular
http://www.causepimps.ca/FMTA/metrotenants.html
you will find out that the Federation of Metro Tenants Associations featured in this Toronto Star story was founded by the Communist Party of Canada and is closely interrelated to OCAP, the Ontario Coalition Against Poverty known for the riots they organize in Toronto.
There is some other good information from the Toronto Sun
http://www.torontosun.com/comment/columnists/sueann_levy/2010/11/18/16209761.html
Common now, the Liberals simply want Section 8 housing for their black voters like they do in the US.
That way it’s an easy drive from suburbia to pick up drugs in one convenient place, usually outside the little government sponsored strip mall with two liquor stores and abortion clinic.
besides making a little cash as a landlord you get some entertainment, tho quite often at great expense. So I quit the gig about 13 yrs ago and now work for some landlords.
There is some other good information from the Toronto Sun on this radical tenant group and their ties at
http://www.torontosun.com/comment/columnists/sueann_levy/2010/11/18/16209761.html
It you check out this website
http://www.causepimps.ca/FMTA/fmta.html and in particular
http://www.causepimps.ca/FMTA/metrotenants.html
you will find out that the Federation of Metro Tenants Associations was founded by the Communist Party of Canada and is closely interrelated to OCAP, the Ontario Coalition Against Poverty known for the riots they organize in Toronto.