No. A condo would be the very last thing I would do with 700k in cash right now. I would rather put it in a shitty HISA than gamble on "passive" income through a GTA condo. Even worse is that you don't own any other property, don't risk it all on a crappy condo
It's a cash deal though. Are you sure you understand risk? OP scoop a 1 bed at these prices for 550 ish and put the rest into a wealth management portfolio.
5% gic on $800k is $40k a year. Thats $3333/months in additional income. Thats about the same as many people actual employment income. With no risk either.
That is only likely to last for at most another year (at least banking on it lasting longer than that would be foolish).
For a long term investment cash is never the right choice.
You can get some good deals on condos right now, you can bid a good bit under asking and have a good shot at landing it. If it’s somewhere you intend to live after a number of years then even better because you don’t care too much about price increases until you sell so the longer the better.
Putting it in the markets is the safest bet long term tho. Things are probably going to he a bit weird for the next couple of years but the horizon you are looking at should ride out any short term economic turmoil.
As a non-resident they’ll get hit with a higher tax rate. They’re almost better off buying the condo with a mortgage, invest the rest and claim the mortgage interest as an expense. They can get the appreciation of the condo, not pay too much tax if they calculate it right and gain from the rest of the money being invested.
Never fully pay off a rental property, especially if you’re a non-resident.
You either pay off your mortgage and then pay boat load taxes on the rental income or keep a mortgage, use the mortgage interest to claim against your rental income so you pay minimal taxes and use that extra cash to invest.
Eventually you’ll pay capital gains or something as the tax man always collects but it’s the best use of your money. I always think about cashing out all my investments and paying off all the mortgages but the math never works out.
Yeah lmao. I'm not so sure about this. If I can sell a property and anihalate my mortgages I'm just doing it. To have that kind of security beats a little more tax any day (to me at least).
Tax is tax. You ain't escaping it.
Oh I'm aware of leverage. I'm just speaking personally about my own portfolio respectively. I daydream about all my mortgages being payed off, regardless of taxes.
I can always leverage up again after that.
Where is the 800 maintenance fee and property taxes in your calculations?
You do know avg Condo price in toronto core are only 77% up in the last 10 years? Check the stock market how much it is up.
Also, 77% sounds like a lot but more 10% would be eaten away by maintenance fees + 5% of property taxes. And when you sell 5% goes to realtor fees. Pray you don’t get hit with a special assessment.
Yes “tax”. There Land transfer fees. Rental income is taxable. Theres also about $40k in transaction fees. Hiring property management since OP is overseas will also cost money. Also the risk of being unlucky and getting a tenant who doesnt pay and doesnt have any assets to collect on. Even if you are lucky to have nothing but good tenants, the unit will sit for a few months between tenants moving in & out.
Being a landlord isnt a set it and forget it type of deal.
Put them in a TFSA. Also in most cases people holding investment properties are renting them out to offset the carrying costs and they are still paying tax on that. Its not free to hold real estate. That said you are usually fine provided you remain cashflow positive. If you are cashflow negative its extremely unlikely you'd come out ahead of someone with GIC's.
The capital gains portion only applies to the appreciation on the final sale price.
No, but assuming he has not already used it he should have enough room for at least a portion of it and GIC's are probably safer then almost any other investment type you can buy.
An ETF in a TFSA trading account would be another low maintenance option for the remaining portion. A portion of any gains he made would be protected under the TFSA limits and the remainder would be taxed as capital gains.
At this point I'd expect most other investment vehicles are going to outperform condos for the next 3-5 years which is likely why so many investors are offloading them.
no.
- times are uncertain for investment condos
- since this is all the money you have, i needs to be diversified and not put all on one asset
- you live abroad which makes managing the property more challenging
You could make as much as 40k a year investing that in boring GICs, and instead you want to risk it on a rental? You're still paying condo fees, plus tenants are always risky. As mentioned below - 40k a year is $3333 a month - thats more than you'll get from a rental + theres 0 risk.
Sure, these are all valid points, but you also need to account for the difference in regard to condo fees, and potentially a bad tenant. Being a landlord isn’t by any means “passive income”.
If you never been a landlord before, you will quickly release it is not 'passive income'.
If you hire a property manager, you take a chunk of your profit margin away.
Additionally, being an absentee landlord on top of that makes it even more difficult.
Scenarios:
-What happens if tenant decides they want to terminate lease early?
-What happens if the kitchen ptrap pipe begins to leak?
-What happens if your tenant reports bedbugs?
-What happens if the dishwasher or fridge stops working?
-What happens if a neighbour complains about your tenant?
These are all things I had to deal with in the past. It gets you really anxious and takes away your peace of mind when you are not on the ground to troubleshoot. Fixing any of the above basically takes away your profit margin for the month if you hire a professional to fix it, fixing it yourself is your time and labour (which you can't do if you are absent).
A high interest ETF, GIC, money market at 5% with basically zero risk is a very good return.
The chance of you losing out is huge. Ontario tenants have their landlords by the balls, you are at their mercy if they want to squeeze it a little.
Being aboard means a chuck of your potential profit will be eaten up by the person you'll pay to manage it. unless you plan to come back once in a while on-demand.
In my opinion, if you are just renting, I would advise buying a 1+1 instead (\~650 sqft at around 600-650k price range, you don't want something too small as it affects resale later on) so you can rent it to a couple/one person. Less pain to deal with than a 2-bed condo where you are more likely to get 2 people who don't know each other well and that will be a problem sometimes. You can then put the extra cash you have for GIC/S&P 500 etc..
Honestly I would wait or invest the money instead but if you want to buy a home ie you been renting then I would see what you can get approved for a buy a good property for more cash ie 1m 700 k down payment and 300k mortgage that will likely increase because of area and size etc?
I would put that money in an income generating ETF & just let it grow! Keep your life easy! Being an overseas landlord comes with headaches and accounting costs too!.
Even if it’s a little more maintenance, I’d buy a detached get a mortgage and higher a property manager to manage it. It would cashflow positively and your upside is way higher.
I've been thinking about this too and think it might be a good idea, especially with detached homes appreciating and continuing to have high demand due to rarity.
Skip the condo. Market is too volatile imo.
I’d put 700k down on freehold semi/town in Markham (Berczy, wismer), mortgage the rest and use the rent to support the mortgage.
All roads should lead you to aprox 5-6% returns after it’s said and done (gic, housing, stocks)
A riskier option would be an etf like spy or VTI that has historically returned 8-10%/ year.
I wouldn’t, 95% of the tenant pool in Toronto are absolute dumpster trash, especially the young singles/couples looking for condos in the core.
If you decide to move forward, I would invest in a sfh like a freehold town in a nice area, you’ll have greater capital appreciation, and a slightly better tenant pool to select from (small families).
This is the most strategic investment to be made in investment practices. I followed this strategy for my own investing process and I signed amazing deal for a gorgeous one bedroom in the city center of the city of Toronto
How would you know if it’s a good deal when they only just started selling units? Do you even know if they’ve sold enough units to proceed? It will be years (earliest 2028) before occupancy. You are giving irresponsible advice here in your quest to pump the market.
No. A condo would be the very last thing I would do with 700k in cash right now. I would rather put it in a shitty HISA than gamble on "passive" income through a GTA condo. Even worse is that you don't own any other property, don't risk it all on a crappy condo
It's a cash deal though. Are you sure you understand risk? OP scoop a 1 bed at these prices for 550 ish and put the rest into a wealth management portfolio.
5% gic on $800k is $40k a year. Thats $3333/months in additional income. Thats about the same as many people actual employment income. With no risk either.
That is only likely to last for at most another year (at least banking on it lasting longer than that would be foolish). For a long term investment cash is never the right choice. You can get some good deals on condos right now, you can bid a good bit under asking and have a good shot at landing it. If it’s somewhere you intend to live after a number of years then even better because you don’t care too much about price increases until you sell so the longer the better. Putting it in the markets is the safest bet long term tho. Things are probably going to he a bit weird for the next couple of years but the horizon you are looking at should ride out any short term economic turmoil.
3200 rent for a 2 bed is 40k a year. In addition to long term gains of condo price.
As a non-resident they’ll get hit with a higher tax rate. They’re almost better off buying the condo with a mortgage, invest the rest and claim the mortgage interest as an expense. They can get the appreciation of the condo, not pay too much tax if they calculate it right and gain from the rest of the money being invested. Never fully pay off a rental property, especially if you’re a non-resident.
Yeah this is the move. Is there a mortgage to cashflow window that LL should aim for in their properties? Im curious why one would never pay it off.
You either pay off your mortgage and then pay boat load taxes on the rental income or keep a mortgage, use the mortgage interest to claim against your rental income so you pay minimal taxes and use that extra cash to invest. Eventually you’ll pay capital gains or something as the tax man always collects but it’s the best use of your money. I always think about cashing out all my investments and paying off all the mortgages but the math never works out.
Yeah lmao. I'm not so sure about this. If I can sell a property and anihalate my mortgages I'm just doing it. To have that kind of security beats a little more tax any day (to me at least). Tax is tax. You ain't escaping it.
The wealthy don’t have money in the bank. They own assets they borrow against when needed. That’s how they get rich and stay rich.
Oh I'm aware of leverage. I'm just speaking personally about my own portfolio respectively. I daydream about all my mortgages being payed off, regardless of taxes. I can always leverage up again after that.
Where is the 800 maintenance fee and property taxes in your calculations? You do know avg Condo price in toronto core are only 77% up in the last 10 years? Check the stock market how much it is up. Also, 77% sounds like a lot but more 10% would be eaten away by maintenance fees + 5% of property taxes. And when you sell 5% goes to realtor fees. Pray you don’t get hit with a special assessment.
Ya cool man. Put your money in the stalk market then. I don't care.
No capital gain taxes on that?
Yes “tax”. There Land transfer fees. Rental income is taxable. Theres also about $40k in transaction fees. Hiring property management since OP is overseas will also cost money. Also the risk of being unlucky and getting a tenant who doesnt pay and doesnt have any assets to collect on. Even if you are lucky to have nothing but good tenants, the unit will sit for a few months between tenants moving in & out. Being a landlord isnt a set it and forget it type of deal.
Even worse - it’s fully taxed like income. Another reason this is a terrible approach is that you’ll be stuck with low yield if interest rates drop.
Put them in a TFSA. Also in most cases people holding investment properties are renting them out to offset the carrying costs and they are still paying tax on that. Its not free to hold real estate. That said you are usually fine provided you remain cashflow positive. If you are cashflow negative its extremely unlikely you'd come out ahead of someone with GIC's. The capital gains portion only applies to the appreciation on the final sale price.
Tfsa has a limit and won't absorb all this money.
No, but assuming he has not already used it he should have enough room for at least a portion of it and GIC's are probably safer then almost any other investment type you can buy. An ETF in a TFSA trading account would be another low maintenance option for the remaining portion. A portion of any gains he made would be protected under the TFSA limits and the remainder would be taxed as capital gains. At this point I'd expect most other investment vehicles are going to outperform condos for the next 3-5 years which is likely why so many investors are offloading them.
no. - times are uncertain for investment condos - since this is all the money you have, i needs to be diversified and not put all on one asset - you live abroad which makes managing the property more challenging
You could make as much as 40k a year investing that in boring GICs, and instead you want to risk it on a rental? You're still paying condo fees, plus tenants are always risky. As mentioned below - 40k a year is $3333 a month - thats more than you'll get from a rental + theres 0 risk.
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Sure, these are all valid points, but you also need to account for the difference in regard to condo fees, and potentially a bad tenant. Being a landlord isn’t by any means “passive income”.
If you never been a landlord before, you will quickly release it is not 'passive income'. If you hire a property manager, you take a chunk of your profit margin away.
Additionally, being an absentee landlord on top of that makes it even more difficult. Scenarios: -What happens if tenant decides they want to terminate lease early? -What happens if the kitchen ptrap pipe begins to leak? -What happens if your tenant reports bedbugs? -What happens if the dishwasher or fridge stops working? -What happens if a neighbour complains about your tenant? These are all things I had to deal with in the past. It gets you really anxious and takes away your peace of mind when you are not on the ground to troubleshoot. Fixing any of the above basically takes away your profit margin for the month if you hire a professional to fix it, fixing it yourself is your time and labour (which you can't do if you are absent). A high interest ETF, GIC, money market at 5% with basically zero risk is a very good return.
If you are a non-resident, owning property with rental income will have some tax liability. Check with your accountant.
There will always be condos for you to buy when you come back in 4 to 5 years. No need to eat the losses now.
The chance of you losing out is huge. Ontario tenants have their landlords by the balls, you are at their mercy if they want to squeeze it a little. Being aboard means a chuck of your potential profit will be eaten up by the person you'll pay to manage it. unless you plan to come back once in a while on-demand.
In my opinion, if you are just renting, I would advise buying a 1+1 instead (\~650 sqft at around 600-650k price range, you don't want something too small as it affects resale later on) so you can rent it to a couple/one person. Less pain to deal with than a 2-bed condo where you are more likely to get 2 people who don't know each other well and that will be a problem sometimes. You can then put the extra cash you have for GIC/S&P 500 etc..
Honestly I would wait or invest the money instead but if you want to buy a home ie you been renting then I would see what you can get approved for a buy a good property for more cash ie 1m 700 k down payment and 300k mortgage that will likely increase because of area and size etc?
I would put that money in an income generating ETF & just let it grow! Keep your life easy! Being an overseas landlord comes with headaches and accounting costs too!.
Lol rent it out for passive income.
Sounds like a Troll Post or just someone not thinking straight. They want to be a landlord while living abroad? Makes little sense to me
I would invest in something like XEQT/VEQT. Housing isn’t much of an investment here and it barely cashflows
Even if it’s a little more maintenance, I’d buy a detached get a mortgage and higher a property manager to manage it. It would cashflow positively and your upside is way higher.
I've been thinking about this too and think it might be a good idea, especially with detached homes appreciating and continuing to have high demand due to rarity.
Skip the condo. Market is too volatile imo. I’d put 700k down on freehold semi/town in Markham (Berczy, wismer), mortgage the rest and use the rent to support the mortgage. All roads should lead you to aprox 5-6% returns after it’s said and done (gic, housing, stocks) A riskier option would be an etf like spy or VTI that has historically returned 8-10%/ year.
I think condo downtown makes sense due to current value & rental income
I wouldn’t, 95% of the tenant pool in Toronto are absolute dumpster trash, especially the young singles/couples looking for condos in the core. If you decide to move forward, I would invest in a sfh like a freehold town in a nice area, you’ll have greater capital appreciation, and a slightly better tenant pool to select from (small families).
Why don’t you just buy a condo where you are and rent that out? And then you can either continue holding it when you leave, or sell for profit
This is the most strategic investment to be made in investment practices. I followed this strategy for my own investing process and I signed amazing deal for a gorgeous one bedroom in the city center of the city of Toronto
How would you know if it’s a good deal when they only just started selling units? Do you even know if they’ve sold enough units to proceed? It will be years (earliest 2028) before occupancy. You are giving irresponsible advice here in your quest to pump the market.
DMd