anonymous at VREAA 15 May 2011 11:06pm – “Know of friend’s friend who has a 900K mortgage – a couple in their early 30s, likely make under 150K. first owned a surrey condo, and then managed to borrow another $700K to buy SFH in burnaby — therefore total mortgage of 900K. some of their thinking: RE is the only way to get rich; it is cheap, only costs $3000+ per mth, subsided by renting out surrey condo & SFH basement, out of pocket is only $1,xxx!”
Local speculators; the bubble’s life-blood. Total net-worth likely a fraction of their RE holdings; will probably get completely wiped out in downturn; many like them. – vreaa
Vancouver Real Estate Anecdote Archive 
Assuming that the numbers are correct and they live in one of the homes and pay $1,xxx out of their pocket, is it then negative cash flow? Their primary residence is not an investment property, so they are just paying for their place to live.
However, the numbers in the example are most likely bogus. $900k mortgage and monthly cost is only $3000? I strongly doubt that. Even if they have the best possible rate (2.5%), then with taxes (house and condo) and condo fees (only the condo), their monthly payments (30y mortgage) must be around $4,200.
IF they have the best possible rate.
I’ve been thinking for a while now that Vancouver probably won’t see much of a decline in the market until we start seeing a significant decline in employment. The collapse of markets in the US and the PIGS coincided with steep increases in unemployment.
The other alternative is that inflation in Canada starts taking off and the BoC is forced to increase interest rates.
In any case, if the numbers claimed by this anecdote are correct, I don’t really see how this family will suffer. However as bubbly says, it’s unlikely that this is the case.
THe story is true. I don’t know the exact #s. Bubbly is right, they live on the top floor just rent out the basement.
And don’t expect speculators like this to be sensible like us, when they bragged about their investment, like almost all others, they won’t take into acct tax, insurance, & utilities. All they count is the mortgage payment. I just plugged in the number, if they do 35 years, at 4%, the mthly payment is 3,984! when they have the guts to take such a big loan, they have the guts to be on a variable rate mortgage, but i really dont know the specifcs!
Oh, I just noticed that they don’t own the condo anymore. So the whole $900k is in one house. Almost a million in the hole for the privilege of sharing a house with tenants with all the related responsibilities and risks. Sweet deal!
that’s how you know you’ve made it to the big time in Vancouver!
they bought right b4 mar 18, i totally believe they have 35 yr mortgage.
I know a girl first hand and I obviously don’t know precise numbers, but pretty darn close…She owns a 2 bedroom condo in Surrey (35 year mortgage and can’t sell for less than 380k to break even). The current renter only covers roughly 75% of her carrying costs for the place…she subsidizes the rest and she technically doesn’t have strata clearance to have renters and can’t currently get that clearance. Also, last summer she bought a new house in Surrey with carriage house over garage (35 year mortgage). She faked a car loan (worked in the car sales business for shady car dealer) to borrow 50k to come up with the down payment for Surrey home ($498,000 was purchase price) and never used that money to buy a car. She has a car payment (on top of her faked car payment), a motorcycle payment, has borrowed 10k from old employer to cover mortgage payments a few times and just got an home equity loan for 20k to pay off credit card (10k plus) and finish a kitchen downstairs so she can suite the basement…problem is she has less than 5k left on loan and hasn’t even started kitchen install..she’s now afraid she’s out of money to finish the job. She rents out carriage house, and has two roomates helping her with mortgage. She is sinking deeper and deeper in debt and it’s only a matter for time before her access to credit dries up and looses it all, but here’s the kicker…she is currently working for 38k a year plus commissions which bring her to 50k max if she’s lucky AND she was looking for friends who might be interested in going in with her on buying a 3rd house!!! She’s so f*****d and doesn’t even recognize it yet. I don’t understand how someone can borrow so much while earning so little…she’s close to 900k in debt and thinks she is getting rich!!
What a crazy story!!!
Yes crazy, but all true.
Will be headlined at some point, thanks.