Ontario – “I have 3 rentals that i own and a house that i live in and iam only 29 years old. How can you say its a risky investment i have so little risk i want to own even more.”

“I have 3 rentals that i own and a house that i live in and iam only 29 years old. all the house make me a positive cash inflow and have made my life very comfertable. How can you say its a risky investment i have so little risk i want to own even more and build a rental empire to last me till i decide to sell. Some areas are out of control like toronto or vancover but the rest is a great bang for your buck… maybe look at areas where it is good to buy a house like most of ontario.” – Dgreen, comment at Canadian Business 20 Jul 2011 2:49pm

[sic] -ed.

14 responses to “Ontario – “I have 3 rentals that i own and a house that i live in and iam only 29 years old. How can you say its a risky investment i have so little risk i want to own even more.”

  1. At 29 he has never seen a downturn let alone a crash. No wonder he feels good. Lets chat again in 20 years time.

    Or as an old jewish friend once said. Im not buying till I see a lot more blood in the streets.

  2. My brother had several rental homes near the University of Windsor. He enjoyed many years of positive cash flow. Then the housing market took a downward tumble. Houses were no longer worth what he paid for them. The price of rent became very competitive and he had a hard time renting a lot of them. In a lot of cases, he was barely breaking even. When mortgage renewal time came around, most of his houses were worth way less than what he owed on them. He lost every one of his houses to the bank. Playing Monopoly looks good on paper but can sometimes bite you in the a**!

    • Wow I thought student slum housing near Univ of Waterloo would be relatively immune! Just curious, why did he lose all the house to the bank? Did the bank demand more cash during mortgage renewal time to make up for the fact that the house is worth less than the mortgage? Did he buy with low downpayment or the standard 20% down? If with 20% down then I’m surprised that the house prices already fell that much there?

      Also hasn’t the bulls always stated that banks in Canada will not foreclose on you and always renew your mortgage if you have been paying mortgage on time? Your story is totally in contradiction to that? How does the bulls explain this? If this becomes a widespread practice then watch out! We might not just see blood on the street, we might be flooded with a bloody river on the streets!

      • Windsor != Waterloo. Very different housing markets.

      • Ah ok, I guess I got lazy after “University of W”.

        However, my second point/question was did he buy all the houses with low down payment or the 20% down? We have been told again and again that Canadian banks will not foreclose on you and will renew your mortgage if you have been paying all your mortgage payments on time, even if you are underwater. So did your brother lose the houses at renewal time because banks wouldn’t renew or because he couldn’t keep up with the payments and vacancies?

  3. pricedoutfornow

    I’d wonder how much debt this guy has. Some of my clients think they’re doing well because they have a bit of positive cash flow. Which they won’t when 1) a tenant moves out and they can’t rent out the place or 2) interest rates go up. One guy doesn’t realize that he started out the year with a 35 year amortization, and it’s now 42 years because the mortgage payments stay the same throughout the year and when the rates go up, more gets allocated to interest rather than principal. But of course he doesn’t have a clue, I don’t even think he noticed.

    • Sounds like those wonderful negative amortization subprimes loans in US 🙂

      • pricedoutfornow

        You wouldn’t believe how many clients I have who make around $50k per year (or less) and have mortgage balances of $500k-$900k (combined principal residences and rental properties).
        No, there is no loose lending in Canada…..nope, nope, none whatsoever, we are just fine!

  4. @ space889:

    To begin with it’s the University of Windsor, not Waterloo. Waterloo region seems to be doing fine in the housing market but Windsor is a different story. The housing prices there have taken a big hit. Check out the listings on MLS – you’ll be surprised. He bought his houses when house prices were at their highest. Then, the big 3 car companies ran into trouble and there were a lot of layoffs – remember the big US bailout? Being a border town, Windsor is very tied into the automotive and manufacturing industry and relies heavily on a strong US dollar for business.

    I don’t have the details of his down payments and such. All I know is that he didn’t have a lot of equity in the homes once the market crashed – very risky (most likely from lower down payments?). I believe he was of the philosophy that real estate always goes up, never down. He was up to his eyeballs in debt and never thought he’d lose. He ran into trouble getting his houses rented, especially during the summer months. There was too much competition and he couldn’t keep up or he wouldn’t break even. In my opinion, he bit off way more than he could chew – very unfortunate. If done correctly, it may have worked out. However, not having enough money down can hurt you in the end. Real estate DOES go down.

    In Canada, banks will definitely foreclose on you. They will lock you out. When we visit, we drive by homes that have foreclosure signs and locks on them. It has happened to many people in Windsor that I personally know. It’s always safe practice to have more equity than you need – but most people already know this. You just never know what will happen. Bubbles always tend to burst sooner or later. This is a true story of real estate speculation and gambling by playing Monopoly.

    • Waterloo will take a big hit if RIM stays on the path that it is on.

    • Thanks for the info! I posted my reply to your earlier post before reading this one, so please ignore that.

      This is a very good cautionary tale which i think will be biting a lot of people here, especially since our 800 sq ft 2br condo probably costs as much if not more than the houses in Windsor.

      I wonder how the student housing will play out here since a lot of condos are bought with the intend to rent out to international students. A lot of Chinese condo buyers are banking on the international students market.

  5. It’s definitely a lesson to learn from. I can guarantee that your Vancouver condo is worth much, much more than a single detached home, in a nice neighbourhood in Windsor. If the city had more to offer (Windsor, that is), it would be a great place to buy right now. Prices are at an all time low – or so we think! Cheers!

  6. @ space889

    Check out this random listing – great neighbourhood in South Windsor:


    I believe your condo costs so much more in Vancouver. Crazy!

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