“I asked our new landlords if they planned on selling. They said they considered it, but decided they were likely to end up as “wealthy land owners” if they just hung on. My husband and I are both born and raised here, and we’re never seen stranger times.”

“We’ve been in a big 100 year old fourplex near Main Street, virtually rent-controlled, for nearly 14 years. Our landlords, who are far from amateurs (a family business that includes an entire apartment building), felt that the market had “plateaued” and listed the house about six weeks ago for $1.4 M. It wasn’t exactly what I wanted to hear but I supported his decision and still do; they’ve been excellent, honest, non-gouging landlords.

I’ll admit the open houses were extremely unpleasant given how long we’ve been here; our kids have spent their whole lives here. It sold in a couple of weeks to I believe first time buyers, who have evicted us to take over our suite. After a bad couple of weeks, someone responded to one of the signs we put up in the neighbourhood and we’ve put down a deposit on a lovely place (albeit for more rent, but much nicer than we currently have, and still reasonable by Vancouver standards).

You couldn’t pay me to be in the new owners shoes. They just put down (presumably) $1.4 M for the privilege of living in a suite that rents for $1525 and on top of that have to manage 3 other suites. It’s an old house so the bedrooms broil in summer and freeze in winter, and running the microwave trips the fuse. The wood in the sunroom is rotting. The laundry is down 3 flights of stairs and around the back of the house (no joke in the middle of winter). I’m guessing the value of Vancouver houses over $1 M will drop fairly soon, given F’s new cap. Yet amazingly I’m guessing they’re over the moon at their opportunity to “get into” the market.

Our new landlords are in the their early 30’s with not particularly high-paying jobs. I’m guessing Bank of Mom and Dad had everything to do with them owning a house. I asked if they’re planning on selling it, and they said they considered it back in the spring, but decided they were likely to end up as “wealthy land owners” if they just hung on. So unless they have a material change of heart, it looks like we have some stability again.

My husband and I are both born and raised here, and we’re never seen stranger times.”

Exile on Main Street at VREAA 6 Jul 2012 7:06pm

6 responses to ““I asked our new landlords if they planned on selling. They said they considered it, but decided they were likely to end up as “wealthy land owners” if they just hung on. My husband and I are both born and raised here, and we’re never seen stranger times.”

  1. OK so there are 3 suites to be rented, let’s say for $3000. Now add in say $100K income and a 25% downpayment, which would be $350K, perhaps being helped a bit by parents and previous equity gained in a previous home purchase.

    Total mortgage $1.05MM. This is doable if nothing goes ron but is a, um, stretch. One hopes they had more than $350K to put down.

    All I can think of with this anecdote is “wealth transfer”.

    • The house is 100 years old!!! Unless the previous owner was meticulous with maintenance and repairs with several major renos, this house is probably barely standing as it is. Something going wrong is pretty much guaranteed. In such case, lower downpayment and having lots of liquidity is probably the better way to go cuz when you need money for major repairs, it’s going to be hard to get it from the bank.

  2. For some reason this reminds me of a story from the charlatan Robert Kiyosaki in Rich Dad, Poor Dad — which was my unfortunate first book in finances.

    In the story, he talks about how some kid buys a “quadplex”, lives in it and uses the “rent money” from the other 3 units to pay for his mortgage. Thereby living free!

    So maybe the new owners were just “inspired” by this story (plus some speculative mania magic…).

    • Exile on Main Street

      The RE agent was pumping the “take back a suite and rent out the rest” scenario hard at the open houses (I only got through that particular misery by visualizing her working at Walmart in 5 years time, as this was my 14 year home they were talking about). I still don’t know if the new owner was a first time buyer, but that is definitely the market they were pitching it to – calling it a “rare opportunity.” Many many professional landlord types came through the property, but not one of them bit, and no wonder – how do you make the numbers work in terms of profitability without a *massive* down payment?

      Off topic but are there any finance books you like that are reasonable accessible?

      • [OT] I’m only starting to learn about finance myself so maybe others who know better can pitch in.

        I’ve heard good things about the “Millionaire Next Door” and the “Wealthy Barber” but haven’t read them. I’ve read “Upside Downside” (Ron Dembo) — but it mainly talks about risk management and what risk is/means. (However, it was very instructive for me because I didn’t really have a definition/understanding for risk at the time.) And yeah, don’t bother w/ Rich Dad, Poor Dad (see John Reed’s commentary or various 1-star amazon review ratings).

        I’ve also read “The Big Short” by Michael Lewis, but that’s not a financial book as more of a story of the meltdown crisis of 2008 (and who cashed out on it).

        Right now, I’m less concerned about formulas (e.g. how to do “x”), I’m more concerned w/ just understanding the basic fundamentals (e.g. what’s a DRIP?).

  3. No sympathy for anyone buying anything at this point in the cycle.

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