“My uncle, a retired nurse, bought a 2br condo in Coquitlam last year and is now renting it out for $1500 a month, which will barely cover his mortgage plus fees. He is convinced that he can sell it for a profit at anytime. He knows nothing about real investments.”

“Talking with my dad the other day. He speaks a lot to my uncle, a retired nurse who really is clueless about a lot of things. He bought a 2br condo in Coquitlam last year and is now renting it out for 1500 a month, which will barely cover his mortgage plus fees.. He is convinced that he can sell it for a profit at anytime. Wonder if he can make any profit on it. Meanwhile, my dad says my uncle knows nothing about real investments (my portfolio is up 40% this year not including dividends that are reinvested) and is just buying into this bs about how real estate never goes down. There are still idiots out there.”
Dave at VREAA 18 Oct 2012 at 7:06pm

A large percentage of the local population have been led by recent experience to believe that RE is the only asset class that is safe and performs well. Contrarians know that this is a reason for caution.
– vreaa

24 responses to ““My uncle, a retired nurse, bought a 2br condo in Coquitlam last year and is now renting it out for $1500 a month, which will barely cover his mortgage plus fees. He is convinced that he can sell it for a profit at anytime. He knows nothing about real investments.”

  1. When clueless people buy, you know you’re at a market top. I met a Toronto Portfolio Manager whose claim to fame was selling gold at the top of the market in 1980. When asked why he sold when he did he said “There was a lineup of people waiting to buy gold and CITY TV was interviewing random people. The dumbest girl from my high school happened to be interviewed and she said she was in lineup because everyone knew gold prices were going to double, at least”
    I’ll always remember that story.

  2. The new bull argument is that RE investors are in it for the long run. More than five or even 10 years, in fact.

    • You had me at amateur!

    • “Undoubtedly the tightest segment of the GTA’s commercial market is multi-unit residential, given a rental vacancy rate in the City of Toronto that hovers under two per cent.”

      2% compared to what? Chart RE idiots.

    • Not coincidentally, RC… It’s why a REITs ‘blood bath’ wouldn’t surprise me in the least. That and my ‘micro’ field surveys which reveal an awful lot of untenanted prime retail/commercial.

      Speaking of ‘bloodbaths’ NA equity index futures are none too ‘promising’. To put it mildly.

      • Ralph Cramdown

        I don’t think we’re going to see a bloodbath in REITs. It’s the difference between amateur and professional management, characterized by not overpaying, specializing, keeping overhead low by having a relatively small management team looking after a relatively large portfolio, keeping the tenants happy and the properties maintained and leased, usually on a schedule such that refinancings and lease renewals aren’t concentrated in any one year.

        Sure, if the Canadian economy takes a real dump, some of these REITs would take a hit via reduced incomes and increased vacancies. Are they overbought? Probably a bit. But most of their investors are in it for the yield, and they’re one of the few games in town. Absent higher interest rates, the bloodbath can only come at the hands of an exogenous problem that reduces their payouts. 5 1/2% of the assets I manage are in REITs.

    • Ops. That chart should have been a 5yr moving average. Chart Vacancy rates are heading for the next leg up.

  3. He bought in the wrong location. Station square sold out yesterday in 1 day. Completion date 2015 lol. 4 more towers to sell. Great location but a risky investment.

  4. Dave, tell me more about this portfolio of yours…

    • Renters Revenge

      Yes! Obviously a pro fund manager, idling his time on obscure real estate discussion boards.

    • I’d like to know as well. But I would imagine the risks that comes along with it. Probably all equities incl junior penny stock.

      • Why do you guys need to know. If someone done 40% this year on his portfolio, it is a save bet that this portfolio is not going to go up in the close future, the same like RE.

    • Let’s face it, it doesn’t matter what Dave was/is invested in. It’ll either be considered too risky, too thinly traded, too small a capitalization, too low a share price, too high a yield, too low a yield, or too something else. But here’s the news: The US Fed and the BoC have made it abundantly clear to all who will listen that rates are going to be low for a long time. So you’re not going to be making any money in investment grade bonds. You probably think real estate is overpriced. That leaves three things: Commodities, which are a zero sum game played for high stakes by smart professionals, junk bonds, or equities. Take your pick.

  5. Here’s an update on REW’s House Hunter Chronicles from the Vancouver Courier. http://bit.ly/TCj2Gi Oddly filed in the Travel section by the URL. The biggest update: “But the summer lull made Elaine move the goalposts again. She went back to her banker and got approved for another $100,000 in financing. She can now buy a house priced at up to $1.2 million.”

    • “She went back to her banker and got approved for another $100,000 in financing”

      Frankly, I am amazed a the gullibility/idiocy of most people. People only care about what the bank is willing to give them or their monthly payments.
      Not an iota of financial awareness or events around them. Wow!!

      • And it is flabbergasting to think that these financial morons set the tone of the market for the ones that actually use their brains.

      • they don’t want to know and until they take a fall, there is no helping them … take 2 X 2 for risk-reward: (1) g-g (2) b-g (3) b-b (4) g-b … whichever transpires, the crucial takeaway is a clear head for next decision (because there is always going to be one unless you’re dead) … winnings/losings are ancillary … 1 and 3 are easy to process … others are extra hw … bubbles are filled to burst with #2 … unchecked, mis-attributing chance for aptitude always ends in hanging by one’s own ego

      • web bot aggregator

        House Hunter chronicle
        reads like Creative writing, with the aim to conduct a survey on the Reactions.

    • pricedoutfornow

      I’d love to see the financial numbers on this young woman! How much does she make, how much are her mortgage payments going to be? Rather than this fluff story which just casually says “in the market for a million dollar house with her mother” WTF?? Numbers, I want more numbers!

    • She is a moron. People here are a joke. No difference between rich and poor now. Just live on credit.

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