I'm like totally a savvy investor! All i had to do was pick a crib and post the goods on the craiglists. CMHC hooked me up with the money stash.
I took this in front of a condo conversion in March. Hopefully this stage of the real estate cycle has passed and one day people will buy condos and houses for the shelter they provide.
A Calgary REALTOR posted about what to expect in terms of appreciation:I am concerned about the certainty in the uppercase WILL and that this was directed to a client. Consider that the REALTOR gains a commission for persuading a buyer but loses nothing if the forward looking statement turns out to be incorrect.A client recently asked me about the Royalty Review, the current flat and depreciating market, and why I think prices will continue to increase in Calgary.
Here's my response.
In 2006 prices increased 37%
In 2007 ... to date ... prices have increased 24%. (Isn't this amazing ... the media is only speaking about the drop in prices.)
In 2008 prices WILL increase 12 + %.
...
"GIT-R-DONE" summarizes the attitude mortgage brokers have getting people into non-conforming loans in Edmonton. This article in the Edmonton Real Estate weekly goes over many of the available options with these products. It describes these options as blessings for the consumer without any cautions to the drawbacks. There is also the attitude that any form of ownership is superior to renting:Rents have also escalated dramatically and rental units are scarce, leaving tenants discouraged and financially strained, looking for a better way to put a roof over their heads but hoping to stay in Edmonton.How to stay in Edmonton without renting?
non-conforming lenders, available primarily through mortgage brokers, may allow as much as 50% of the monthly income to be used for both housing and consumer debt.
Some examples of acceptable income are self-employed income, as little as one day in business, part-time employment, overtime earnings and even non-declared tips. Other commonly used income includes GST cheques, child tax, child support and alimony payments (both court-ordered and not), pensions, foster parent income, workers’ compensation payments and even rental income from a roommate or illegal basement suite.
In some cases non-taxable income received can be grossed up by as much as 25% to help qualify for the mortgage.
Another way to improve the chances of qualifying for a mortgage is by stretching the repayment period out over a longer amortization period, as much as 40 years.
Don’t talk yourself out of trying to buy because you think you can’t qualify with today’s prices. With the hundreds of mortgage products available to borrowers today through a mortgage broker, the odds are certainly in your favour!
CMHC just introduced 100% financing for 1 and 2 unit rental properties. Also 90% financing for 3-4 unit properties. See product announcement| Year | Loan Balance | Yearly Interest Paid | Yearly Principal Paid | Total Interest |
| 2008 | 533,718.19 | 37,457.29 | 2,531.81 | 37,457.29 |
| 2009 | 531,003.36 | 37,274.27 | 2,714.83 | 74,731.57 |
| 2010 | 528,092.27 | 37,078.01 | 2,911.09 | 111,809.58 |
| 2011 | 524,970.74 | 36,867.57 | 3,121.53 | 148,677.15 |
| 2012 | 521,623.55 | 36,641.92 | 3,347.19 | 185,319.07 |
| 2013 | 518,034.40 | 36,399.95 | 3,589.16 | 221,719.02 |
| 2014 | 514,185.78 | 36,140.49 | 3,848.62 | 257,859.50 |
| 2015 | 510,058.95 | 35,862.27 | 4,126.83 | 293,721.77 |
| 2016 | 505,633.79 | 35,563.94 | 4,425.16 | 329,285.72 |
| 2017 | 500,888.73 | 35,244.05 | 4,745.06 | 364,529.76 |
| 2018 | 495,800.66 | 34,901.03 | 5,088.08 | 399,430.79 |
If you received tips through your employment and they are not included on your T4 slip, report them on line 104 of your return.
However, it is very unlikely that most individuals who are paid in tips or cash declare their entire income on their annual taxes, so right out of the gate this method of qualifying has a number of possible ways to go wrong.The solution:
Because of these increasing obstacles, a number of non-conventional lenders are recognizing this growing problem and offering employees alternatives beyond just that of declaring more income to the tax man.
As we have seen in Edmonton, house prices can change dramatically over a period of two years, making it a potentially costly decision to wait until you have the perfect income documents to show the bank before you get into the real estate market.
In the August report the absorption rate just exceeds the balanced market. The blue band has been moved up slightlyt 2.1-3.6.
For September the absorption rate heads up as sales decline and inventory increases. As this value goes way outside the balanced market range the label is conveniently moved up.
Sales remained strong as buyers took advantage of a wider selection of homes available. At the midpoint for the year 13,282 residential properties have been sold through the MLS® valued at almost $4.5 billion. That is 1,712 more properties than the same time last year. Single month sales in June were up 20% from last month and 15% from June 2006.Which is still found at the end of the second paragraph at Real Estate Weekly:
Monthly payment $3000
Annual property tax $2000
Annual Increase in home value 0%
Down Payment $10000
Interest Rate 6%
Monthly rent $1000
Year comparison 10
You should Buy!It looks like you should Buy based on the assumptions you have given us.
Why? If you buy for $452842.14 (the maximum you would qualify for) you will pay down your mortgage of $442842.14 by $105493.48 over 10 year(s) with your Principal and Interest payments of $2833.33 per month, plus your property will increase in value by $0 for a total investment growth of $105493.48.
This total is greater than your total investment growth from renting, which is approximately $40328.31 after 10 year(s). This was calculated by growing the monthly savings from renting ($2000.00) plus your current downpayment of $10000.00 at a standard after-tax rate of 4% per annum.
The main problem is in the amount saved each month renting. Even if this money is stuffed underneath your mattress it would add up to $240,000. Substantially more than the 40K determined by the calculator.
Thanks to poster lukecs from Alberta Bubble Blog for finding this.
Note: Even with $10/month rent it still returns the same result.
