The big question

For the first time in more than four years, the average Canadian house costs less than it did the year before. Soon it will be considerably less. Even in Van and 416. But it’ll take a big drop, and a long time, for most Canadians to lose their fixation with bricks. This autumn should speed that along, with the October 25th rate hike and the universal mortgage stress test.

In the meantime, people like Devon struggle with the notion of risk.

“I have been following your blog for couple of months now and I think you are doing an awesome job,” his note starts out with the obligatory suck-up. “I do share the same view as you, that the housing market is due for a correction, so back in May I sold my house and moved in with my parents. I now have around $800K of cash that I need to find investment opportunity for.” So far, so good. Smart boy, this Devon.

“I know that you encourage a diversified portfolio (ETFs, preferred shares, bonds, etc…) that on average can make 6%/yr. But given the all-time high of the US stock market and the geopolitical uncertainty (Donald Trump), it is too risky to buy into the stock market now? At a high level, how would you construct a portfolio in this environment?

“I was thinking another option is to buy 2 condos, $400k each, and rent them out for $2k each. That would give a 6% return. The rental market is crazy hot so it shouldn’t be a problem to find tenants. I know there will be risk of bad tenant, additional expenses maintain the properties, and tax credits might not be as good as buying stocks. But as a long term investment is being a landlord a good way to investment your money?”

This is something many struggle with. They see “investing” meaning “stocks” which translates into “danger.” Meanwhile real estate looks benign and is so, so easy to fall into. Without a doubt, society has tilted in favour of properties, thanks bigly to cheap loan rates, mortgage-pimping banks and mom. But as this pathetic blog always points out, risk is everywhere. The best way to control it is to have diversification and balance, and putting all your money into a couple of condos blows up both of those principles.

If D buys those two units he’ll pay $20,000 in closing costs and end up with $820,000 invested. Condo fees, property taxes and insurance will equal at least $800 a month, and the average rent in Toronto for a one-bedder is $1,800. That leaves a return – without any vacancies, repairs or the cost of fishing iguanas out of the toilet – of $12,000 a year per unit, or 2.9% on an investment of $820,000.

But wait. That twenty-four grand is considered income in Devon’s hands, and lumped on top of his regular, working-dude wages. If he earns the average (about $80,000) his marginal tax rate is 31.5%, and he ends up paying $7,500 on the rent. Net return: $16,500, or 2%. Sucks, of course.

And what of risk? Bad tenants, condo fee increases, higher property tax or special assessments (they’re coming for glass-walled buildings) are all beyond his control. More concerning should be illiquidity and net loss – the consequences of a real estate market that can lose altitude fast. If condo values correct a modest 15%, D is screwed over for $123,000. If he decides to bail, he faces paying commission of $40,000 – if he can find a buyer.

Incredibly, there are thousands of people who do this. Blindly.

So what happens if D goes balanced & diversified with a liquid portfolio of ETFs of the kind oft described here? If the last seven years is a guide, he might make about 6.5%, with most of the returns in the form of capital gains and dividends. Given the tax breaks, his actual net return would be a tad over 5% – putting him about $24,000 a year ahead. Of course, ETF portfolios do not come with condo fees, property tax, insurance premiums or guys who pee off balconies. There is no 5% commission when you sell and no land transfer tax when you buy. And they’re instantly liquid, the cash flows a couple of days after you push the button.

But what of risk?

It’s everywhere. Trump. That Kim dipstick. Record Dow. But while the US continues to expand, and global growth has returned (both good things), investors need to dampen volatility and squish risk by having the right assets in the correct weightings. That’s why 40% in safe (fixed income) assets and 60% in growth stuff (of which a minority is exposed to US markets) makes so much sense. The same rising interest rates that can sink real estate, propel preferreds. Of course higher rates also tank bonds (keep the weighing low) while they signal more robust economic growth (helping equities).

The bottom line? Investing in a liquid, well-built portfolio beats the pants off buying two apartments. In every regard. Even now, in the Trumpian era, and especially given the trajectory of Canadian real estate.

But investing is hard. Condos are easy. And nobody can see your ETFs, the way you can point to a building. There may even be some women who are not turned on by dividend income, high liquidity or low embedded MERs. Imagine.

Think this through, Devon. We’re pulling for you.

191 comments ↓

#1 crowdedelevatorfartz on 08.15.17 at 5:57 pm

Devon.
Why catch a falling knife?
Avoid falling Real Estate for 12 months. Wait and see. THEN vultch.

If you’re nervous about the markets stay conservative with the investments.
The housing / condo markets are full of nervous owners right now.
I wouldn’t touch Real Estate right now with a Realtors “barge pole”.

#2 amateur landlords on 08.15.17 at 5:59 pm

Why would the guy with 800k cash to invest give himself the eternal headache of owning and managing rental units?

Rental units are managed best by property companies who bought when units were cheap. Period and full stop. Their ROI is much much higher than any of the idiots trying their luck at this today would ever be.

Property cos. own hundreds of units and generate income that allows them to hire management and maintenance staff and still make profits. They’re also connected with law firms if they ever need to seek a planning approval or get an eviction notice on a deadbeat tenant.

This is not even a contest or a challenge.

D-Man. Put your money to work in equities and other paper claims to generate yourself a pay cheque and leave the headaches to your advisor or the pro landlords.

#3 conan on 08.15.17 at 5:59 pm

Meh, wait til those 400k houses are 250 K. There is going to be another wave of selling. Right now its the cohort of people that bought in the last 6 months, soon it will also be the people who bought in the last year. Pray it does not get worse then that.

I guess you could try and vulch now, but that requires being a vulcher.

#4 ME Here on 08.15.17 at 6:01 pm

What of leveraging… I’d love to see a calculation including a 3% mortgage. How much would you have to borrow to make up the difference due to leveraging. OR put another way, assuming a 5% on your portfolio, how much would it take to make that 25,000…

Given you won’t get a loan for less than 5%… I don’t see a good way to ACTUALLY earn money on leverage if you’re passively investing.

If you take a mortgage to borrow $400k, you’re paying 2.5%… which is about $10k in mortgage interest… so you’re break-even. Is there ANY situation when borrowing money to invest is a good idea in a passively help portfolio generating 5%?

THAT, to me, is why buying a condo or house could make sense… you may break even… but you will, at least, have appreciation of the asset ( hopefully ).

#5 Mike on 08.15.17 at 6:02 pm

CREA, TREB, VREB and …. CHMC all at drawing boards on how to spin and pop it back up.

Lets see if they can. I think they would…..they know the game. Common man doesn’t.

#6 Perspective on 08.15.17 at 6:04 pm

The two children we adopted while guests in the USA became Canadian citizens today. For some reason nothing else matters.

#7 Penny Henny on 08.15.17 at 6:04 pm

“I do share the same view as you, that the housing market is due for a correction, so back in May I sold my house and moved in with my parents.-Devon.

///////////////////////

Unless Devon’s name is really Tony I’m not so sure his parents are thrilled that he moved back.

#8 Penny Henny on 08.15.17 at 6:07 pm

“I was thinking another option is to buy 2 condos, $400k each, and rent them out for $2k each. That would give a 6% return. The rental market is crazy hot so it shouldn’t be a problem to find tenants.-Devon

/////////////////

I think Devon just might be a Tony but he should be taking that 800k and buying eight 400k kondos with 100k down on each.
Atta’sa boy

#9 Arctic Gringo: Qalunaaq on 08.15.17 at 6:13 pm

My girlfriend thought this was a column advising on ‘how to pop the question.’ She had a good laugh, then asked, “How’s XAW doing lately?”

I know – I got a good one.

#10 eh? on 08.15.17 at 6:15 pm

“or the cost of fishing iguanas out of the toilet”

Is this some reference to a news story I missed, or is this a personal experience Garth?

#11 Boombust on 08.15.17 at 6:17 pm

#6…

Congratulations! I am a very proud Canadian and I hope they will be happy living in this wonderful country!

#12 paracho on 08.15.17 at 6:18 pm

I was a former landlord . I lived in my own place right next door to my parents in Woodbridge, Ontario . I had tennants in the basement and it was all cool. But The costs were there..repairs, property taxes to the City of Vaughan, Hydro, lawncare, maintenance, new roof..etc.
But I was always invested in the market and tried to be diversified ..with more of a preference for US equities, especially when the US and CDN dollars were par.
Garth is right once again ..even though it is hard to find good bonds with this rising interest rate environment . Preferred shares will rarely vary much in price but offer you a great yield , especially if they are Canadian . I personally own most of the banks common shares and then their preferreds for a yield boost. Plus there are some great preferred share ets that have monthly payouts .

#13 NV Landlord on 08.15.17 at 6:21 pm

Land Lord NO MORE !
Phew! Sold TWO condos.
Made it before the downturn!
Money is in the bank!
No more debt! No more tenants!
What a HUGE relief!
You know being a landlord is like being a parent!
Thanks so much Mr. Turner!

#14 -=jwk=- on 08.15.17 at 6:23 pm

General rule of thumb is each 100k in price should be 1000 in monthly rent. So 400k at 2000 you are already looking at a crappy investment, best case.

That 2000/mo condo is only with 200k to a real investor. No emotion involved, that is what it cash flows, that is what it is worth. Cash buyers won’t pay more than that. Period. if the loans stop flowing, that is what it will be worth because only the cash buyers will be in the market. This happened in many areas of the US when their loans stopped flowing. I know, I took advantage and was buying at less than 100:1!

Will it happen in Toronto? No, the CMHC keeps chugging, the money keeps flowin’ so they will not go down to cash prices.

#15 Vegan Merchante on 08.15.17 at 6:29 pm

Devon,
If you want to buy condos and rent them out, instead just buy CAR.UN and enjoy the dividends coming in. Less risk than buying just two condos with all the costs associated etc but wit would be more risk than buying the balanced portfolio..so there is a safer but still risky alternative for you. What do you think everyone?

#16 bdwy sktrn on 08.15.17 at 6:36 pm

#6 Perspective on 08.15.17 at 6:04 pm
The two children we adopted while guests in the USA became Canadian citizens today. For some reason nothing else matters.
———————-
oh god, not that damn smoking man song AGAIN!?!

just kidding, congrats, you did a very very good thing. my wife would love you. – shes adopted

#17 Tkid on 08.15.17 at 6:38 pm

Devon, let me understand this? You are half my age, have twice the net worth and you are hellbent on losing that money on the real estate racket?

No, do not buy condos or anything else real estate related. Book yourself an appointment with Garth and coast for the next ten years.

#18 I'm stupid on 08.15.17 at 6:39 pm

Devon should go enjoy life, it passes very fast. I don’t think anyone should think about their future before 26. Go to school set up your career but save nothing. Travel, socialize enjoy your youth. Ask anyone in their 50s what they would give up to be 23 again. I bet the answer is everything they have. Youth is priceless so don’t screw it up!

#19 trumbo on 08.15.17 at 6:41 pm

If the last seven years is a guide, he might make about 6.5%, with most of the returns in the form of capital gains and dividends.
=================

What if we started nine or ten years ago…when the markets were frothy (like they are now) and then dropped badly in 2009…would the % gain be as high?

(A) Over 2008, 2009 & 2010 a balanced portfolio averaged 5% annually. Not bad. (B) This is not 2008. — Garth

#20 Ron on 08.15.17 at 6:45 pm

The best thing about investing in real estate is even if your property drops 30%, the real estate board will say it went up 1% and next year should go up 5% to 10%….. Ignorance is bliss…..

We need the stock’s to put out made up fake numbers…. Get more people investing in companies that actually drive our economy….. Not driving it into the ground like debt crippling real estate…. Sucking the living life out of everything non real estate related. God help us when HELOCs get pulled in….

#21 Guy in Calgary on 08.15.17 at 6:46 pm

D, take your new found freedom and get the hell out of your parents basement. Go live a little man damn… travel, go live in some new places for a while. You’ve won the lottery go enjoy it.

Life can be so easy and D is an example of how we just try to make it hard on ourselves.

That would be a funny conversation for me, “hey mom I have $800 liquid, am an adult and have a job. Can I move home for a while?” What a joke.

#22 Rental property math on 08.15.17 at 6:51 pm

Why do you have to be attacking rental property math all the time?

At least let me give you real examples and none of this clueless don’t know how to do math buying a condo as an investment stuff you got here.

The numbers are a bit different with mutifamily rentals in hammertown. Appreciation in the last couple years has been real. Buying preconstruction has been very lucrative.
Not all millenials eat avocado toast.
Rich old Italian guys were once young Italian guys.

#23 Courage and Poo on 08.15.17 at 6:54 pm

Dear Devon,

The answer to your question is simple. Let Garth manage your money with his partners. With 800 000 k you’re getting in for sure!

#24 active on 08.15.17 at 6:55 pm

$800K liquid and living with mommy and daddy. Lol. Pathetic. Grow up Devon!

#25 Danny on 08.15.17 at 7:12 pm

Devon
Rental units are not really hot…..in Toronto
Hundreds are available in South Etobicoke…and over the last year I have always noticed many are available….never seen. ZERO….units.
Also watch out for all those hundreds of condos…now under construction which will hit the market in 1 to 2 years. …around Bloor and Islington at least 6 high rise towers under construction.
Read previous blogs to understand there will be over supply of units…number of expected people moving to Toronto was way over estimated……and all those speculators will probably decide to rent their units…as the value of their new purchases are already worth less than they bought. Check out as one the 3 Towers under construction by Tridel….whole tower sold to fast to not be speculators.

#26 Cto on 08.15.17 at 7:13 pm

Garth
How did a guy that is young enough to move back in with his parents build $800,000 in cash??? He certainly didn’t make it using your average example of $80,000 per year.
???
Maybe Devon should be writing about how to invest, because if at age 30 or so he’s made $800,000 in cash without getting three-quarters of it given to him from his parents, he beats the pants off most of us including you Garth!

#27 Cto on 08.15.17 at 7:15 pm

I think Devon should be writing this blog or maybe he’s just a troll

#28 IHCTD9 on 08.15.17 at 7:19 pm

Devon,

Condos are not like that house you owned. As condos get older, they become more expensive to own, they eventually suffer permanent depreciation, they lose their ability to command top rents, become less liquid, your tenants may become more problematic, you may unwhitingly become a slumlord instead of a landlord in time.

If you still own it when the building is making news headlines because of all the fist fights breaking out at special assessment meetings, you’re toast.

Eventually your investment will be imploded, and you’ll be left with zero expensive downtown dirt to sell.

You’ve got 800k and loads of time. Call up Garth and have him set you up. Then go get your shades, because your future is looking bright.

#29 Imalwaysright on 08.15.17 at 7:23 pm

What if Devon’s parents are in their eighties and Devon is 65?

#30 Amazing on 08.15.17 at 7:28 pm

The average “working dude” wage is 80 grand? Where, on “planet Garth”? Jesus Christ dude, no wonder you’re so anti tax, you think everyone makes 80k. Dude, step out of Bay Street for half a day and meet the real Canada, holy shit.

#31 Vanrentor on 08.15.17 at 7:32 pm

Hey Happy Housing Crash Guy, here is a shyster for you.

http://bc.ctvnews.ca/realtor-being-investigated-over-20-000-commission-fee-on-243-000-condo-1.3545413

#32 AB Boxster on 08.15.17 at 7:45 pm

So I went back to a blog that Garth wrote several yers ago when he gave some advice to somone looking to invest $50k.
He recommended equal amounts of:

-TSX Index
-S&P 500 index
-Canadian Short term Bond Index
-Preferred Share Index
-Reit Index

So I looked at a portfolio of indexes made up of ishares ETF’s and found that the YTD growth on such a portfolio, assuming dividends to end of year, and growth to date, (or lack thereof) that the return so far is 5.34%.

Pretty good, and aligns with what Garth has said over the years.
A larger portfolio should be managed by a pro (like GT) but for others looking to invest, its a good start.

#33 For those about to flop... on 08.15.17 at 7:49 pm

Market Snapshot.

I will lob a few softballs at the realtors on here and see if they want to take a swing…

M43BC

Recent properties sold or removed.

5-8388 Park Rd. Richmond Paid 840 ask 898

401 2189 w 42nd ave Vancouver paid 900 ask 968

4443 Glencanyon Dr North Vancouver paid 2.2 ask 2.39

1603 Balmoral Ave Coquitlam paid 1.3 ask 1.09

2911 w 23rd ave Vancouver paid 2.82 ask 3.0

2160 Mathers ave West Vancouver paid 3.0 ask 3.35

1847 Venables st. Vancouver paid 2.01 ask 2.02

8920 15th ave Burnaby paid 2.06 ask 1.68

3826 Coast Meridian Rd Port Coquitlam paid 1.2 ask1.14

3208 Euclid ave Vancouver paid 1.95 ask 1.79

1756 Hampton Dr Coquitlam paid 1.97 ask 2.09

2592 Nelson ave West Vancouver paid 3.68 ask 3.59

12607 96 ave Surrey paid 782 ask 799

8020 114 st Delta paid 925 ask 899

#34 Freedom First on 08.15.17 at 7:51 pm

For myself, I live a Freedom First lifestyle. Though I have owned and lived in 2 houses when it suited me #’s wise, but the reality of ever having tenants would/could never fit into my freedom first lifestyle, of course.

Devon, as people have already advised along these lines, I believe the smartest thing you could possibly do right now is to hire Garth. He will make sure that ALL of your in depth present and future financial needs/goals are met in every way. The only mistake you could make is to not trust/listen to Garth and follow his advice. Without question.

If in doubt, Garth’s entire past history of his life is readily available.
………………………………………………………………
Trust me.

#1
Freedom First
Master of Freedomonics
Its my life

#35 NoName on 08.15.17 at 7:52 pm

#151 IHCTD9 on 08.15.17 at 11:13 am
#113 NoName on 08.15.17 at 12:17 am
Interesting read, shell is venturing into electricity production.
____

They probably got a look at a typical Hydro One electricity bill and realized they’re in the wrong game.


and that was funny.

===

word for devon, dont be chicken buy those two condos and teach us all lesson.

https://www.youtube.com/watch?v=xirU0nLHY_k

#36 ccc on 08.15.17 at 7:57 pm

Hey Devon!
Steve Jobs once said that the real power he ever found money to have was to enable him to invest his time in doing those things that really mattered to him in life. Sit back and ensure yours does nothing but to bring more options your way! … and live with your parents, two partners or seven dogs, who cares?
Just remember to be who you are and do as you please because those who mind don’t matter and those who matter don’t mind.

#37 IHCTD9 on 08.15.17 at 7:58 pm

#30 Amazing on 08.15.17 at 7:28 pm
The average “working dude” wage is 80 grand? Where, on “planet Garth”? Jesus Christ dude, no wonder you’re so anti tax, you think everyone makes 80k. Dude, step out of Bay Street for half a day and meet the real Canada, holy shit.
——

I think that’s the “household income” median in Toronto, high 70’s iirc.

#38 Cici on 08.15.17 at 7:59 pm

Net return: $16,500, or 2%. Sucks, of course.

_____________________________________________

He could get that or better with a GIC or bundle of laddered GICs, with zero risk if spread across institutions. Not that I would actually recommend that either, but it would be way less work and risk (and probably more lucrative) than betting it all on condos.

#39 A Love Poem on 08.15.17 at 7:59 pm

Dev

On

Dev

On

You are clueless,
Live with mom. . .
And mow her lawn

And never get laid again.

Girls hate guys
Who only have mom in their eyes

Buy a car
Motorcycle
Or boat

Invest you money with Garth. . .
And try not to smoke.

#40 Old Ron the Realtor on 08.15.17 at 8:05 pm

I agree with Garth on this one. Condos prices can snap back negative very quickly, simply because they are more susceptible to over supply. Just count the number of cranes on the skyline and multiply by 300 to 500 units.

Kids are rolling in from all over the country and insist on renting downtown, but that supply is finite. Rents will soften.

Another trend that could effect Condo rentals is the “out migration” that is occurring as I write this. Young couples who live here are striving to land a job anywhere but Toronto.

My realtor friends within 200 km of the Big Smoke are in a mini boom. Toronto has priced itself out of the game, even with the $200 k crash in prices. Further with little chance of a rise in values anytime soon, there is less incentive for our prospective buyers to bury themselves in Toronto, debt.

So the young X-Toronto people are looking at many of the mid size cities and towns around Ontario where they can secure a pair of lesser jobs, buy a proper $300k family home and still afford to raise a couple of rug rats. None of which is easy in Toronto at the current prices.

#41 Mattl on 08.15.17 at 8:05 pm

Investing is hard? Its never been easier. Vanguard SP 500 ETF has returned over 7% the past 8 years. While I get that it isn’t balanced, it likely beats most of advisors over the long term.

Saying investing is hard is akin to Realtors saying real estate will go up for ever.

And yes, I get that there are folks that have complex tax and estate planning requirements but for the large majority of folks, especially those with lead time, investing has never been easier.

Never hold one single asset. — Garth

#42 For those about to flop... on 08.15.17 at 8:09 pm

#142 JD on 08.15.17 at 10:12 am
To #33 Dolce Vita and all who just rubbing stats and tickling own emotions!
Yep, all good numbers in the stats to talk about and tickle your “inner mini me” that supports the opinion that GVRD is crashing!
I have no stats to back me up no objective pieces of evidence to support what we have experienced in YVR area this summer during our passive and active hunt for a home for my family.
The moment you mention the stats and any references to the downturn trend, we got ridiculed and presented with listed /sold facts. I do not know what to believe anymore, but Vancouver, Richmond, Surrey and further out, all are out of reach for professional families and both members working full-time raising a couple of kids!
Since May we were not able to find any acceptable home, not price-wise nor the condition relative to the asking price!
Revivewd all options proposed:
a) Buy run down shack and rebuild – not economically feasible nor practically achievable in our situation. – always scooped up by some one instantly if priced a bit even with today’s trend – only 3 were presented.
b) A one in liveable condition & a lot of continuous reno projects – was not able to find – I guess this one is my fault as I am too picky! – can not stand main level depressing shacks, I wouldn’t be able to find the stamina to drive me to do the reno on those dog house size hobbit houses!
c) Went along with all RE agent proposals which were not many to go with.
In last four month, we definitely did not notice any crush nor inventory improvement on the dwelling quality side of things. The only short moment we observed that in June-July was some kind of pose in the musical chair game and back it was again in August. Prices did not move down! We have seen listing with gambling prices but that is evident at the time I guess not for the statistician working with or Computer that computes it.
It is absolutely impractical for the buyer to use these stats in any form.
I am not pumping RE in this post! I am the utterly frustrated peasant who worked and saved 20 years diligently & painstakingly, guided by “supposedly” proper source of information resulted in the inability to buy a home with 25% DP in the area where the roots one’s where! That is it!

////////////////////////////

Hey JD , be a bit more precise on location and budget and if I see something that matches on my travels I will let you know…

M43BC

#43 Happy Housing Crash Everyone! on 08.15.17 at 8:10 pm

Vanrentor on 08.15.17 at 7:32 pm
Hey Happy Housing Crash Guy, here is a shyster for you.

http://bc.ctvnews.ca/realtor-being-investigated-over-20-000-commission-fee-on-243-000-condo-1.3545413

—————————————————————–

Where is the government? We all know this is the tiny tip of the MASSIVE SHYSTER ICEBERG. These dirty high school drop shills have gotten caught so many times on so many different incidences . It’s even hard to get caught and yet these unqualified to flip burgers idiots are out there advising people on the biggest purchase of their lives. The government needs to shut them all down and create a college course of 2-3 years. All realtors would have to get requalified with a 2-3 grace period until the first graduates come out of college. The numbers of realtors would crash so hard as many wouldn’t even pass the entrance exams for college. I will send another round of emails and I hope some of you will join me in eradicating these vermin of deceit. The government has to get rid of these uneducated shysters.

#44 IHCTD9 on 08.15.17 at 8:19 pm

#34 Freedom First on 08.15.17 at 7:51 pm

The only mistake you could make is to not trust/listen to Garth and follow his advice. Without question.
———

Dev, not sure how old you are, but if you are young enough to have not yet tasted bitter defeat, dwell on the words above.

You are a guaranteed cash (multi?) millionaire waiting to bloom, don’t blow it.

I quit trying to do drywall years ago because I don’t do drywall for a living. It’s an art, you can’t learn it from a book, you learn by doing it every day.

Now, I leave jobs like that to the pros, you should too.

#45 L P on 08.15.17 at 8:21 pm

#6 Perspective on 08.15.17 at 6:04 pm

Good for you, and to the young people, WELCOME!

F70ON

#46 paracho on 08.15.17 at 8:34 pm

Two articles on two “respectable ” business sources both posted by realtor friends on social media today . They know this can not just be swiped under the rug anymore .
This from bnn
http://www.bnn.ca/realtors-brace-for-next-mortgage-crackdown-amid-shadow-banking-fear-1.827890

#47 Netpreneur on 08.15.17 at 8:48 pm

Why not diversfy and leverage? Buy properties with 20 % down and invest rest carefully in 2nd mortgages, sticks bonds n GICs . Sit down n choose options. N ease into them. No quick draw mcgraw actions.

#48 For those about to flop... on 08.15.17 at 8:49 pm

Here is the latest article from howmuch,that I think some of the tech people on here might enjoy…

M43BC

“See Which Tech Employees Generate the Most Money for their Company.

Employees at some of America’s top Tech companies can now know exactly what they’re worth to their bosses. On this chart, each figure represents the revenue each employee generates per year. Your standard Apple employee brings in $1.9 million, but even the average AMD employee, 20th on the list, still adds $512K to company coffers.

Analysis by Business Insider of the Standard & Poor’s 500 Index (S&P500) shows that, by sector, energy companies have the highest average revenue per employee ($1.78 million in 2016), double as much as healthcare companies ($880,000), in second place. Industrial companies and those manufacturing consumer discretionaries (i.e. non-essential goods) had the lowest ($321K and $424K, respectively). Of course, this does not just reflect inherent profitability, but also the labor-intensity needed to operate different types of business: less for a nuclear plant than a car factory, for example. Perhaps somewhat surprisingly, the IT sector ranks as fairly labor-intensive, finishing near the bottom of the scale at $484K – just above consumer discretionaries. As Business Insider explains, this is in large part because other companies in more profitable spaces like Energy and Healthcare have large, non-employee costs that Tech companies don’t have.

Still, as this graph shows, some Tech giants are among the best-performing companies overall when it comes to revenue per employee – none more so than Apple. At $1.9 million, it outperforms Facebook ($1.6 million) and Alphabet, the parent company of Google ($1.3 million).Verisign, the domain name and online security provider, came in fourth, at $1.2 million, just ahead of the average Visa employee, who generated $1.1 million in revenue in 2016. That’s about two grand more than the average employee at rival card company MasterCard. Of the tech giants, Microsoft scores the lowest, ranking 10th at an average annual revenue per employee of $748K. Disappointing? Not until you realize that you have to multiply this figure by about 190,000, the number of Microsoft employees globally. And anyway, the company recently announced it would be shedding 3,000 jobs, so the average revenue per employee looks set to rise next year – such is the cruel arithmetic of profit vs. staff. Doing slightly better on a per-employee basis are wireless equipment company Qualcomm (#9), at $772K, chip makersLam Research (#8), at $785K and fellow semiconductor specialist Broadcom (#7), at $843K.”

https://howmuch.net/articles/tech-companies-revenue-per-employee

#49 yorkville renter on 08.15.17 at 8:51 pm

Devon… dude. Seriously?

Buy 2 condos for cash – CASH – and then what? Collect pitiful rent? Pray you don’t get a professional tenant!

With that kind of scratch, there’s so much more you can do… Travel is #1 on my list.

Why not invest $500K and use $300K for property? I wouldn’t – since prices are crashing HARD and you don’t seem to be in a rush.

Why condos? Find a commercial space, in a good hood, that has a real cap rate.

Also, GTFO of your parents house. Live man – LIVE!!!

#50 Tony on 08.15.17 at 8:54 pm

Re: #7 Penny Henny on 08.15.17 at 6:04 pm

My parents are both dead and condos are one of the worst investments anyone could possibly make.

#51 GFD on 08.15.17 at 9:04 pm

Plastic fantastic!

#52 Gotta Get Out of Calgary on 08.15.17 at 9:12 pm

Within the last few blog posts, there have been some comments inquiring about the Calgary real estate market.

Saw this on a 1-bedroom condo listing today; says it all:
“Special offer, seller will pay 6 months of condo fees plus $500 move in bonus to buyer.”

I did not make this up. Contrary to one blog dog’s thoughts, Calgary’s market is falling (falling apart if you’re a condo owner).

Sure, single-family detached in upscale neighbourhoods may be selling but SFD in other neighbourhoods are staying on the market a lot longer before a sale. Only one in five lawn signs sports a “conditional/sold” sign.

The condo market has sunk lower than the Mariana Trench. Huge oversupply that even repeated price reductions can’t budge. No one is holding open houses anymore since the only person showing up is the realtor.

As mentioned in a previous comment, three units went up for sale in January in my building. Eight months later, one has sold. The other two have lowered prices repeatedly, switched realtors, and one unit is simultaneously for rent and sale. That owner wants to sell but says she can’t take anymore loss so will try to rent temporarily till a buyer shows up. That unit started at $219,888 back in January and is now listing at $198,000.

Developers may still be building new condo towers but one only needs to look at “special incentives and free gift card” offers in the sales flyers filling up the mailboxes, on the billboards and in the newspaper ads to see what is happening there. (If all the holes in the ground and tumbleweeds blowing around the partially completed foundations don’t make it obvious.) This is not a case of “if you build it, they will come”.

#53 Doug in London on 08.15.17 at 9:20 pm

@Vegan Merchante, post #15:
Yes, I agree, and also have some CAR.UN. That’s a good investment, but why not also buy some other REITs, or better yet some XRE for diversity? It sure beats the hassle of managing properties yourself.

#54 BobC on 08.15.17 at 9:21 pm

Devon,
So do you now think your a professional real estate investor/manager with years of experience?
Maybe you can become a professional stock investor/ portfolio manager and be as good as someone that has years of experience.
Take some advice from an old man. Call Garth. Send him $750k to manage for you. Yes he’ll grab 1% but think about how much it would cost you and the years it would take to do as well as he would. You do what your good at and let him do what he’s good at.

#55 IHCTD9 on 08.15.17 at 9:26 pm

#39 A Love Poem on 08.15.17 at 7:59 pm
——-

A limerick:

Young Devon had need of direction
But a condo did draw his affection
He spent all his cash, never though of a crash
And lost it all in the correction!

#56 Doug in London on 08.15.17 at 9:30 pm

@I’m stupid, post #18:
What you said is debatable at best. I had the presence of mind to start saving early, getting compounding to work for me RIGHT AWAY, and now at age 56 am retired and LOVE IT!!!!!!! I’m glad I didn’t blow my money on useless rubbish so I could retire and not have to endure the drudgery of having to work until I die. At age 50 I had no desire to be 23 again. My only regret is I didn’t follow the example of Derek Foster (see http://www.stopworking.ca) by getting out of those dreadful mutual funds and into good dividend paying stocks sooner in my life. I’m not the only one to have the good sense to start saving early, here’s someone else with the same sound, rational idea:

http://www.mrmoneymustache.com/2015/09/29/if-youre-not-getting-rich-in-your-20s-youre-doing-it-wrong/

#57 dr. talc on 08.15.17 at 9:41 pm

There will be no universal mortgage stress test.
And in the fall when the universal mortgage stress test does not materialize , I will be here to remind y’all that I was right.
But first, I challenge anyone here to explain to me why it’s a good thing to stress tests all non cmhc loans irregardless of down payment size, I’m waiting.

#58 viorelli on 08.15.17 at 9:43 pm

I good old friend from the high school days in East Van, a smarty pants (although divorced), just cashed out all his bit coins (bought at $600 a piece back in the days). Made a couple of million (tax free), sold his house in Kerrisdale, sold his business in Marpole. Gone to Thailand! Adios amigos! The socialist parasites will get nada….Good luck

#59 Wrk.dover on 08.15.17 at 9:45 pm

#30 Amazing on 08.15.17 at 7:28 pm

The average “working dude” wage is 80 grand? Where, on “planet Garth”? Jesus Christ dude, no wonder you’re so anti tax, you think everyone makes 80k. Dude, step out of Bay Street for half a day and meet the real Canada, holy shit.

++++++++++++++++++++++++++++

In my real Canada, teachers are considered tycoons.
When there is talk of raising minimum wage, eyes glaze over like during a loto commercial.

But this is an investor site. Gotta have extra to have investment funds. 80K will walk that walk, and then some. In Garth’s Canada, all are well invested!

#60 Lefty on 08.15.17 at 9:45 pm

Agree with diversification, but still say preferred ETFs are a sucker’s bet.. CPD is down 27% compared to 10 years ago, down 19% from 5 years ago. Yield is good but come on now.

Don’t buy what you don’t understand. — Garth

#61 2 Cents Canadian on 08.15.17 at 9:45 pm

Dear Devon. If you have $800k cash right now don’t you dare buy 2 condo’s now. You are like a moth drawn to the bug zapper. GTA RE will slowly sink for 2-3 years minimum. Put your $800k somewhere where it can make 5,6,7% for that 2-3 years ….. and then Maybeeee when the smart people on here call a near bottom (based on facts) …. go buy those same two condo’s you are looking at now for $600-$650K (instead of $800K). If i wasn’t’ making 10% on investment before tax on condo renting I wouldn’t bother. People have done it in the past (3 months ago) because delusional increases in appreciation more than made up for the skinny profit margins … but ONLY if you sold (a tiny % of the people actually did).

#62 Millmech on 08.15.17 at 9:48 pm

Devon,
Invest with Garth.
#30, if your not making over 80k look in the mirror,my millennial kids make 6 figures,been doing so for a couple of years

#63 Mayor of Milton on 08.15.17 at 9:49 pm

Hello Devon,

We are so happy you wrote! Please let me extend a warm welcome to our real estate and wealth building expo happening in our fine community this weekend. We would like to extend a free invitation to you and your mom to our, “Happy 32 Foot Lot” celebration happening at its new location, the CN Rail 400 Acre Distribution Centre, smack dab in the middle of our residential and school area! Just follow the signs from the Halton Waste Dump, left and you will see our wonderful event site. You can be rest assured that the Environmental Protection Agency says that events lasting under a two hour time frame are not considered harmful to you and your loved ones health. And please don’t listen to Garth, with all of that scary “investment” talk, best to leave that stuff alone, listen to your mom and consider some wonderful townhouses we have listed. You will have over 400 homes to choose from, that are currently listed for sale by the “Honest Realtor” since March. Apparently, according to him, it’s a great time to buy! And here in Milton, we trust that Honest Realtor. Most homes come standard with quality 1/4 underpadding under those lush beige carpets. We have many wonderful events planned, next to the stored oil and hazardous waste tankers – we will have our most popular game: “Guess My Frummpy Wife’s Weight Gain Since The Birth Of Our Third Child.” We will also have a sing-a-long and “Guess That Song” to the constant buzzing sound coming from our wonderful Cell Towers.

Anyway, hope to see you there. Please pick up, your “It’s Just A Blip” tee shirt from rich Mike at the door and your free pack of cigarettes from Smoking Man. Please remember, to not approach Happy Housing Crash Guy, you should consider him armed and dangerous.

See you at the Rail Depot and may I be so bold as to say, Welcome Future Miltonian!

#64 Joe2.0 on 08.15.17 at 9:51 pm

The more messed up the world gets, the people will be coming to Canada.
Don’t beleive me, ask someone from China or Spain or Africa or the USA or Russia or France/Europe or Japan or Mexico or the Philippines or Vietnam or Columbia or Iran or South Korea or……………

#65 Buffet on 08.15.17 at 9:51 pm

#41 Mattl on 08.15.17 at 8:05 pm

Investing is hard? Its never been easier. Vanguard SP 500 ETF has returned over 7% the past 8 years. While I get that it isn’t balanced, it likely beats most of advisors over the long term.

Saying investing is hard is akin to Realtors saying real estate will go up for ever.

And yes, I get that there are folks that have complex tax and estate planning requirements but for the large majority of folks, especially those with lead time, investing has never been easier.

Never hold one single asset. — Garth

Buffet recommend 90% low cost S&P 500 ETF and 10% bonds (In case u need money sell bonds). S&P 500 earns money from all over the globe and all sector so they are well diversified.

But buffet may be wrong after all he is Oracle of Omaha vs Garth who owes this pathetic blog

Buffet’s holdings are immensely diverse. — Garth

#66 Capt. Serious on 08.15.17 at 9:53 pm

If worried about the market valuation, set a value averaging path to move in over time. In value averaging you add more if markets fall, less if they rise, the idea being to follow a value path vs time to get to fully invested. (This is a slightly more complicated but better method than dollar averaging where a fixed amount per period is added.) Look it up.

#67 Honest Shyster on 08.15.17 at 9:57 pm

Honest Realtor An Ode To You:

Are you an Ox

Or

A

Moron?

You are my dear . . .both

An

Oxymoron!

#68 Dee on 08.15.17 at 9:58 pm

“There may even be some women who are not turned on by dividend income, high liquidity or low embedded MERs.”

There are plenty of us who are, though. But then we’ve got portfolios of our own. :D

#69 IHCTD9 on 08.15.17 at 10:01 pm

#40 Old Ron the Realtor on 08.15.17 at 8:05 pm

Another trend that could effect Condo rentals is the “out migration” that is occurring as I write this. Young couples who live here are striving to land a job anywhere but Toronto.

My realtor friends within 200 km of the Big Smoke are in a mini boom. Toronto has priced itself out of the game, even with the $200 k crash in prices. Further with little chance of a rise in values anytime soon, there is less incentive for our prospective buyers to bury themselves in Toronto, debt.

So the young X-Toronto people are looking at many of the mid size cities and towns around Ontario where they can secure a pair of lesser jobs, buy a proper $300k family home and still afford to raise a couple of rug rats. None of which is easy in Toronto at the current prices.

——–

A quick stab at a mortgage calculator says a couple serving doughnuts making the new Ontario minimum wage of 15.00/hr would qualify for about 235K at 4.84%. That’s a decent place, better than a 750K fungus farm in the 416.

A decently employed couple making 90K could pick up a 370K house which is a nice place.

A well employed couple making 120K could move into a 510K house. Now, that gets a place that will make your GTA buds not want to visit anymore.

If the 120K’ers can come up with a 250K down payment, they would be getting into the upper crust of small city homes. Essentially mansions, real timber frames, soaring cathedral ceilings and windows to the peak, pools in and out, hot tubs, fake palm trees and all that goes with it. 3/4 Million goes a long, long way on a 100K lot.

Just add 10K/year for property taxes…

#70 To: Honest Realtor on 08.15.17 at 10:02 pm

You smelly, foul beast. . .

You odourous bovine. . .draft animal!

Peddle your manure elsewhere!

Try a Millenial or SJW site, they love the crap you are spewing!

#71 MF on 08.15.17 at 10:02 pm

#15 Vegan Merchante on 08.15.17 at 6:29 pm

Checked out car.un

In theory you are right. No maintenance and tenant issues. No evictions etc.

But according to google, the yield is 3.78%. As with most of these ETF’s, you need to have huge sums to invest to make 3.78% worth anything in the real world.

Most people do not have those sums, so the leverage that real estate provides is attractive.

MF

#72 Jeff on 08.15.17 at 10:10 pm

Sherry Copper at Dominion Lending wrote this today on their News page. If her statistics are correct, prices are more than 8% up Y-o-Y in all hot markets:

“After having dipped in the second half of last year, benchmark home prices in the Lower Mainland of British Columbia have recovered and are now at new highs (Greater Vancouver: +8.7% y-o-y; Fraser Valley: +14.8% y-o-y).

Meanwhile, y-o-y benchmark home price increases were running a little below 20% in Victoria and just above 20% elsewhere on Vancouver Island.

Benchmark price gains slowed again on a y-o-y basis in Greater Toronto, Oakville-Milton and Guelph but remain well above year-ago levels (Greater Toronto: +18.1% y-o-y; Oakville-Milton: +12.7% y-o-y; Guelph: +23% y-o-y).”

I’m afraid it’s going to take a lot more than those 16 point measures to cool this beast.

Tell us again who pays Sherry’s salary. — Garth

#73 Happy Housing Crash Everyone! on 08.15.17 at 10:12 pm

Garth was right you dirty shyster shills. It’s not the Chinese .

https://m.canadianinsider.com/blog/poloz-forced-admit-responsibility-driving-home-prices-senate-testimony

#74 MF on 08.15.17 at 10:13 pm

#58 viorelli on 08.15.17 at 9:43 pm

You are right! Another “ex pat” who thinks he is a high roller who will no doubt end up in the red light district of Thailand and be easily exploited. Good riddance!

MF

#75 Graeme on 08.15.17 at 10:15 pm

Devon, Stay in cash for the time being. The markets are poised for a correction.

You know this, how? — Garth

#76 2 Cents Canadian on 08.15.17 at 10:16 pm

I go on kijiji often looking at old cars and motorcycles…. if I see interesting stuff I buy it, and tinker in my little man cave/shop I bought (sold a pretty big company and sold 905 places 6 months ago … have time and $ to do this stuff now).
While on kijiji I noticed “house and condo’s for sale” and houses and condo’s for rent”.
I clicked on them ….. as of today …
GTA Houses for rent – 5,800
GTA Condo’s for rent – 10,400
GTA Housesnfor sale – 25,400
GTA Condo’s for sale – 24,200
Check it out….. existing houses and condo’s, future build’s houses and condo’s. Private sales, RE agent offering’s … builders flogging future builds, title consignments….. everything. It’s a shit show.
You’ll see guys with $70-$80,000 deposits into condo’s being built in 2-3 years trying to get out ($545K for an under 500sq/ft unit???
This whole thing is way messier than it appears on the surface (and it looks pretty messy on the surface :)

#77 re., buffett on 08.15.17 at 10:19 pm

Warren Buffet is an outlier. He’s a freak

‘what counts for most people in investing is not how much they know but rather how realistically they define what they don’t know’

#78 MF on 08.15.17 at 10:20 pm

#57 dr. talc on 08.15.17 at 9:41 pm

It isn’t. I believe it’s just OSFI, after being asleep at the wheel for 15 years, trying to make it “look like” they are doing their job.

It will come and go without a peep. Nobody on the street is aware of it and everyone still believes houses only go up here in the GTA. I still say it’s a good time to buy in the fall and I wish I could.

MF

#79 oopswediditagain on 08.15.17 at 10:30 pm

#57 dr. talc on 08.15.17 at 9:41 pm
There will be no universal mortgage stress test.
And in the fall when the universal mortgage stress test does not materialize , I will be here to remind y’all that I was right.
But first, I challenge anyone here to explain to me why it’s a good thing to stress tests all non cmhc loans irregardless of down payment size, I’m waiting.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

OSFI will be stress testing every mortgage (insured and uninsured) as well as renewals because a lot of clever consumers/realtors/mortgage brokers/bankers/subprime lenders etc. thought it was a great idea to circumvent their last set of rules.

It was such a great idea that OSFI all of a sudden had to worry about the banks because so many unqualified buyers took the route of borrowing/begging for that 20% down payment to avoid qualifying at the BOC qualifying rate.

The banks/financial system is the only concern OSFI has so all of these new mortgages mean that the banks could actually have a little bit of skin in the game that would make them susceptible to the same scenario as the USA scenario.

This Universal Stress Test is just a piece of their legislation being enacted to look after the banks. Not you or any other homeowner.

OSFI will move forward with their legislation to protect the financial system (Banks) interests.

Those homeowners that are uninsured with huge down payments are simply collateral damage and those uninsured with borrowed down payments will just be damaged.

#80 Ace Goodheart on 08.15.17 at 10:44 pm

Bigger question is the Donald is indicating openly on mainstream media that he supports individuals who have been identified as KKK, neo Nazi and white nationalists.

Attempts to call the rest of us “alt left” (wtf does that mean, there is no alt left, is he nuts?)

So just going by what happened to the German stock market just before Hitler solidified his power, what does this exactly mean for US equities?

Alt-nothing. — Garth

#81 Sam the Sham on 08.15.17 at 11:00 pm

Does anyone besides myself find it ironic that everyone on this blog are rushing to tell this young guy who made $800,000 clear by investing in real estate that real estate investing is a bad idea. I would be curious to know what Devon would be worth today if he had, instead of buying, rented and invested in the stock market instead.

#82 Long Branch Apprentice on 08.15.17 at 11:29 pm

Devon,

Man up, move out of your parent’s place and put a percentage of your loot in Bitcoin.

Oh wait that’s in a bubble too right blog dogs?

#83 JWD on 08.15.17 at 11:37 pm

Call Garth and his team or invest with the greatest investor of all time – Warren Buffett. Buy brk.b
Nobody can touch this guy and financial advisors don’t dare compare. Yes, the argument has always been – what happens when he passes…. well, Steve jobs comes to mind. How did Apple do? Buffetts empire of stocks is the 800 lbs gorilla.

That said, Garth and the boys do a stand up job. Support the local talent :)

#84 sinner on 08.15.17 at 11:38 pm

# 57

yuk .. hanging in Thailand with bored and boring , fat expats .. shacked up with a 20 something girl who hates ya and only wants ya money .. . no thanks

#85 paulo on 08.15.17 at 11:41 pm

#81 Sam the Sham:

I think this young guy was lucky, he walked away from the great ponzi game with a bag of money.

The ironic part is he is one of the few,many will not be so lucky.

like winning a jackpot at the casino,if you leave you win
if you stay, the chances are that the House will take it all back !

#86 sinner on 08.15.17 at 11:45 pm

correction . # 58

#87 the ryguy on 08.15.17 at 11:49 pm

Sam the sham – What would Devon be worth if he hadn’t got out and was trying to sell today, because “real estate always goes up right?”

No one in here is suggesting that you should NEVER invest in RE. I cashed out 2.5 ish years ago, made a tidy little sum on both properties.

And guess what, probably in 2023 when the credit cycle loosens, Ill snap up a few properties and do it all over again.

That’s the game Sam.

#88 2 Cents Canadian on 08.15.17 at 11:52 pm

#81 Sam the Sham
Devon making $ in real estate.
Devon has done it right …. he got out at the right time. He got the ridiculously high growth profits out. Most didn’t. Yes RE will probably go up again…… but not for many years. There will be a good time to get back in. But it isn’t now. Too much mess to clean up, rule changes, interest rates turning upward, (for the first time in many years). No one thing is always the best investment.
Thousands of people lost $5billion+ in the Bre-X scam ….. I know a guy who made millions from Bre-X (and got to keep it) …. wasn’t greedy but sold near the peak. At 37 he built a beautiful house on the waterfront in Oakville for $2.5 million (and that was when $2.5 million was a lot of money : ) So scam or no scam …. ridiculous or not ridiculous in these “too good to be true” scenarios you can get out with the cash. People who didn’t sell their house in the last 5-6 months missed the opportunity of a live time. Doesn’t put mean you’re screwed (if you aren’t over financed and have a stable job) …. just means you missed an opportunity.

#89 Dissident on 08.15.17 at 11:54 pm

HAHA, I have a meaty treat for you dogs.

Just finished reading a sad post on a FB real estate page. Some guy is trying to unload 4 condos he bought in B.F.-nowhere. And assignments are now illegal. *womp womp* He’s even offering $20K off the original sticker price for each one :D :D :D But nobody’s buying. Where is Clarington anyways? :D

Saw some other “assignment sales” on there for million dollar McMansions. Just sad. That’s what you get when you have “big eyes, little stomach”.

#90 DON on 08.16.17 at 12:07 am

#29 Imalwaysright on 08.15.17 at 7:23 pm

What if Devon’s parents are in their eighties and Devon is 65?
*****************

My first thought as well!

#91 rjrt81 on 08.16.17 at 12:23 am

#74 MF on 08.15.17 at 10:13 pm
#58 viorelli on 08.15.17 at 9:43 pm

You are right! Another “ex pat” who thinks he is a high roller who will no doubt end up in the red light district of Thailand and be easily exploited. Good riddance!

MF
——————————————————————-

You clearly have never been to Thailand.

#92 Dee on 08.16.17 at 12:58 am

#57 dr. talc on 08.15.17 at 9:41 pm
There will be no universal mortgage stress test.
And in the fall when the universal mortgage stress test does not materialize , I will be here to remind y’all that I was right.
But first, I challenge anyone here to explain to me why it’s a good thing to stress tests all non cmhc loans irregardless of down payment size, I’m waiting.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

OSFI will be stress testing every mortgage (insured and uninsured) as well as renewals because a lot of clever consumers/realtors/mortgage brokers/bankers/subprime lenders etc. thought it was a great idea to circumvent their last set of rules.

It was such a great idea that OSFI all of a sudden had to worry about the banks because so many unqualified buyers took the route of borrowing/begging for that 20% down payment to avoid qualifying at the BOC qualifying rate.

The banks/financial system is the only concern OSFI has so all of these new mortgages mean that the banks could actually have a little bit of skin in the game that would make them susceptible to the same scenario as the USA scenario.

This Universal Stress Test is just a piece of their legislation being enacted to look after the banks. Not you or any other homeowner.

OSFI will move forward with their legislation to protect the financial system (Banks) interests.

Those homeowners that are uninsured with huge down payments are simply collateral damage and those uninsured with borrowed down payments will just be damaged.

——————

And how do you know all this osfi info? Is it just a guess?

#93 Ian on 08.16.17 at 1:21 am

Best post ever Garth!!

I am having a full-tilt argument with three property bulls simultaneously on my Facebook right now. I keep referring them to your site. Apparently I’m not getting much traction.

It must fall short of their literacy standard I guess.

#94 Ian on 08.16.17 at 1:25 am

#57 talc

Good to hear you’re operating in the real world.

Happy 2% Stress Test to you!!!

#95 Finally on 08.16.17 at 1:46 am

We closed the house today after waiting for 117 days. We were worried that the buyer was going to walk. This might sound fictional but the buyer became our friend 3 days ago and we even helped her with the move. She revealed to us that she did consider walking but decided not to as she was afraid of a lawsuit. This is definitely a happy ending for us but not everyone is as fortunate.

#96 Linda on 08.16.17 at 1:53 am

I’m with Garth on this one. Devon should invest the cash & wait out the coming meltdown. If he wants the thrill of ‘ownership’, maybe there are funds out there (are there REITs made up of property managed condos/apartment buildings?) so you get your real estate fix w/o the issues of having to be a landlord & deal directly with tenants.

Also I trust that Devon is paying his parents rent – for sure he can’t say he can’t afford to do so with $800K in cash in his account.

#97 sam on 08.16.17 at 2:24 am

#6 Perspective – My salute to you. God bless you in a Godless society.

#98 SoggyShorts on 08.16.17 at 2:43 am

#57 dr. talc on 08.15.17 at 9:41 pm
There will be no universal mortgage stress test.
And in the fall when the universal mortgage stress test does not materialize , I will be here to remind y’all that I was right.
But first, I challenge anyone here to explain to me why it’s a good thing to stress tests all non cmhc loans irregardless of down payment size, I’m waiting.
*********************************
If you are going to loan someone money at 2% but you think the rate is going to be 4% later, shouldn’t you check to make sure they can still afford it at 4%?
Seriously it’s pretty obvious.

#99 SoggyShorts on 08.16.17 at 2:46 am

#81 Sam the Sham on 08.15.17 at 11:00 pm
Does anyone besides myself find it ironic that everyone on this blog are rushing to tell this young guy who made $800,000 clear by investing in real estate that real estate investing is a bad idea. I would be curious to know what Devon would be worth today if he had, instead of buying, rented and invested in the stock market instead.
******************************
Would you tell a lotto winner to go buy some scratch n’ wins?
Those who bought a cheap house and managed to get out before the correction started won the lotto. With all of what’s happening now (stress test, higher rates etc) trying to win the lotto twice would be a fools errand.

#100 RW_Z on 08.16.17 at 2:56 am

“moved in with my parents + have around $800K of cash”

Disgusting. Also suggestive of a backstory.

#101 Freedom First on 08.16.17 at 3:23 am

#79 oopswediditagain

Great post! Very very very true too!

And I could not have worded it better!
…………………………………………………………
Truth & reality are extremely difficult for the ignorant, the arrogant, or the precious snowflakes to hear.

…………….Almost impossible to accept.

…………….Yet impossible to escape.

#102 Dolce Vita on 08.16.17 at 3:52 am

Speaking about the “The big question”, what is happening to GVRD RE in the last quarter?

I assume calcs below compare peak sales to a low sales period, still, numbers are not good.

Went to Zolo.ca, pulled all their unit sales and avg. selling price for Vancouver, Surrey, Burnaby, Richmond, Coquitlam, Langley and Delta today AND then summarized it in Excel (any GVRD city with a population > 100,000) and got these summary results (overall for Condo, Townhome and Detached, also have individual data for each property type and for each City in calcs):

May 17 vs. Jul 14 to Aug 12 (almost a Qtr’s worth of data)

% Avg Sell Price Change -18.4% (1.024 MM to 865.4 K)
Qtr Total $ Sales Change -2 B ($4.19 B to $2.16 B)
% Qtr Total Sales Change -48.5%

If any of you want to play with the Excel file with the above calcs & verify using Zolo.ca, this DropBox link should let you view & download the file (copy entire link, not just the underlined portion, if it is not all underlined – should work, then again, have not used DropBox in quite a while):

https://www.dropbox.com/s/pzsg26ygphz05kf/Zolo.ca%20RE%20Data%20May%2017%20to%20Aug%2012.xlsx?dl=0

Saretsky, a YVR Realtor and VanCityCondoGuide owner using MLS data shows a 19% drop in total BC RE July 2017 vs. July 2016 ($56.4 B vs. $45.6 B):

http://vancitycondoguide.com/total-dollar-volume-falls-19-across-bc/

What, on God’s Green Earth is going on in YVR?

I cannot believe that the Zolo.ca data is that wildly out from MLS data that only Realtors have access to.

#103 Frank on 08.16.17 at 4:13 am

On #65 Buffet: The SP 500 index is not one asset. Its a capitalization weighted index of the 500 largest US companies. Its long run return since 1870 has been 6.6% plus inflation. And the long run inflation rate has been 3%.

There is a long run 1.5 to 2 % edge if you invest in the Mid Cap 400 rather than 500. And a further advantage if you pick small value companies or an index of them. Two small value indexes are XXM.b, and JKL Both hold US companies. US markets to this point have performed the best over extended periods of 15+ years.

The SP 500 or SP 400 or major small value indexes should by far outperform over 15+ year periods any other mix of market traded investments. If you doubt this see http://www.cfiresim.com a monte carlo simulator with all the data back to 1870. The more bond funds you own the worse you do. And the safe withdrawl rate is 2.5 to 2.75% not 4%. You can see that also with the simulator.

Warren Buffet would have a concentrated portfolio of his 10 to 12 best ideas. He has stated this. His portfolio size forces diversification. A single ETF such as the Mid Cap 400 index with 400 companies, is a lot of diversification. People confuse US traded companies with where they receive revenue.

The source of revenue for US traded companies is around the world. And many of the companies are foreign as well. But they have US regulatory standards to meet. So the Chinese companies that list in the US gain more market exposure in return for more scrutiny than similar in China.

Stock investing is a roller coaster ride. You have to deal with the emotions in other ways than by buying bond funds, preferred share funds or similar. Major US market indexes are currently expensive, and will correct. The long run SP 500 P/E is 14.2 It would be smart to focus on small or mid cap value right now.

There’s nothing special about dividends. Dividends should only occur when the company believes that you can invest the cash at a greater return than they can. Its a stagnant business if you’re receiving large dividends. Dividends cause immediate taxation, rather than leaving the value in the company, for tax deferred capital gains. The gross up on dividends will also push you into a higher tax bracket on your other income.

Concentrated portfolios are better if you have the patience measured in years, and they are correctly selected. Both xxm.b and jkl are Morningstar indexes with similar criteria and investments. However xxm.b is a much smaller collection of companies, leading to a better expected outcome.

#104 Reality 1 on 08.16.17 at 4:34 am

Morneau and Truedope met Warren Buffet 2 weeks before Buffet “saved” Home Capital Group (HCG).

They claimed they did not discuss the HCG file with Buffet – and I do believe them.

However, what they DID discuss that was they were going to implement “stress tests”.

Buffet understood that this would drive people to ‘alternative lenders’.

No risk as he was getting this info from the Finance Minister and the Prime Minister of the country !

Ergo, HCG receives an investment from Buffet right before the “stress tests” are to be announced at a knock down price.
How nice for Warren.

Stress tests in one form or another are a done deal.

Socialists Morneau and Truedope (tax the rich socialists) giving perhaps the biggest capitalist out there advantage to help himself to ‘the little guy’.

These people make me sick and will make Canadians a lot poorer.

#105 Reality 1 on 08.16.17 at 4:45 am

to # 57 Dr. Talc

Read my first post in this thread.

I put more belief in Buffet investing up to $ 390,000,000 in HCG after a visit from Morneau and Truedope than I do in the factually unsupported bleatings of a financial nobody on a free blog.

Figure it out man – Stress Tests in some form are on their way.

No way are they going to let their new oligarch friend down.

#106 Reality 1 on 08.16.17 at 4:53 am

to # 65 Buffet

What is it with yoou people – you think Buffet is some sort of investing altruist ?

Buffet owns a lot of positions in S&P 500 companies and other related indexes and the bonds thereof.

Of course he tells people to invest in it – its good for his positions.

Or did you just want to blindly follow the oligarch, figuring he was looking out for you ?

#107 Reality 1 on 08.16.17 at 4:57 am

to # 64 Joe 2.0

Maybe, but it won’t hold prices up.
It hasn’t anywhere else on the planet once prices began to fall.
But, hey, by all means keep on dreaming.

#108 FLHTK on 08.16.17 at 5:03 am

Devon, do the right thing….invest in a diversified portfolio sit back and collect your 6.5% which is about $52,000 a year! Invest that 52k back in for around 5 more years and build it up even more to over a mill and then retire and live off the profit! It’s a no brainer…..i would love to be in your shoes…jealous AF

#109 Oft deleted much maligned not politically correct stock picker on 08.16.17 at 5:42 am

Sorry…..6.5% on a million is chump change…..less than inflation return….a recipe for a dry kibble diet in your old age. Forget what your lying govt says about inflation stats that exclude the things that house you, feed and clothe you. Yes….inflation on TShirts from Bangladesh is zero…..but food costs have doubled in five years to where currently seniors are eating garbage and families boil a magic soup pot behind closed doors. I’ve personally witnessed both…..your average Canadian is struggling to eat as well as they did ten years ago…..and food inflation will double again in five years when carbon taxes and electricity shocks really bite in.

I’m hoping for a real shock…..the death of NAFTA WHEN ITS FREE AND FAIR TO CHARGE CANADIANS ANYTHING AMERICAN AND MEXICAN PRODUCERS CAN GET AWAY WITH. Justin Trudeau has designed a wish list of feminism, obama legacy environmental charges and other liberal wacko fairy dust in order to sink the treaty negotiations…..thinking snubbing Trump will make him look good…..to hell with Canada.

6.5% is a kibbles retirement program on a million dollars. 5 million OK……but any less and you’ll join a long line of seniors being run out of your houses for tax arrears. If you can’t sleep at night with a portfolio of stocks set to earn 40% through nightmarish volatility….I suggest scotch or Ativan……the stock mechanics recipe for success.

#110 maxx on 08.16.17 at 7:07 am

#1 crowdedelevatorfartz on 08.15.17 at 5:57 pm

“…Avoid falling Real Estate for 12 months. Wait and see. THEN vultch….

I wouldn’t touch Real Estate right now with a Realtors “barge pole”.”

Absolutely agree.

#111 Gravy Train on 08.16.17 at 7:30 am

“Is a subpar golfer good or bad?”

“If I spend 100 minutes with Geico, will I get free car insurance?”

“The five-second rule does not apply when you have a two-second dog.”

#112 Reality 1 on 08.16.17 at 7:30 am

It absolutely amazes me that people can even think about buying a dwelling at 2 to 3 times its historical value when

1) they complain about rising taxes

2) they complain about bad prospects for high paying jobs

3) they complain about Trudope giving away billions

4) they complain about rising costs of living

5) they complain about the expansion of the overly costly civil service

6) they complain about the costs / impacts of immigration (their kids can’t get jobs and there are 400,000 TFWs pressuring wages, billions spent on new immigrants social costs)

7) interest rates are rising and credit availability is contracting (hello, stress tests ?)

8) Canada is becoming less and less competitive globally (think carbon taxes , electricity rates, etc.)

9)Virtually every metric of the economy and taxation levels indicate that disposable income is / will be shrinking

10) up to 50 % of Millennials are living at home because they can’t afford to form households

11) Boomers are undersaved massively for retirement and will need to sell homes to fund themselves

12) the Boomer cohort is about to stress the system with all their demands on health care, pensions, etc.

I could go on and on and on.

The very issues that they are complaining about (with justification) will undermine the price of residential real estate !

Every issue mentioned above (and many more) will reduce DISPOSABLE INCOME, upon which real estate values, in the last analysis, depend !

How can any sentient adult not see this.

Are people that are smart enough to hold a job, drive a car, read a book, raise kids, etc. really this stupid ?

Reality bites and its about to tear a lot of Canadians a new a*#^hole.

I have never witnessed such widespread delusion, except that is for every other bubble that I have witnessed in my life.

#113 maxx on 08.16.17 at 7:31 am

@ #5

Only a realtard, or someone who got completely snookered by one would (repeatedly) come up with this drivel.

The cavalry ain’t comin’ to save the day. It (finally) figured out that the realtard industry very nearly destroyed the economy.

As for potential buyers, it would appear that they are waking up.

“Spinning and popping” economic balance is the way forward.

Sorry. :-)

#114 MF on 08.16.17 at 7:57 am

#91 rjrt81 on 08.16.17 at 12:23 am

Got a problem with my post?

The country is known as a destination for western men looking to exploit impoverished women.

The worst offenders are usually older wealthy men, but younger losers are also at fault.

There are countless stories of these men being victim to scams, being exploited, ending up in jail, or worse.

My GF was approached a few times by western men while living in South East Asia before she came here (The Phils, Singapore though). The guys were usually someone who struggled with women for some reason or another. Most were wealthy and older, again.

Speaking of my GF, she’s going through the rigorous process of immigrating here for more opportunity. The name of the game in those countries is usually to leave as soon as you can and avoid poverty, corruption, natural disasters, disease, etc.

They are always proud to become Canadian. The fact that our current temporary elected government is slightly left leaning is 100% ignored for the stability Canada provides.

When someone calls out Canada as “socialist”, and wants to leave I think they are delusional.

So again, good riddance.

MF

#115 Asterix1 on 08.16.17 at 8:22 am

http://business.financialpost.com/real-estate/torontos-existing-homes-market-is-seeing-a-massive-decline-in-prices-or-is-it/wcm/0e166cef-f554-420e-bf99-25fdff3e51c4

FOMO QUOTE: Derek Holt, Scotiabank Economics:
“The sales numbers do show the market (correcting) but I do think in my heart of hearts that it’s going to be a transitory shock (in Toronto) like the one in Vancouver. You will start to rebound.”
___

What Vancouver rebound? Yes, prices went up for a while after their new regulations, then way back down! Vancouver is now -0.5% year over year.

The RE industry will try anything to get suckers back in the market! More lies..

#116 Spaccone on 08.16.17 at 8:53 am

#80 Ace Goodheart on 08.15.17 at 10:44 pm

Attempts to call the rest of us “alt left” (wtf does that mean, there is no alt left, is he nuts?)

==========================================

I prefer loony left and loony right. I know there is at least one prominent loony right on here though he toes the line–did not really get the sensation there was much of the loony left/SJW types here due to how civil it generally is (it must be the 0.5% of the 1% of comments Garth deletes).

#117 Reality 1 on 08.16.17 at 8:57 am

to # 114 MF

“The fact that our current elected government leans to the left….. ”

Leans to the left?
Compared to who – Venezuela ?

Of course you don’t think of Canada as socialist – why would you criticize a country who may let your “girlfriend” immigrate here.

Biased much ?

Got news for you, I live abroad mostly and literally everyone outside Canada sees it as a “socialist country” the same as Holland / Sweden / Denmark , etc.

Ever hear of Canada’s socialized medical system ?
Seems everyone else has.

#118 Al on 08.16.17 at 9:04 am

Devon you should buy real estate with that money.

Anyone who is truly wealthy has gotten their through either running their own business or through real estate.

But if you buy you must have a long term horizon.

Also, I don’t recommend going the condo route.

I own real estate..detached homes..and to me this the way to go.

Firstly, they go up in value (over the long term) more than condos or semis

Secondly, the condo fees are a killer.

Lastly, the synergistic write offs are not there with a condo. Meaning…if you also owned your own home there are bog time synergies with maintenance and capital expenses.

Stocks are like little league and real estate is the big leagues…the pros from a wealth buidling perspective.

I would recommend holding off for a bit though.

Buy in st catahrines or vacation rentals on lake Erie and plan to hold for the long haul. Toronto is to dam high still. Maybe one condo in toronto and a few places in niagara region.

#119 IHCTD9 on 08.16.17 at 9:08 am

#71 MF on 08.15.17 at 10:02 pm

But according to google, the yield is 3.78%. As with most of these ETF’s, you need to have huge sums to invest to make 3.78% worth anything in the real world.
____________________________

Or time.

A 25 year old who throws 500.00/month at 3.78% till he’s 65 will be sneaking up on 600K in the portfolio by retirement.

Get the wife to do the same, now you’ve got near 1.2 Million.

Now add in 900.00 CPP (assuming you’ve both worked all your lives) and 800.00 OAS for you and the wife.

That’s a tidy 81K per year combined retirement income without even drawing down the 1.2 Mil principal. Most folks would call that plenty. Plus any kiddies would get 600K after taxes when you’re gone if you never drew it down.

Proceeds from making excuses and doing squat: $0.00

#120 Happy Housing Crash Everyone! on 08.16.17 at 9:09 am

#115 Asterix1

Realtors are shysters who lie.
Scotiabank Economics:
“The sales numbers do show the market (correcting) but I do think in my heart of hearts that it’s going to be a transitory shock (in Toronto) like the one in Vancouver. You will start to rebound.”

” I do think in my heart of hearts”
I think in my heart or hearts? What? What great proof. What great numbers. what great logic. These shysters have nothing . They tell stories because they can not back their fiction and hope with anything .These Shyster should be locked up for financial crimes against Canadaand Canadians.LOL I’m my heart of heart…shyster

#121 Reality 1 on 08.16.17 at 9:14 am

at # 114

You don’t get out much do you ?
Nor do you have any REAL life experiences – its obvious from the way you describe Thailand and other cultures you really know nothing about.

How many countries have you visited or lived in outside of Canada and for how long ?

You repeat ‘stories’ that you have ‘heard’ and talk with such authority about things that you yourself have never experienced.

Oh yeah, you hooked up with a Philippino girl (watch what happens when she gets her papers – your life is about to change buddy) who wants to emigrate from her hell hole country so now you think you know something.

Ever made enough money to pay over 50% income tax on ? Yeah, then maybe you will get a clue about socialism.

Women get hit on all the time all over the world. You’ve been in your Canadian bubble way too long, but I suspect you’ll get a real education with your new “friend”.

#122 Dissident on 08.16.17 at 9:23 am

See, the thing with investing in general is that you have to have some cash to start with. You need money to make money. The point of investing is not to generate abundant cash flow, because most people don’t have enough cash to make that kind of noise, but to save your average savings in a place where it will appreciate in value slowly over time, dodging small incidences of risk.

People see real estate as a quick buck. An easy, dumb quick buck. Anyone can do it. Even Donald Trump. Even highschool drop outs. But, the market is fickle. So it has greater risk because you are trying to get in and out in a short span of time, whereas investing is the opposite; its there for the long haul, not the short gain.

People like Devon obviously haven’t made this distinction yet. He already won the real estate game by selling high. Why go back to the table to lose what he gained by buying more of the same when its value is dropping? That would be very foolish, and misguidedly greedy. Avoid the risk of real estate, now that it has clearly revealed itself to be in the downturn. Take your spoils and invest them for the long run in risk-averse investment vehicles. Don’t give the house your chips.

#123 BillyBob on 08.16.17 at 9:35 am

#84 sinner on 08.15.17 at 11:38 pm
# 57

yuk .. hanging in Thailand with bored and boring , fat expats .. shacked up with a 20 something girl who hates ya and only wants ya money .. . no thanks

====================================

Hahahah! The jealousy rings through clear as day! Someone is demonstrating their clear lack of experience actually ever traveling to Thailand. Spouting some tired old stereotype to make yourself feel better about your own pathetic life is just, well…pathetic.

Seems to me like some mirror-gazing is in order – you’ve just described any typical Canadian suburb. Filled with fat people who only want to obsess about real estate – please, try and provide an example of something more boring? Except, of course, the Canadian version lacks the 20 something Thai girls and has way crappier weather. There may be some shady expats but they’re certainly anything but boring. Someone is showing their ignorance.

MF – isn’t that the guy who’s managed to make every incorrect investment decision, ever? Now an expert on expat living because he has a Filipino g/f, is that it? Of course there are gold-diggers, climbers, and predators in Asia. I guess there aren’t any in North America? lol

Embarrassing. Writing from Denpasar on layover as we speak. And I can tell you, there is much about the Far East to recommend it to the losers who’ve never stepped beyond their local Tim Horton’s.

Please, do write and continue to say how much you’ll miss the tax dollars of those who’ve left, MF. We’ll keep putting home ownership out of your reach from beyond the borders.

Once the massage is finished, that is.

#124 Ole Doberman on 08.16.17 at 9:42 am

Sounds like prices are finally following slow down in sales. Biggest drop since 2008, as per Bloomberg:

https://www.bloomberg.com/news/articles/2017-08-15/canadian-home-prices-tumble-most-since-2008-recession-on-toronto

#125 Ole Doberman on 08.16.17 at 9:44 am

#52 Gotta Get Out of Calgary on 08.15.17 at 9:12 pm

Within the last few blog posts, there have been some comments inquiring about the Calgary real estate market.

Saw this on a 1-bedroom condo listing today; says it all:
“Special offer, seller will pay 6 months of condo fees plus $500 move in bonus to buyer.”

I did not make this up. Contrary to one blog dog’s thoughts, Calgary’s market is falling (falling apart if you’re a condo owner).

Sure, single-family detached in upscale neighbourhoods may be selling but SFD in other neighbourhoods are staying on the market a lot longer before a sale. Only one in five lawn signs sports a “conditional/sold” sign.

The condo market has sunk lower than the Mariana Trench. Huge oversupply that even repeated price reductions can’t budge. No one is holding open houses anymore since the only person showing up is the realtor.

As mentioned in a previous comment, three units went up for sale in January in my building. Eight months later, one has sold. The other two have lowered prices repeatedly, switched realtors, and one unit is simultaneously for rent and sale. That owner wants to sell but says she can’t take anymore loss so will try to rent temporarily till a buyer shows up. That unit started at $219,888 back in January and is now listing at $198,000.

Developers may still be building new condo towers but one only needs to look at “special incentives and free gift card” offers in the sales flyers filling up the mailboxes, on the billboards and in the newspaper ads to see what is happening there. (If all the holes in the ground and tumbleweeds blowing around the partially completed foundations don’t make it obvious.) This is not a case of “if you build it, they will come”.
——————————————————-
Thanks for the anecdotal evidence. I think Calgary peeps are coming to terms with the grim reality oil is NOT coming back.

And now that the twin towers (Toronto/Vancity) have fallen the psychological supports are causing an unhinging in sentiment.

#126 Reality 1 on 08.16.17 at 10:18 am

at # 123 BillyBob

see my post about # 57 MF at comment # 121 this thread today

totally agree with you – Canadians live in a bubble and talk like they know the world that they have never even visited.

Where are you based now ?- just interested as am seriously looking to give up my part year European place to move to Thailand / Vietnam for at least 6 months / year and establish my base there.

Would like to email you / speak to you about where is best in your opinion.

From your attitude and posting contents, I think we have much in common, so your opinion would be very relevant to me. Lived in Alberta and Ontario in the past and have serious reservations about ever returning there to live.

Thanks for any help / direction you could point me in.

#127 n1tro on 08.16.17 at 10:21 am

#30 Amazing on 08.15.17 at 7:28 pm
The average “working dude” wage is 80 grand? Where, on “planet Garth”? Jesus Christ dude, no wonder you’re so anti tax, you think everyone makes 80k. Dude, step out of Bay Street for half a day and meet the real Canada, holy shit.
————————————————-
World is changing, get on board or be left behind. If you aren’t making on average $80K, ask yourself why that is?

Considering that green peas coming out of universities are getting $45K-$60K and can’t even tie their own shoes without a merit badge, a more experienced person should be pulling in more.

If you stayed at 1 company for longer than 5 yrs even with title changes, you more likely fell in the HR/corporate bullshit where they have only increased your pay by 5-15% off your *crappy* starting base salary while hiring someone with the exact same experience as you and paying them the “market” rate.

I’ve seen this over and over in the corporate world.

#128 paulo on 08.16.17 at 10:28 am

Devon should keep his powder dry for a few month’s:

Nafta negotiations, real estate crashes, possible big changes in the white house.
fact of the matter its a risk on environment.

cash could defiantly be king shortly, but make your plans get a investment adviser, follow recommendations re properly balanced portfolio’s and
cut your teeth in the new year provided there is more clarity on the above issues.

#129 Victor V on 08.16.17 at 10:31 am

Why Some Toronto Neighbourhoods Are Likely to See Prices Fall Even Further

http://www.movesmartly.com/2017/08/why-some-toronto-neighbourhoods-are-likely-to-see-prices-fall-further.html

#130 Tulips on 08.16.17 at 10:33 am

#6 Perspective on 08.15.17 at 6:04 pm
————————————————-

Congratulations to you and your kids! Wishing your family strong attachment, with experiences and joys that material things will never bring.

#131 NoName on 08.16.17 at 10:42 am

Interesting read

https://www.bloomberg.com/news/articles/2017-08-16/trump-says-amazon-does-great-damage-to-retailers-shares-fall

#132 Chris on 08.16.17 at 10:43 am

I firmly believe that 99.9% of all these people who are even considering becoming landlords to rent out an ‘investment’ property or just to rent out their dwelling because they can’t sell it now for a profit have absolutely NO idea what they’re getting themselves into.

I didn’t several years ago. Rented out my house after I moved away because I was underwater, and what a nightmare dealing with tenants. After 6 years, I sold the house for exactly what I paid for it, the the RE agents made just as much as I did on it, which equated to about 0.6% each year. Not worth the headache by a long shot.

I feel that all of these people that are current landlords (often not by choice) are just dreaming of the day they can sell their property to break even now and the second their 5 year term is up, they’re gone. I know tons of friends in Calgary and Saskatoon like this. They hate renting out their places (and often for negative cash flow every month), but they do it because they didn’t want to take the initial loss on their place… So they rent it out, build up a little bit of equity, and hope that one day soon they can sell and never become a landlord again…. I know I did.

And that partially explains why house prices in Calgary haven’t crashed and burnt. Rents have… But it’s because all these single people that got hitched moved into 1 of their homes, and rented out the other one, and still do. They refuse to sell home # 2, so they rent it out for anything they can get, and are subsidizing rents big time right now and will do for a very long time… At least until they can break even on the sale of their 2nd home. So I personally see house prices in Calgary, Edmonton, Saskatoon, Regina, eroding, but at a very slow pace, which is basically what has been happening for several years already.

Stocks, bonds, etf’s, private equity, REITs, etc all NEVER call you in the middle of the night with a broken pipe, or to ask for a reduction in rent, or damage your stuff.

Think twice people! Leave the landlord work up to professionals (and no, you’re not a professional nor will become one).

#133 Keith on 08.16.17 at 10:44 am

#117 Reality one – If your friends lump Canada in with Scandinavian countries, they don’t know much about what happens in a socialized democratic state that doesn’t happen in Canada.

1. Five or six weeks vacation for every worker, every year
2. Socialised drug care
3. Shorter work week
4. Better pensions.
5. Cheaper or free post secondary education.

Canada is far closer to American capitalism than it is to European socialism, so the characterization of Canada as “leaning left” is more than fair. Dozens of billionaire Canadians are not emigrating despite the taxation.

#134 Asterix1 on 08.16.17 at 10:49 am

#124. That Bloomberg article is also a joke!

The title: Canadian Home Prices Tumble the Most Since 2008 Recession
The sub-title: But economists see evidence the worst declines may be over

Which economists? Ohhh, they meant the 1 economist that they quoted in the article. Good old Derek Holt at Bank of Nova Scotia.

The journalist also mentions:
– “Tuesday’s figures may also signal the worst of the recent slowdown is over”.
– “Vancouver’s experience may provide a precedent for Toronto”

REALLY! Could they explain how? The numbers do not indicate that at all.

#120. I know! Again, good old Derek Holt at Bank of Nova Scotia saying “I think in my heart or hearts?” Bunch of liars, they should be sued. Same for the MSM for printing these garbage articles (zero analysis).

#135 MF on 08.16.17 at 10:50 am

#121 Reality 1 on 08.16.17 at 9:14 am

Haha.

Judging by your little attack I must have hit a nerve with my comment. Good.

High quality men will always be desired by high quality women. I’m not worried.

Stay salty though.

MF

#136 MF on 08.16.17 at 10:53 am

Come on Billybob,

I usually agree with all your posts.

Anyways,

I look at my parents. Multi millionaire enjoying their retirement immensely here in Canada.

Those who leave are usually chasing some fantasy. That and people who take Canada for granted can go. We don’t need them and there are others who are dying (literally) for a chance to live here.

That was my point.

MF

#137 Renter's Revenge! on 08.16.17 at 11:00 am

Wow, tough choice!

Buy condos and unclog toilets full of other people’s crap for the rest of your life, or invest the money and spend 6 months a year in Thailand.

I’ve noticed that some people try really, really hard to not be happy.

#138 dee on 08.16.17 at 11:04 am

Reality 1 post #104 you said that Morneau/Trudeau said they had nothing to do with home cap bailout. Wrong. Morneau is interviewed and out of his own mouth he said “it probably isn’t a coincidence that we met with buffett a couple weeks before his home cap investment” (with a smirk on his face)

http://www.bnn.ca/finance-minister-bill-morneau-vows-to-stay-closely-focused-on-housing-1.810599

#139 jess on 08.16.17 at 11:18 am

the rise of fake influencers
http://www.bbc.co.uk/programmes/b091zhtk

A US marketing agency says it secured brand sponsorship deals for two fictitious social media influencers, after acquiring a following for their Instagram accounts for less than $300 (£231).

August 14, 2017 by John Harrington
http://www.adweek.com/digital/this-influencer-marketing-shop-created-fake-accounts-to-prove-that-the-industry-is-full-of-ad-fraud/

#140 LateToTheParty on 08.16.17 at 11:19 am

Devon – if you or anybody else makes it down this far –

You’re raising a really good, big question about the timing. If you look around you’ll some strong views claiming you shouldn’t time the market, you should dollar-cost average, dca is bunk, etc… Here’s what I think. Maybe Garth will let us know what he things:

US & Can markets appear have done great over the past 8 years of crawling out of the second worst recession the modern economic system ever had. Don’t calculate your expected returns based on the past 7 years performance. U.S. equities seem overvalued but hey, just cuz market cycles have averaged 8 or so years in the past doesn’t mean this one won’t go for much longer. I would invest a small amount south of the border (1/8th?). As far as Canadian equities go I’ve followed This Blogs advice and put in a bit more (2/8th?). There are some really good ‘blue-chip’ indices out there for ‘international’ (that’ll be EU + Japan + S. Korea) companies, and also for ‘developing’ countries (China, India, etc). You could consider putting 1/8 in each. What about the remaining 3/8? Well, bonds. But this isn’t a good time to buy bonds. If the Can gov’t keeps raising its rates both short-term and long-term bonds funds will keep going down in value. My thought is to wait until January, hopefully after the next round of projected raises, and then buy in (to long-term funds? Still learning about this). What to do with yr putative bond fund$$$$ in the meantime? Up to you, but you could open a (first-time customer) Tangerine savings account and pick up 2.4% guaranteed return on the first six months (and then, you know, move it all into bonds in January…).

Either way, sounds like you’re in a very good spot. If I had as much money as you I’d hire a good financial advisor. The DIY-by-nescessity in the under-100k-leagues is both a bit stressful and very time-consuming…

#141 Ex-Cowtown on 08.16.17 at 11:32 am

ISIS tears down statues, bullies people, loots and destroys things that don’t match their belief systems.

Alt-Left tears down statues, bullies people, loots and destroys things that don’t match their belief systems.

Alt-Right tears down statues, bullies people, loots and destroys things that don’t match their belief systems.

All the same-same. The mistake Trump made was in pointing it out. Deep down everyone knows it but they don’t want to hear it spoken out loud.

ISIS militants are religious fanatic whackjobs. Alt-righters are racists. What’s alt-left? — Garth

#142 Martha L on 08.16.17 at 11:38 am

Devon is a lightweight, my good friend Abraham El Sanbati sold his place just last year and made $950k when he moved back in with his parents. He is now only 20 years old and did everything on his own with no help.

#143 Smoking Man on 08.16.17 at 11:40 am

#136 MF on 08.16.17 at 10:53 am
Come on Billybob,

I usually agree with all your posts.

Anyways,

I look at my parents. Multi millionaire enjoying their retirement immensely here in Canada.

Those who leave are usually chasing some fantasy. That and people who take Canada for granted can go. We don’t need them and there are others who are dying (literally) for a chance to live here.

That was my point.

MF
…..

You have no clue whats down the road. Take a peek at Venezuela if you want a clue. The smart money is getting out. Or in my case already out. T2 is hell bent on following his globalist hero’s to turn us into a 3rd world country. Elite privlage gult or something like that.

The real estate market is getting crushed. And canada is still racking up debt like no tomorrow.

This little bump in the CAD. Temporary so more smart money can exit.

Canada great warm people but dumb as a rock.

#144 n1tro on 08.16.17 at 11:45 am

#126 Reality 1 on 08.16.17 at 10:18 am

I prefer setting up in Thailand over Vietnam. More stable, less crowded, less corruption(?), cleaner, way more polite.

Just don’t deal drugs, make fun of the King, or mock Buddhism.

#145 n1tro on 08.16.17 at 11:52 am

What’s alt-left? — Garth

Alt-Left is a made up term but left radicals of today would be Antifa and to some extent BLM

#146 Reality 1 on 08.16.17 at 11:55 am

to # 144 N1tro

thanks for your input
have been to Thailand several times and learned those things long before I made my first foray there
I was looking for more focused advice, like where is best to locate now (safest, most user friendly , rent a condo or long term guest house accommodation – things like that)
any further info / advice would be gratefully accepted

#147 Lee on 08.16.17 at 11:58 am

#143 Smoking Man,

JT will win in 2019. He has the Maritimes locked up 29-0. He has little to gain or lose on the Prairies or out West. He has 40 or so seats in Quebec locked up. And he won his 80 ridings in Ontario by such large margins that even if he loses a few of them in 2019 that would be big news. He would have to lose 16 more ridings in total to lose a majority by 1 vote. The best the C’s can hope for is a Liberal minority, but a pretty solid minority.

#148 Ex-Cowtown on 08.16.17 at 12:02 pm

ISIS militants are religious fanatic whackjobs. Alt-righters are racists. What’s alt-left? — Garth

++++++++++++++++++++++++++++

Anti-Fa. Only difference between them and the Alt-Right is that Anti-Fa is media savvy and better funded. Every bit as rabid though.

You guys are getting comical. — Garth

#149 Prairieboy43 on 08.16.17 at 12:02 pm

Sweden nice. Definetly not as nice as Canada. Swedes take a beating from Canadian hockey players annually. Worst part wages are brutal in Sweden. Doctors average 50,000 kronor/month less than $8000.00/ monthly. Heck a receptionist (executive assistant), earns more in Canada working for Justin Trudeau. My Swedish brother in law, happy I was able to help him out, with his job prospects 15 years ago. He had a tough time with the cowboy culture. However I kept his hand to the fire. He turned out good. He always grateful, he learned to stick it out. His doctor buddy in Stockholm, wanted to come over for same type job. I denied him entry.

PB43

#150 Prairieboy43 on 08.16.17 at 12:04 pm

Here are some stats.

http://r.search.yahoo.com/_ylt=AwrSbjbEZ5RZLaIAjRwg7YlQ;_ylu=X3oDMTByb2lvbXVuBGNvbG8DZ3ExBHBvcwMxBHZ0aWQDBHNlYwNzcg–/RV=2/RE=1502926917/RO=10/RU=http%3a%2f%2flostinstockholm.com%2f2012%2f01%2f10%2faverage-salaries-in-sweden-by-occupation%2f/RK=1/RS=NJGaagLLLHORu39KfKz0GYfp1Ck-

#151 Victor V on 08.16.17 at 12:08 pm

Home sales and prices declining in Toronto

http://www.cbc.ca/news/thenational/home-sales-and-prices-declining-in-toronto-1.4248973

#152 Capt. Serious on 08.16.17 at 12:11 pm

@ #103 Frank on 08.16.17 at 4:13 am

Yes, if you just grab the time series data it’s obvious small caps have outperformed over the long run. However, you are interested in two (possibly 3) things when investing now:
1. What are rational expectations for asset classes going forward from now?
2. What is my ability to execute my strategy? This should inform how many safe assets one owns. If you haven’t lived through a 50% value crash in your equity holdings, err on the side of more safe stuff so that you don’t abandon your strategy and kill your long term returns as a result.
3. The sequence of returns really matters, but there isn’t really anything you can do about that. There are periods of time as long as 20 years where an asset class will go nowhere in real (inflation adjusted) terms. You need to be able to stick to the plan.

>>Concentrated portfolios are better if you have the patience measured in years, and they are correctly selected.
For most people it is a path to ruin. A concentrated portfolio is one bad company outcome away from trashing a multi year savings plan.

#153 Reality 1 on 08.16.17 at 12:15 pm

to # 138 Dee

Can you not read nor comprehend what you post and link to ?
Read the whole article.

Reread you link in which it says ;

” … noting that they didn’t discuss the Home Capital specifically, but spoke about the “emerging strength “of the Canadian housing market. ”

That means what it means – they told him what they were going to do to address the “emerging strength” , i.e. bring in measures (hello, stress tests !)

They basically told him the play and he could figure it out that alternative lenders would do very well on the biz that the Cdn Banks would send away due to new credit restrictive measures.

So, he of course went after the #1 lender in that space, which was obviously floundering and on which he could wring a “buffet style” deal from.

Wake up.

#154 MF on 08.16.17 at 12:18 pm

Smoking Man,

No question these clowns currently running the country have dark plans and it’s critical they get punted as soon as possible.

But the rest of the world has the same or worse problems.

Debt? Everyone is in debt.

The weather is better elsewhere though. I’ll give you that.

MF

#155 Reality 1 on 08.16.17 at 12:30 pm

to # 135 MF

In other words, you got no comeback and you can’t refute my points.

Just as I suspected.

You couldn’t hit a nerve in me if you tried – you are just weak and I’m no pushover.

Yeah, you had to go to a 3rd world country to find a girlfriend where you , in your own words, note that the first thing people there do is to try to find some way out.
Think about what you wrote.
No doubts – you really are naive, aren’t you ?

Your “girlfriend” will have no problem running your life – that is after she has your balls in her purse or finds a better mark.

Watched 5 men (with more sense than you I might add) go down that road ( 4 with Fillipinos, 1with Cuban wives / girlfriends)- to the destruction of their wealth and personal integrity.

You have too high an opinion of yourself and of Canada.
But, hey , keep telling yourself that Canada is not a socialist country and whatever else you have to as your taxes go up, your social services decline and your future opportunities diminish.

BillyBob has it right.

#156 Lillooet, BC on 08.16.17 at 12:39 pm

Buffett was mentioned (multiple times actually) but InvestorsFriend does not comment.

What is wrong?

#157 Reality 1 on 08.16.17 at 12:41 pm

to # 133 Keith

I have lived in Denmark, Sweden, Holland, Begium, Germany and another 10 countries besides Canada in my adult working life.
Resident and paid taxes in ALL of them.

How many have you even visited ?

The pensions / holidays do not a socialist state make – go ask some Venezuelans.

And you should be outraged that your socialist Canada doesn’t provide all these “benefits” despite having a similar tax load on their inhabitants.

#158 Damifino on 08.16.17 at 12:41 pm

#132 Chris

They refuse to sell home # 2, so they rent it out for anything they can get, and are subsidizing rents big time right now and will do for a very long time… At least until they can break even on the sale of their 2nd home.
——————————–

Given the high carrying and liquidation costs of a second home they will have to sell for much more than they paid in order to ‘break even’. That’s unlikely, to say the least.

The more time passes the worse it gets. It’s not a strategy, it’s an unwillingness to admit a mistake, get out and stem losses.

Damn those emotional ‘investments’.

#159 Smoking Man on 08.16.17 at 1:02 pm

#147 Lee on 08.16.17 at 11:58 am
#143 Smoking Man,

JT will win in 2019. He has the Maritimes locked up 29-0. He has little to gain or lose on the Prairies or out West. He has 40 or so seats in Quebec locked up. And he won his 80 ridings in Ontario by such large margins that even if he loses a few of them in 2019 that would be big news. He would have to lose 16 more ridings in total to lose a majority by 1 vote. The best the C’s can hope for is a Liberal minority, but a pretty solid minority.
……

He doesn’t stand a chance, so much more damage to come. That only Aliens can see right now.

#160 45north on 08.16.17 at 1:04 pm

oops: OSFI will move forward with their legislation to protect the financial system (Banks) interests.

Dee: And how do you know all this OSFI info? Is it just a guess?

OSFI said it. It’s not just a guess. It’s my thinking too. The GTA housing bubble is in free fall and who would know better than the banks? So they protect themselves by withdrawing credit. The regulatory agency (OSFI ) adds the stress test which formalizes the withdrawal of credit.

The hard part is to understand the political side. We’re talking a 50% across the board drop in prices in the GTA. Which will not be popular. I’m thinking the politicians are going to treat this like Hurricane Hazel which was also not popular:

https://en.wikipedia.org/wiki/Effects_of_Hurricane_Hazel_in_Canada

I mean the US Fed has raised rates. Canada follows. Politicians in Canada really don’t get a say. Another factor is the collapse of housing in the GTA is not in the news and until it is, it’s not a problem. It’s not, because the real estate industry widely and deeply influences the news media. Without real estate advertising the newspapers would be out of business. Another factor is no political party wants to talk about it. So until one does, none of them do. It’s très ironique that this radical and deep change in the domestic economy proceeds without comment or fanfare.

#161 n1tro on 08.16.17 at 1:04 pm

#146 Reality 1 on 08.16.17 at 11:55 am
to # 144 N1tro

thanks for your input
have been to Thailand several times and learned those things long before I made my first foray there
I was looking for more focused advice, like where is best to locate now (safest, most user friendly , rent a condo or long term guest house accommodation – things like that)
any further info / advice would be gratefully accepted
———————

I’d like that info to from any ex-pats living in Thailand semi-permanently. Please post.

I did find Thailand’s “elite” visas interesting though
http://uk.businessinsider.com/you-can-buy-elite-residency-in-thailand-for-60000-2017-4

#162 Victor V on 08.16.17 at 1:23 pm

Canada’s housing bubble has vanished without a ‘crash landing’, say economists: Economists say the Canadian housing bubble — long feared to be vulnerable to a dangerous pop — is now officially dead

http://business.financialpost.com/investing/trading-desk/canadian-housing-market-bubble-has-ceased-without-a-crash-landing/wcm/f1e899d9-1f98-4513-94ab-f7a5fce42b82

#163 IHCTD9 on 08.16.17 at 1:23 pm

#143 Smoking Man on 08.16.17 at 11:40 am

Canada great warm people but dumb as a rock.

_______________________

Sad but True. I’ll never live down some the words and actions out there, even here on this blog sometimes. It’s like Canadians want to lose their jobs, become permanently broke, and retire eating whatever the Cat left for them.

We’ve got an epic case of Quixotism on the rise, and now Ottawa’s got just the goofball airhead to make it epidemic.

Seriously, what a joke.

#164 Victor V on 08.16.17 at 1:25 pm

Breaking: Toronto home prices slip into bear market as mid-August sales sink 35.6%

http://www.bnn.ca/toronto-home-prices-slip-into-bear-market-as-mid-august-sales-sink-35-6-1.831666

Home sales across the Greater Toronto Area continued sliding into the middle of August, pushing prices into bear-market territory.

Purchases sank 35.6 per cent year-over-year in the first 14 days of August, according to Toronto Real Estate Board data obtained by BNN.

That marked a slight moderation from July, when full-month sales plummeted 40.4 per cent. Meanwhile, new listings fell 10 per cent year-over-year in the first half of August, according to the data released on Wednesday.

The average selling price at mid-month was $731,614, marking a 20-per-cent decline from the April peak of $920,791.

#165 Jose on 08.16.17 at 1:28 pm

This is incredible! Alt-right, alt-left, what the hell?! oh, wait a minute, hell was created on earth by the Third Reich, that’s what. how can anybody forget that!?
It’s fascists against anyone else with human decency!

#166 Smoking Man on 08.16.17 at 1:33 pm

Barb kills it. On the James Demore Story.

Google is a for-profit enterprise. It’s their right to pander to trendy theories in their hiring and training policies. It’s also their right to fire employees who call them out for doing so. I only wish Google had had the integrity to attribute James Damore’s termination to “insubordination,” rather than implying that his evidence-based statements regarding “gender stereotypes” are false.

I don’t think the mucky-mucks at Google really believe the gender disparity in their ranks is due to sexism. Corporations have no soul. I think they’re going with the ideological flow rather than enduring the public hassle of bucking it for no material reward. If tomorrow the Flat Earth Society achieved prominence in progressive circles, they’d likely throw a round-earth employee dissident under the bus in exchange for social peace.

http://nationalpost.com/opinion/barbara-kay-4/wcm/2e410abb-7754-4e4d-89cb-a16d271223db

The insane left even has Google scared.

#167 Reality 1 on 08.16.17 at 1:33 pm

to # 160 45 North

bang on correct – good post

Also, consider that by introducing “stress tests” they TARGETED housing with substantially increased interest credit ‘testing’ rates, without strengthening the loonie or affecting the general level of interest rates in the economy.

#168 JD on 08.16.17 at 1:39 pm

Thanks “For those about to flop” Our preferred area for the next 10 years as the prime residence would be Richmond, avoiding Bridgeport area – the famous Airplane landing path and other dubious neighborhoods. In a case of investment opportunity – South Surrey around 150 str and south towards US Border.

#169 re., Reality 1 on 08.16.17 at 1:40 pm

to # 65 Buffet

What is it with yoou people – you think Buffet is some sort of investing altruist ?

Buffet owns a lot of positions in S&P 500 companies and other related indexes and the bonds thereof.

Of course he tells people to invest in it – its good for his positions.

Or did you just want to blindly follow the oligarch, figuring he was looking out for you ?

………………

the last question, where did you get that thought from? Or rather, you routinely draw silly assumptions? why?

#170 Reality 1 on 08.16.17 at 1:42 pm

to # 161 N1tro

thanks for the link and the effort, much appreciated

#171 Reality 1 on 08.16.17 at 1:55 pm

to # 167 re: Reality 1

Can you read and comprehend ?

“silly assumptions” ???

Last line was a question, not an assumption.

Do you not think that Buffet and others in the investment talk their book when interviewed ?

Do you not think that people blindly (and lazily) act on what well known investors say ?

What “silly assumptions” do you think I’ve made here ?

Sincerely, let me know of any such instance and I would be pleased to clarify.

But, before you do, please really read and comprehend what I have written.

If you don’t understand the meaning of the word ‘assumption’ , one has to question your comprehension skills.

#172 Chris on 08.16.17 at 2:02 pm

#158 Damifino on 08.16.17 at 12:41 pm
#132 Chris

They refuse to sell home # 2, so they rent it out for anything they can get, and are subsidizing rents big time right now and will do for a very long time… At least until they can break even on the sale of their 2nd home.
——————————–

Given the high carrying and liquidation costs of a second home they will have to sell for much more than they paid in order to ‘break even’. That’s unlikely, to say the least.

The more time passes the worse it gets. It’s not a strategy, it’s an unwillingness to admit a mistake, get out and stem losses.

Damn those emotional ‘investments’.
********************************

They’ll just keep them, and slowly pay down the principle and one magical day they’ll be able to break even after lawyer fees, RE fees, etc…. Then they’ll never own a second home again lol. In this current market, it’ll take them a very long time, but they’ll just sit and hope and pray things rebound and housing swings up again. I can probably name a dozen friends that are going through this. Lots try to rent for break even and I’m often very tempted to reply to their facebook posts of “hey we’re looking to rent out our condo, please pass this along to anyone looking!” asking them if they’re high on crack b/c they’re dreaming if they ever believe they’re going to get what they’re asking for rent…. I rent a 2000sq ft home in Edmonton. Most friends are asking nearly the same price I pay for basement suites, or 1 or 2 bedroom condos in Edmonton, Calgary, or even Saskatoon. LOL.

#173 IHCTD9 on 08.16.17 at 2:07 pm

#147 Lee on 08.16.17 at 11:58 am
#143 Smoking Man,

JT will win in 2019. He has the Maritimes locked up 29-0. He has little to gain or lose on the Prairies or out West. He has 40 or so seats in Quebec locked up. And he won his 80 ridings in Ontario by such large margins that even if he loses a few of them in 2019 that would be big news. He would have to lose 16 more ridings in total to lose a majority by 1 vote. The best the C’s can hope for is a Liberal minority, but a pretty solid minority.
______________________________________

Trudeau will win an even bigger majority than last time. My “stump”, “cement”, and “rock” indexes have been going off the scale lately, and that can mean only one thing.

The only way the Cons could win is if they become classic Liberals (which none have existed in Canada for ages). But I struggle to accept the idea that Canadians even care what the platforms are these days – they respond to tabloidy click-bait pointyfingerism, not platforms.

No matter though, I’ll be out voting for T2 unless the NDP can come up with a truly horrible candidate that could possibly be even worse than the goofball we’ve got now.

#174 Gravy Train on 08.16.17 at 2:12 pm

“Why did the chicken stop in the middle of the road? To get to the other side.”

“Why did the chicken stop in the middle of the road? She wanted to lay it on the line.”

“Work Tip: Stand up. Stretch. Take a walk. Go to the airport. Get on a plane. Never return.”

“I asked my North Korean friend how it was there. He said he couldn’t complain.”

#175 Doug in London on 08.16.17 at 2:25 pm

@Vegan Merchante, post#15:
Have a look at today’s Report on Business, page 9 in The Globe and Mail. It’s about investing in 3 apartment REITs, namely CAR.UN, IIP.UN, and KMP.UN. Good reading.

#176 Lee on 08.16.17 at 2:34 pm

National Post confirms yet again today Toronto real estate blip is no crash. Soft landing declared. Sorry.

The newspaper did not confirm anything. — Garth

#177 MF on 08.16.17 at 2:52 pm

Reality1,

Buddy I met my woman here in Toronto. Where did I say otherwise?

Your responses are the definition of triggered. Trying to pretend I didn’t hit a nerve just makes it more obvious.

Lol @ the pushover comment. Not worth a response.

MF

#178 Asterix1 on 08.16.17 at 3:10 pm

#176 Lee on 08.16.17 at 2:34 pm
National Post confirms yet again today Toronto real estate blip is no crash. Soft landing declared. Sorry.

The newspaper did not confirm anything. — Garth
__________________________________

Ha ha! How gullible you are Lee, the perfect pigeon for the RE industry! Or you might be part of the RE industry.

Did you read the article? Its all quotes from biased players who have lots to lose if the truth was not sugar coated like that.

– Douglas Porter, BMO Capital Markets
– Robert Hogue, RBC Capital Markets.
– TD Bank economist Diana Petramala
-David Rosenberg, Gluskin Sheff + Associates Inc

Its already been a huge correction, there is no soft landing to be had. Next step is the continuous fall of prices and a crash in some neighborhoods of Toronto and towns in GTA.

#179 Lee on 08.16.17 at 3:11 pm

#176,

The Post put out four professional opinions unopposed that this is a soft landing.

#180 Damifino on 08.16.17 at 3:38 pm

This just in…

Old Man Yells at House Sitting on Cloud.

Soft Landing Declared.

#181 Victor V on 08.16.17 at 3:42 pm

#176 Lee on 08.16.17 at 2:34 pm

Does a 20% price correction and a collapse in sales volume seem “soft” to you?

http://www.bnn.ca/toronto-home-prices-slip-into-bear-market-as-mid-august-sales-sink-35-6-1.831666

#182 Reality 1 on 08.16.17 at 3:47 pm

to # 177 MF

typical response from a beta male and a SJW

get your debating pointers from Saul Alinsky ?

weak, doesn’t address the issue, no facts, no cogent response, just SJW nonsense like the word “triggered”

yep, you’ll do well in the new Canada

point to where I sai

#183 SOME DAY NEXT YEAR on 08.16.17 at 3:47 pm

The federal banking regulator is reviewing domestic retail sales practices at Canada’s key banks, focusing on the inherent “reputational risks” and the potential impact on the institutions’ financial stability.

The review by the Office of the Superintendent of Financial Institutions comes as the country’s financial consumer watchdog is conducting its own probe of practices at Canada’s biggest banks, prompted by news reports earlier this year containing allegations of high-pressure sales tactics by some bank employees.

OSFI’s review will be “focusing on risk culture, the governance of sales practices, and how banks manage the potential reputational risk inherent in sales activities,” according to a consultation paper released by the Department of Finance on Friday.

http://business.financialpost.com/news/fp-street/canadas-banking-regulator-to-review-sales-practices-of-major-banks/wcm/d8abdcfc-398a-48ea-a19a-494067a0e8b2

The FCAC’s review is underway and the watchdog will make preliminary results available later this year. The watchdog expects to conclude the review in June 2018 and subsequently publish a final report.

#184 Frank on 08.16.17 at 3:53 pm

On #152 Capt. Serious:

@ #103 Frank on 08.16.17 at 4:13 am

Yes, if you just grab the time series data it’s obvious small caps have outperformed over the long run. However, you are interested in two (possibly 3) things when investing now:
1. What are rational expectations for asset classes going forward from now?
2. What is my ability to execute my strategy? This should inform how many safe assets one owns. If you haven’t lived through a 50% value crash in your equity holdings, err on the side of more safe stuff so that you don’t abandon your strategy and kill your long term returns as a result.
3. The sequence of returns really matters, but there isn’t really anything you can do about that. There are periods of time as long as 20 years where an asset class will go nowhere in real (inflation adjusted) terms. You need to be able to stick to the plan.

>>Concentrated portfolios are better if you have the patience measured in years, and they are correctly selected.
For most people it is a path to ruin. A concentrated portfolio is one bad company outcome away from trashing a multi year savings plan.

The time series data at cfiresim is all the annual data for multipe asset classes from 1870. You can review all rolling 5 or 10 or 20 year periods to see the distribution of returns. Small caps, and in particular underpriced companies by standard measures, P/E, P/B, F factor have outperformed the rest.

On your #1, some asset classes have gone years without earnings such as airlines, but the payoff is in focusing on companies. If you look across that industry, read the filings, and think about it a little Air Canada is a place to dispose of cash, but alternatively you could own a piece of Alaska Airlines and been making money for years. They’re still at 13.6 P/E. After a 15 year return close to 20% per year in USD plus the CAD conversion if you want to figure that out. Investors who bought years ago could still be deferring the tax.

On 2. there are no safe assets. Bonds are going down as interest rates rise. You lose money on them after tax and inflation. Preferred shares have terrible 10 year returns. You’re not buying GICs or real estate now. And REITs reflect inflated real estate as well.

On 3. Of course the sequence of returns matters. Knowing that the indexes are inflated, its especially important to be buying the companies that others avoid. We’re in an auction market. Either you buy ETFs of underpriced companies eg XXM.b or JKL or you do better if you have the skill and discipline to select individual stocks. Cash declines in value, so you always want to be 100% invested.

About 80% of my portfolio is individual equities and I will hold up to 5% in a company, the rest stock ETFs. I have been through both the 2000 and 2009 crashes, and
seen large temporary losses.

A concentrated portfolio in a market ETF eg SP 400, is fine. The longest I’ve seen a portfolio decline to recovery was for a 4 year period around the 2000 crash. And less time for the cost basis to be recovered. New at it back then. My retirement funds were all in an SP 400 index, and were fine through the 2000 crash and recovery.

#185 CJBob on 08.16.17 at 3:56 pm

I’m finding the criticism of T2 particularly amusing today. You’d rather have a leader who is closer to business leaders, like the U.S.? Except they are running away from him right now like rats from a sinking ship.

I’m good with our guy, thanks.

#186 IHCTD9 on 08.16.17 at 4:19 pm

I’d rather see RE in the GTA hit an average of 5-6 Million for SFD and 1-2 Million for Condos.

Just for curiosity’s sake.

Although I’m sure all the banks would be calling for a soft landing then too.

#187 InvestorsFriend on 08.16.17 at 4:46 pm

Whither Buffett’s Greatest Fan?

156 Lillooet, BC on 08.16.17 at 12:39 pm
Buffett was mentioned (multiple times actually) but InvestorsFriend does not comment.

What is wrong?

*************************************
Well, I have led people to the fountain of investment wisdom many times. But I can’t make them drink.

Anyone who has read Buffett’s own words over the years should know he is clearly an investment genius and one of the smartest people in history. He has many virtues. Including that he is one of the most trustworthy people ever.

He has spent tons of time trying to teach people to invest.

Never rely on what others say about Buffett. Read his own words. Start with annual letters. If his interviewed on television, take the time to watch and listen and learn.

As far as the S&P 500 he says most (that does NOT mean all) people (and he means Americans) would be best off putting their U.S. equity exposure into the S&P 500 and not picking individual stocks. If he dies first, his wife’s money will go 90% into S&P 500 and 10% into T bills. But I don’t remember him ever saying that is what everyone should do. His wife will have more money than she would ever plan to spend.

100% of Buffett’s main fortune, his Berkshire shares will go to charity. That will total maybe 100 billion counting what he has already given. Aside from Berkshire I believe he has somewhere in the range of a paltry $500 million to perhaps a single billion that he actually lives on (the returns) and most of that may go to his heirs. That money came from gains on the million dollars he had other than Berkshire in the late 60’s. He has never earned more than $100k a year from Berkshire. He got a bit from Board memberships. All else was investment returns.

The notion that he talks his book is laughable. He said he has never told anyone publicly or privately to buy Berkshire shares. At one point in the 1990’s he flatly said in the letter that they were priced so high that he or Charlie Munger would not buy them at that point.

The notion that he had some agreement of heads up from the Canadian Finance minister before investing in Home Capital is also completely laughable. Once he looked at it and saw it was less than half book value and knew that his own investment would instantly end any fears it would go bust he did not need anything from the Finance Minister.

It is far more likely that the finance minister learned something from the genius that is Buffett than the other way around.

#188 DON on 08.16.17 at 4:48 pm

#179 Lee on 08.16.17 at 3:11 pm

#176,

The Post put out four professional opinions unopposed that this is a soft landing.

*****************
Not a balanced article – they didn’t ask for other opinions…but they did say rates were expected to rise. Down playing housing concerns as rate increases are coming. The Bank still wins (higher interest rate revenues).

#189 jess on 08.16.17 at 5:00 pm

poor “conduct” ?

OSFI’s review will be “focusing on risk culture, the governance of sales practices, and how banks manage the potential reputational risk inherent in sales activities,” according to a consultation paper released by the Department of Finance on Friday.
===========
World’s biggest banks face £264bn bill for poor conduct
https://www.theguardian.com/business/2017/aug/14/worlds-biggest-banks-face-264bn-bill-for-poor-conduct
========

Diamond tycoon Beny Steinmetz detained in fraud inquiry

Detention of six people after series of raids by Israeli police follows allegations of forgery and money laundering

The other suspects include David Granot, the chief executive of the Israeli telecoms corporation Bezeq, and Tal Silberstein, a former consultant to the former Israeli premier Ehud Barak and to the Austrian chancellor, Christian Kern.
https://www.theguardian.com/world/2017/aug/14/israeli-diamond-tycoon-beny-steinmetz-arrested-fraud-investigation

#190 cramar on 08.17.17 at 10:55 am

“Days ago I mentioned a recent tidal wave of deplorable comments aimed largely at immigrants, natives, Chinese people, lefties and 1%ers. Me, as well. Open attempts to keep prejudice, racism, xenophobia and haters off this blog earned me a death threat or two. ”

————–

The word that stands out in the above is “recent!” Although this has been building for months—even a few years, I’d wager that in the beginning of this blog, comments were more civil, more respectful, even more tolerant. But things have changed! And it is nothing to do inherently with this blog.

This blog’s comments only RELECT a greater macrocosm in society itself. Society has become more polarized, divisive, and more intolerant in recent years of others who do not share the same viewpoint on any given subject. (Which is ironic since political correctness is being forced on society by governments who seem to have lost their moral compass.)

This division in society has crescendoed due to the election of a divisive and polarizing POTUS in the U.S. Every time he opens his mouth or activates his Twitter fingers, he ADDS, rather than detracts to this polarization. Unfortunately this blog is being carried along with the tide of society, like a rubber ducky on a swollen river. The Internet, including this blog, gives those with extreme views a forum to get their views exposed to a wider audience.

My advice to you Garth is that you will not survive the next 500k comments! The stress will lead you to a premature death. If it were me running this blog, for the sake of my own health, I would do ONE of the following:

A) Shut down all comments and just post your informative analysis.

B) Set high standards for comment decency and respect—and INFORCE IT!! If someone says something offensive, un-civil, even disrespectful—use the “DELETE” key. If repeated, use the “BANNED” filter.

As far as B) goes, a simple word filter is not going to catch the attitude behind the comment. Only a human mind can! The result could very well be that you will be accused of playing God and judging the intent and heart of people. So be it! It is YOUR blog, and you are the god of it! If you want to set standards of decency on your blog then do so! People can disagree without being disagreeable—without accusing others of being brainless, stupid, or idiotic! “Free speech” is allowed, but ONLY within the microcosm of the greater moral law of this blog—which is CIVILITY! This blog could become a MODEL of tolerance, decency, and respect even as differing viewpoints are stated.

If this fails, there is always A).

#191 Eric Smith on 08.17.17 at 2:27 pm

DELETED