The ugly truth

Like a lot of people in her oily city, Tina can’t sell her condo. Well, not for what she thinks it’s worth. Or what she paid ($380,000). So when she moved into Bryan’s place (a semi) she decided to rent it. The going rate is $1,300 for a one-bedder, which she got.

But, oops, the mortgage costs $1,400 a month, plus $150 for property tax, $100 for insurance and $320 for condo fees. Tina’s negative almost seven hundred bucks a month, since she bought with a lowly 5% down. “Never thought I’d be in this position,” the car dealership (Ford) saleslady says. “But at least I can write all of that off and wait until the market comes back, right?”

It’s a common thing. About to get more so. Right across the country rents have failed to keep pace with house prices. Landlords almost everywhere subsidize their tenants, with most willfully blind to the impact this has on their net worth. Now that the big years of capital appreciation are behind us, just saying, ‘the tenants are paying the mortgage’ means little when cash flow is in the red and the property’s value is stagnant or declining.

There are two things worth remembering: first, rents are considered income and taxed that way. Just like your salary. Worse, rental income is added on top of other income sources (like employment wages), and can easily nudge you into a higher bracket. Sucks. This stands in sharp contrast to the favourable tax treatment accorded to dividends and (especially) capital gains. The highest tax rate anyone pays on a cap gain (on an ETF, for example) is 25%, as opposed to a potential 53% on rent.

Second, Tina may be in for a surprise thinking she can wipe away her bad decision by deducting perpetual losses from her car dealership earnings. Judging by comments posted on this non-deductible blog yesterday, many landlords think all losses are write-offs. Just like in delusional Australia.

So let’s review the law.

First, the good news. Here’s what the CRA says about subtracting negative rental cash flow from the income you receive from other sources (like your job):

Rental losses
You have a rental loss if your rental expenses are more than your gross rental income. If you incur the expenses to earn income, you can deduct your rental loss against your other sources of income.

Now the bad news, part one:

Renting below fair market value
You can deduct your expenses only if you incur them to earn an income. In certain cases, you may ask your son or daughter, or anyone else living with you, to pay a small amount for the upkeep of your house or to cover the cost of groceries. You do not report this amount in your income, and you cannot claim rental expenses. This is a cost-sharing arrangement, so you cannot claim a rental loss. If you lose money because you rent a property to a person you know for less money than you would to a person you do not know, you cannot claim a rental loss

And here’s the rest:

When your rental expenses are consistently more than your rental income, you may not be allowed to claim a rental loss because your rental operation is not considered to be a source of income. You can claim a rental loss if you are renting the property to a relative for the same rate as you would charge other tenants and you expect to make a profit.

The key words here are “source of income” and, of course, “profit.” The logic is simple. If you invest in something to create taxable income (a profit) then the CRA will let you deduct costs which exceed that income for a reasonable time – until profitability is achieved. If there’s no expectation of profit because no tenant will pay enough to carry your condo, ever, then tough. The CRA has every right to (and may eventually) disallow the losses/expenses you wrote off against your salary.

And who decides what a reasonable period of time might be to allow them? Guess. It’s not the taxpayer.

Moisters may think rents are extreme in YVR or the GTA, but it’s still impossible to buy a downtown condo with a small downpayment and be cash-flow positive on rent. The only way the part-time landlord is ever going to break even is if she has paid down most of the financing and has a huge whack of equity. But then it’s just a crappy investment – the equity makes nothing and the rental income’s fully taxable. If the unit’s not appreciating, this was all a bad idea.

Well, during the boom last year stats showed just over 50% of new condo units selling in the GTA were going to people with no intention of living in them. Some were flippers and speckers. Most were likely starry-eyed ‘investors’ who believed they could find tenants to pay down the mortgage, write off monthly losses, and end up with something that would make them rich. When those units are built and available in another year or two – especially now that the CRA’s tracking them – the whining and moaning will be deafening.

Rental math. Say, did Brad Lamb mention any of this?

205 comments ↓

#1 For those about to flop... on 01.22.18 at 4:49 pm

#229 45north on 01.22.18 at 4:08 pm
Flop: sent $30 to Terry Fox Foundation

I pray for the best for you and your family.

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

Thanks to the three donations so far.

Obviously won’t affect what’s going on in the other side of the planet but if we can gift a Canadian a week,even one more night with a loved one then that will warm my heart.

Flop For Fox Fund…

M43BC

#2 LivinLarge on 01.22.18 at 4:50 pm

“And who decides what a reasonable period of time might be to allow them? Guess. It’s not the taxpayer.”….it never is.

The beatings will continue until morale improves.

#3 Arse on 01.22.18 at 4:51 pm

That Dog Ain’t Ugly. It is cute

#4 Adult Money Stuff on 01.22.18 at 4:55 pm

Doubtful that Tina can deduct anything from her employment income… the portion of the mortgage payment that is applied to the principal is not a deductible expense.

On the flip side, this means that the condo is probably a lot closer to break-even than a loss, so she likely won’t get skewered on the rental income.

#5 dan on 01.22.18 at 4:57 pm

When I first heard about deducting rental losses, my immediate thought was the CRA had this figured out already. It’s no different than running a business that experiences losses every year and trying to deduct those. After a few years of this the CRA will say your operation’s goal is not profit and whack you I image. This coupled with a CRA mandate to squeeze everyone to pay for T2 spending will not end well.

#6 paul on 01.22.18 at 5:03 pm

Hate to do it but!

https://www.youtube.com/watch?v=rCZRqH7sRyA

#7 Michael Francis on 01.22.18 at 5:04 pm

At least in Aus the Government has outlawed travelling deductions that you rack up when visiting your investment property in sunny Queensland.

Then again, with most of our politicians owning up too 15 investment properties and chartering private aircraft at tax payers expense to inspect their properties, don’t expect too much.

#8 Prematurely Banned Canadian Millenial on 01.22.18 at 5:10 pm

BANNED

#9 InvestorsFriend on 01.22.18 at 5:15 pm

More Bad News

There might be an accounting taxable profit on the rental despite being in a negative cash flow situation where the property does not carry itself.

That’s because the portion of the mortgage going to principal repayment is not in fact an expense. (And that’s true for both rental property and owner occupied property.)

#10 Loans are Income in OW on 01.22.18 at 5:16 pm

I hope that Tina doesn’t lose her job, because in Ontario, in order to qualify for Ontario Works, she will have to liquidate all of her assets until it reaches $1,000. Every rental income that she earned will be deducted from her next welfare cheque.
If she has a mortgage outstanding, Loans are considered income. Ontario Works will treat her mortgage as Income to be deducted from future welfare cheques.

#11 InvestorsFriend on 01.22.18 at 5:17 pm

Adult money stuff at four is correct. I failed to read his comment before I posted my own.

#12 jason on 01.22.18 at 5:20 pm

First of all as other have said she might not have a loss as the portion of principal for the mortgage is not a write off which i suspect is close to $700. Secondly she will definitely expect a profit in the future as the mortgage is paid off and the interest expense decreases so this would definitely be allow as long as it is market price rent.

See is basically covering her yearly costs against rent with close to a net zero and having to pay her own money to pay the mortgage. Not the best place to be but definitely not the worst. If she doesn’t expect prices to go up she needs to cut her losses.

#13 Deano on 01.22.18 at 5:20 pm

Agreed that Tina’s in negative cash flow and this is a terrible investment, but she could be technically squeezing a tiny profit. My understanding is you only write off the interest on the mortgage payment; the amount that goes to the mortgage principle is taxed as income.

Assuming about half the mortgage payment goes to interest and the other half goes principle, her deductible costs are:

$700 interest + $150 + $100 +$320 = $1270

She’s collecting $1300 rent, so $30 profit per month. Terrible, but technically profitable. Assuming she puts that $30 to the principle on the mortgage, she has to shell out another $670 out of her own pocket to cover the difference. Because this is going on the mortgage principle, it’s not a “cost”. Assuming the property doesn’t lose anymore value, and that she’s not underwater right now, she should be able to recoup those principle payments when she sells the place.

#14 CanadianOne on 01.22.18 at 5:20 pm

http://demographia.com/dhi.pdf

the latest survey on housing affordability from 280+ markets world wide.

#15 Nonplused on 01.22.18 at 5:23 pm

I never did understand condo math. After all, if renting out condos was so lucrative why wouldn’t RIETs be buying them all up left right and center?

Instead the model depends on pre-purchase deposits to help finance the construction and then unloading the units to many smaller companies and individuals, who hope to capitalize on the price going up after the condos are completed. It is a risky speculation. Sure, if the condo goes up you can make several times your deposit in a short time, but if it goes down you are SOL.

A proper rental building is owned entirely by one company or individual. That way you don’t have to worry about condo boards and the scale is there to pay for maintenance and also thugs to make sure the rent is collected and any damages are paid for. The last thing you want to do is own one unit in a multi-story high rise. You will have close to no say about anything.

#16 Bad Math on 01.22.18 at 5:24 pm

You forgot the part where you can deduct interest paid to your mortgage as well as reasonable expenses (repairs, advertising etc) from rental income. That significantly lowers the tax burden on rental income.

That said, you are dead on about the rest. Almost nowhere in Canada is it profitable to hold a rental property. Many people who are successful in achieving rental property income streams (in the US) abide by the 1% rule – if you can’t get 1% of the price of the property in monthly rent, you aren’t making enough money to justify that rental property.

To make matters worse for your example, not only is she cash flowing negatively on her apartment, but she is also missing out on the expected returns that her down payment, however small, could be earning in a balanced portfolio.

#17 T on 01.22.18 at 5:27 pm

I know a few realtors who promote writing rental losses against income. They have done this themselves for several years and told me I should do the same before I sold my Toronto condo last year.

Is there a ‘loophole’ which allows realtors to perpetually write off rental losses because they are ‘in the business’?

#18 Toronto Tim on 01.22.18 at 5:29 pm

To the deluded,

Stop talking about averages. Do a tour of neighborhoods in Toronto and you will see that incomes do support prices in Toronto. And, in fact, when you compare prices relative to incomes, Toronto can be a fantastic place to live. MLS has all the information you need to inform yourself as I shared below.

All this talk about average incomes in Toronto and average home prices is delusional.

The average person in Toronto cannot afford a single detached home. And definitely not in a good school district near the subway. There aren’t many of those homes and will only be reserved for the successful.

Let’s take a look at some of the prized neighborhoods and the incomes that support these homes as shown below.

And remember, this is just reported income, this does not include capital gains or dividend income on T4’s.

The takeaway is, Toronto is a city where you can make it big. And, if you do, the house prices are not out of reach relative to what you can earn. In what other cities can people make that kind of money and only on 4-5x income to live in the best neighborhoods?

Instead of hoping for lower prices, your focus should be to take advantage of what Toronto offers and make more money. Perhaps the reader’s of this blog should knock on some of these neighbors doors and ask them how they did it. And maybe they can learn how someone that lives in Lawrence Park is pulling in 1.3 Million every year at the age of 41?

And if you can’t make it big in the city then move to Ottawa. You can work for the government, collect a pension, and move back and rent in Toronto and maybe, one day, write a blog.

No more whining and waiting. Get out there and make it happen.

BABY POINT

Median age – 42
Average income – 932k/year

https://www.realtor.ca/Residential/Single-Family/18690806/84-BABY-POINT-RD-Toronto-Ontario-M6S2G3-Lambton-Baby-Point#v=n

KINGSWAY

Median age – 39 years
Average income – 650k/year.

https://www.realtor.ca/Residential/Single-Family/18757082/35-KINGSWAY-CRES-Toronto-Ontario-M8X2P9-Kingsway-South#v=n

ROSEDALE

Median Age – 42
Average Income – 736k/year

https://www.realtor.ca/Residential/Single-Family/18902883/19-WHITNEY-AVE-Toronto-Ontario-M4W2A7-Rosedale-Moore-Park#v=n

LAWRENCE PARK

Median age – 41
Average income – 1.3 Million / year

https://www.realtor.ca/Residential/Single-Family/19005265/122-ROCHESTER-AVE-Toronto-Ontario-M4N1P1-Bridle-Path-Sunnybrook-York-Mills#v=n

#19 dakkie on 01.22.18 at 5:39 pm

EXPOSED: Canadian Banks CAUGHT Rigging Rates! – What You Need To Know

http://investmentwatchblog.com/exposed-canadian-banks-caught-rigging-rates-what-you-need-to-know/

Why are you reading that crud? – Garth

#20 Montrealer on 01.22.18 at 5:42 pm

Interesting stats here – shows exactly what youve been saying garth – it’s now a buyers market

http://torontostoreys.com/2018/01/report-january-buyers-market/

What’s your prediction on Montreal real estate?

#21 Renter's Revenge! on 01.22.18 at 5:42 pm

“Never underestimate the power of denial”

Scene from American Beauty (weird clip – it’s a series of stills with the sound laid over top):
https://www.youtube.com/watch?v=fr9EQOpan88

Rental math doesn’t work out, even in Winnipeg. Co-worker (an engineer) is thinking of moving out of his rental this spring. Has convinced himself that buying a condo is the right move at this point. He uses the standard wishy-washy, non-math, arguments for why it’s better to buy now:

“If you rent, you’re just throwing money away, but if you buy at least you have something.”

“The rent is about the same as the mortgage. All you pay in addition to that are the condo fees and property tax.”

The actual math:
Condo rents for $1000/mth = $12,000/yr
Condo sells for $275,000. Interest at 3% is $8,250/yr
Condo fees = $342/mth = $4,104/yr
Average property tax in Winnipeg = Property value x 1.3% = $3,575/yr
Total annual cost to own = $15,929
(not including opportunity cost on any equity in the condo, or future special assessments*)

*The condo fee seems very low considering what it includes: Heat, Hydro, Common Area Maintenance, Insurance, Landscaping, Property Management, Water. There’s not much left over after paying for all stuff that to build up a contingency fund, which leaves the owners at greater risk of special assessments in the future.

When you can’t even get engineers to do the math when it comes to finances, how is the rest of population supposed to get through life?

#22 Midnights on 01.22.18 at 5:43 pm

Rental prices rise in the GTA amid low vacancy, fierce tenant competition…
https://www.theglobeandmail.com/real-estate/rental-prices-rise-in-the-gta-amid-low-vacancy-fierce-tenant-competition/article37692158/

#23 Ian on 01.22.18 at 5:44 pm

This has to add to the selling pressure.

Once people realise their rental unit is CF negative AND their equity value is dropping, it will be ‘Katie bar the door’ to unload real estate.

Looked at the Zolo earlier…Toronto sales around a 13 month low! And the chart is 45 degrees down. Ugly!

I have two Home Capital permabulls on my Facebook who will undoubtedly tell me how wrong I am tonight after seeing that giant green bar today.

#24 Math on 01.22.18 at 5:46 pm

If she pays $1400/month interest, on a $361k loan (95% of purchase price) then she needs to find a better lender.

$1400/m is $16.8K per year for $361k loan:

She is paying almost 4.7% interest.

So why is she paying a “posted-rate?”
(As an aside: the whole ‘posted rates’ phenomenon here in Canada is a freaking farce. Who ever thought this was a good idea? Fictional rates?)

So yeah, that $1400 monthly probably includes principle repayment, which means she may not be losing money.

You forgot to add closing costs and CMHC premium to the mortgaged amount. Also your calc is wrong. But thanks for dropping in. – Garth

#25 Ian on 01.22.18 at 5:51 pm

UUP was interesting today.

Has been kind of stalled out the last few sessions, but it is NOT bottoming.

Stockcharts’ Price Momentum Oscillator on it is staying pointed well down, no blips. AND the weekly bar for this week begins as red.

Expect more losses in the USD! How long can the US stock market stay going up diverging like this?

Very bizarre times.

#26 For those about to flop... on 01.22.18 at 5:51 pm

Pink Snow falling in West Vancouver.

This 60’s build was picked up for 4.35 in February 2017

Now asking 4.48 after trying to get 4.98 and 4.88

About to get real for these guys…

M43BC

3050 Spencer Drive, West Vancouver, BC, V7V 3C7

2017-07-28 : $4,988,000
2017-10-30 : $4,880,000
2017-12-03 : $4,488,000

https://www.zolo.ca/west-vancouver-real-estate/3050-spencer-drive

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#27 Paulo on 01.22.18 at 5:54 pm

The Reality is unless you have at least 50% equity in the
property you are intending to rent you are in a negative situation,unless you can expect exceptional appreciation in property value. since that ship has sailed and its downhill from here into the foreseeable future particularly in the GTA and YVR, novice landlords and speckers are about to be given a costly lesson.
as far as tax relief,you had better be reporting a taxable “profit” within 3 years.

#28 Welcome to Slurrey on 01.22.18 at 5:59 pm

Rental math………… ive had the rental math argument before with those in YVR , the way people see it here is……….. who cares if your not cash flow positive , rental offsets your costs , price appreciation will outweigh your losses on income………… so far they are right

#29 SoggyShorts on 01.22.18 at 6:03 pm

#14 Nonplused on 01.22.18 at 5:23 pm
I never did understand condo math. After all, if renting out condos was so lucrative why wouldn’t RIETs be buying them all up left right and center?
***************************
Exactly.
The only difference between a condo and an apartment is who owns it. If renting out a condo made sense, then shouldn’t there be more apartments being built?

#30 Smoking Man on 01.22.18 at 6:04 pm

#8 Prematurely Banned Canadian Millenial on 01.22.18 at 5:10 pm
BANNED.

Bahaha. This post gave off hallarious visual effects. That’s why I’m laughing so hard.

I see wild cat trapped in garbage bin screaming and trying to scratch it’s way out. But it can’t. Going even crazier and more insane.

Now dogs, we follow rules.

#31 TheDood on 01.22.18 at 6:07 pm

#2 LivinLarge on 01.22.18 at 4:50 pm
“And who decides what a reasonable period of time might be to allow them? Guess. It’s not the taxpayer.”….it never is.

The beatings will continue until morale improves.
___________________________________________

:) I love this blog!

#32 Fluorine on 01.22.18 at 6:08 pm

So nice & quiet in here!

And on topic… thanks G for making it much easier to scroll thru the comments to find the good ones.

#33 Linda on 01.22.18 at 6:12 pm

I don’t know if its applicable, but it used to be that small business start ups had 3 years to show a profit before the CRA started looking at them to see whether any losses deducted should still be allowed. In Tina’s case, the fact she moved out & converted her former abode to a rental unit may not be seen in a favorable light by the CRA insofar as deduction of any losses are concerned. Even if they let her have them up front, based on Garth’s post that decision might be rescinded & then presumably Tina would then be on the hook for taxes for all those disallowed losses. Given the monthly loss, it might be best for her to sell at whatever she could get rather than continue to subsidize someone else to live in her place instead of living there herself.

#34 Arun on 01.22.18 at 6:13 pm

Lol…canadians are light years behind us aussies in this game…time for canada to implement negative gearing….when will this housing insanity end…..unlikely to be a happy ending….

#35 My terms on 01.22.18 at 6:13 pm

@17 Toronto Tim

Take a hike buddy! I like my average job just the way it is! I come into the office. Shuffle a few papers. Log into the corporate wifi just before lunch to watch about 15 minutes of porn. Go for lunch. Return to office and shuffle a few more papers. Talk to the boss for about 15 minutes. Log into the wifi for one last round of porn for the day then go home.

So sorry buddy but I’m waiting for housing to meet me on my terms not the other way around.

#36 Smartalox on 01.22.18 at 6:19 pm

@ T #16:

There is a loophole that permits write offs against income. It’s called ‘ignorance’. Doesn’t always work though. It only works when the CRA is ignorant. When the CRA catches on, pleading ‘ignorance’ at that point has little to no effect.

Now if you self-incorporate, and call yourself ‘Landlord Inc.’ you pay a lot less in taxes, write off expenses against (corporate) revenues, amortize costs, and retain capital gains when you sell.

Amateurs.

#37 InvestorsFriend on 01.22.18 at 6:23 pm

Short Home Capital Against Buffett LOL

#221 Ian on 01.22.18 at 2:34 pm said:

Ooooh boy dogs, did I ever dodge a bullet!

Some of you might remember my post back in (October?) where I tried to short Home Capital. Scotia wouldn’t give me any.

Tried last Friday again, couldn’t get any. Big green bar today!!

I still think it will turn into a festering pile of dog poo, I just won’t be there for the decline.

****************************************
Ian, I think you would do well to remeber Rule Number One”

“Always Assume that Buffett is correct” and Rule number two:

“Don’t forget rule number one”.

I told this blog back in June that as soon as Buffett entered the picture, Home Capital was completely out of the woods. Home Capital suffered a crisis of confidence in May. As soon as Buffett came in, Home Capital was given the absolute gold star of approval. The imprimatur of Buffett meant everything.

Also remember that it is one thing to predict that a stock will fall and simply decline to invest. Actually shorting a stock is vastly different and drains a tremendous amount of energy as you WILL obsess about short positions. There is loads of money to be made with far less stress on the long side of things.

Betting against Warren Buffett? Seriously?

#38 Zapstrap on 01.22.18 at 6:27 pm

#3 Arse on 01.22.18 at 4:51 pm

That Dog Ain’t Ugly. It is cute

That Dog Ain’t Cute. It is ugly.

#39 jess on 01.22.18 at 6:27 pm

Pennsylvania Supreme Court Strikes Down Congressional Map In Partisan Gerrymandering Case

The state court — in a brief, two-page ruling — ordered new congressional maps to be drawn over the next month
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE
DISTRICT
https://tinyurl.com/ydao2cnj

must be redrawn before this year’s elections

Five of the seven justices on the court agreed with the League of Women Voters and others who brought the case alleging that the map is an unconstitutional “partisan gerrymander.” Under the map, only five of the state’s 18 congressional districts are represented by Democrats — despite the fact that registered Democrats outnumber Republicans in the swing state.

#40 Danny on 01.22.18 at 6:33 pm

Never thought I would say this but “thank you CRA for tracking those that earn income from renting out properties ”

Last year one of 3 ….45 storey condominiums being built at Bloor and Islington…..sold in one week….approximately 500 units in the one tower. Salesperson told me that many were multiple purchases. Sold before new rent control for newer buildings. Also receptionist could hardly speak English.

Wait until these 3 towers plus 2 more just a couple of blocks over are ready for occupancy by middle of 2019.
Yes as you said Garth 50% are speculators and will go on the market at one time….that means…..1,500 units within a few blocks.

With rent control on all rental units thanks to the Ontario government….all landlords treated equally….tenants are going to be a lot less unsure of their financial expenses for the future.

Tenants can sleep easier.

Speculators not sure what to do…as you eloquently noted today Garth.

#41 Stan Brooks on 01.22.18 at 6:35 pm

The ugly truth.

Dow up 142 point, TSX down on a day in which both gold and oil are up?

#42 Happy Housing Crash Everyone! on 01.22.18 at 6:37 pm

Midnights on 01.22.18 at 5:43 pm
Rental prices rise in the GTA amid low vacancy, fierce tenant competition…
https://www.theglobeandmail.com/real-estate/rental-prices-rise-in-the-gta-amid-low-vacancy-fierce-tenant-competition/article37692158/

Lol pure SHYSTER fiction. Cashflow negative = lots of product

#43 crossbordershopper on 01.22.18 at 6:42 pm

nflx beat , made 10 grand. looking at lam for wednesday. beat. we should talk about stocks , i dont understand who cares about Tina, so she breaks even on cash flow, and she is basically paying for her condo. the tennant pays the operating costs all in condo fee, insurance, financing, repairs(we all know they are coming and should be amortized) .
so if the condo doesnt rise in value, the game is bs. no leverage play on the asset.
she should just go to work live all Canadians, the system in Canada is about the 100 families who control everything the government, the bank the insurance companies. just accept it. It is an exception to make money in Canada, the system is not set up for you to be successful. what do you think its America.

#44 Mike on 01.22.18 at 6:44 pm

.
Hello from GVR.

This doesnt apply to illegal basement suites here. We pay no taxes on that income. We got plenty of such illegal suites and nobody cares. Helps to pay for $1M+ mortgages.

Still booming here. No B20, no foreigner tax, no Poloz interest rates here.

#45 Ian on 01.22.18 at 6:45 pm

#36 investors, er ‘friend’

Umm…not only was Warren Buffett my first investment hero in the 90s, I went to his annual meeting in Omaha in 1997 and have read all his annual reports and every book about him.

If you had done the same, you’d know he’s been wrong about LOTS of things, and he’s very forthright when he is. Are you not aware of his losing a billion on US Airways? Which by the way prompted him to make a joke:

Q: How do you become a millionaire?

A: Become a billionaire, then buy an airline.

That joke is epic!

I don’t know how he got the idea he should invest in Canadian subprime, but he will be well wrong. And you will be too if you’re long HCG.

#46 earthboundmisfit on 01.22.18 at 6:48 pm

@34 My terms …… you sound like a typical (un)civil servant.

#47 down_boy on 01.22.18 at 6:48 pm

The ugly reality….called it on here months ago:
https://domainnamewire.com/2017/11/01/amazon-coin-amazon-com-registers-cryptocurrency-domain-names/

Amazon.
The BIG leagues, boys.

#48 For those about to flop... on 01.22.18 at 6:51 pm

#43 Mike on 01.22.18 at 6:44 pm
.
Hello from GVR.

This doesnt apply to illegal basement suites here. We pay no taxes on that income. We got plenty of such illegal suites and nobody cares. Helps to pay for $1M+ mortgages.

Still booming here. No B20, no foreigner tax, no Poloz interest rates here.

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

Mike,some light reading for you this evening…

M43BC

$$$$$$$$$$$$$$$$$$$$$$$$$$$

Broadway
for the flop…
(btw this month broke new records in my hood 2.5 for 33′ lot and 2.2 for 25′)

https://www.zolo.ca/delta-real-estate/1772-55-street
Sold 1.07 Paid 1.14 Loss ,Pink Snow

https://www.zolo.ca/vancouver-real-estate/6626-inverness-street
Sold 1.555 Paid 1.67 Loss ,Pink Snow

https://www.zolo.ca/delta-real-estate/11231-64a-avenue
Sold 1.17 Paid 1.24 Loss ,Pink Snow

https://www.zolo.ca/burnaby-real-estate/3041-noel-drive
Sold 1.215 Paid 1.18 Loss after expenses.Pink Snow

https://www.zolo.ca/richmond-real-estate/9551-kirkmond-crescent
Sold 2.050 Paid 2.01 Loss after expenses.Pink Snow

https://www.zolo.ca/vancouver-real-estate/2316-w-21st-avenue
Sold 3.76 Paid 3.53 Pink Draw

https://www.zolo.ca/north-vancouver-real-estate/2355-panorama-drive
Sold 1.995 Paid 1.97 Loss after expenses,Pink Snow

https://www.zolo.ca/burnaby-real-estate/6020-malvern-avenue
Sold 1.775 Paid 2.01 Loss, Pink Snow.

https://www.zolo.ca/vancouver-real-estate/2306-w-12th-avenue
Sold 2.885 Paid 2.93 Loss, Pink Snow

https://www.zolo.ca/port-coquitlam-real-estate/3550-pearkes-place
Sold 0.715 Paid 830 Loss, Pink Snow.

https://www.zolo.ca/vancouver-real-estate/2993-w-21st-avenue
???

https://www.zolo.ca/vancouver-real-estate/5540-windsor-street
Sold 1.587 Paid 1.51 Loss after expenses.This one had two renovations.Pink Snow

Thanks for doing this Broadway.

And so I think I can see the pattern,can’t you?

Even the cheapo at Pearkes Pl took a decent loss.

Anyone who is grateful for this information please make a donation at the Terry Fox Foundation.

Flop For Fox Fund…

M43BC

http://www.terryfox.org/get-involved/ways-to-give/

#49 OttawaMike on 01.22.18 at 6:52 pm

How about letting SCM just get a single word or phrase in?
That way we can just get small doses of the “cat in the garbage can”

#50 Saint Herb on 01.22.18 at 6:54 pm

@15 Bad Math

“That said, you are dead on about the rest. Almost nowhere in Canada is it profitable to hold a rental property. Many people who are successful in achieving rental property income streams (in the US) abide by the 1% rule – if you can’t get 1% of the price of the property in monthly rent, you aren’t making enough money to justify that rental property.”

That math says that the typical house in my area that sells for $1,250,000 should rent for $12,500/mth !!!!

Good luck renting for that. I don’t even pay a quarter of that. That 1% guide line can’t be right.

But that is the problem, the price of the house is way, way to high. Like more than triple what it should be. How can this ever become balanced again, where the investment matches the rental income which matches the employment income. Everything seems out of balance.

#51 InvestorsFriend on 01.22.18 at 6:58 pm

Don’t Test Me on Warren Buffett

#44 Ian on 01.22.18 at 6:45 pm responded:

#36 investors, er ‘friend’

Umm…not only was Warren Buffett my first investment hero in the 90s, I went to his annual meeting in Omaha in 1997 and have read all his annual reports and every book about him.

If you had done the same, you’d know he’s been wrong about LOTS of things, and he’s very forthright when he is. Are you not aware of his losing a billion on US Airways? Which by the way prompted him to make a joke:

****************************************
Well, I never said Buffett is never wrong. But I do say a good rule is to always ASSUME he is right. The odds will be on your side.

You are smart to be a Buffett devotee.

I was a little later than you and attended the meeting in 2003. I have all his letters back to 1957 in a binder, well thumbed.

He did joke about his Airline bets. I do believe if you read the annual letters again closely you will see that although he was down on his U.S. Airways preferred share bet, it ultimately rebounded and he got out at a profit. But you are right of course that he became quite negative on Airlines. Absolutely he is wrong sometimes. But don’t ever bet on it.

I am glad to know there are other Buffett devotees on the Board here.

#52 OttawaMike on 01.22.18 at 6:59 pm

Rental math. Say, did Brad Lamb mention any of this?
_________________

I don’t know what Brad Lamb is mentioning these days. He blocked me years ago when I tweeted that I’d rather juggle running chainsaws than invest in his latest Fortress syndicate condo development.

Let’s have a look and see how that syndicate worked out:
https://www.google.ca/amp/www.macleans.ca/economy/angry-investors-seek-class-action-against-high-profile-seller-of-risky-syndicated-mortgages/amp/

Oh, merde.

#53 InvestorsFriend on 01.22.18 at 7:00 pm

Ian, surely you recognized that my two Buffett rules are a word play on his famous two rules:

1. Don’t lose money.

2. Don’t forget rule number one.

#54 Taxdude on 01.22.18 at 7:01 pm

As others have pointed out, she is likely not investing at a tax loss. She’s definitely cash flow negative, though, which is an awful spot to be as an income investor. Hence why professionals stay out of residential condo units and its simply a space for DIY landlords to put sweat equity into their retirement funds.

She’s in the extremely unenviable position of being taxable while losing cash. There will be many innocent fools like her in the years ahead as people who can’t do math spend hundreds of thousands (if not millions) of the bank’s money on places they can’t afford (but all the professionals insisted they could)!

As a side note, if I were renting out at an honest fair market value and taking a loss, I wouldn’t worry to much about the CRA disallowing my losses in the first few years. Courts have held that as long as you can expect to turn a profit eventually (in nominal, not real, dollars), the losses would be allowed. If she has to get into the minutia with a CRA auditor about it, it will be quite clear that as the mortgage gets paid down there will be a lower interest expense and, in the long run, the property will turn a taxable profit.

Of course, she will one day despise the fact that she could have done so much more with her money than “earn” a trivial taxable profit (in nominal dollars) whilst actually losing money when she factors in the opportunity cost of what she could have done with that money (passively invested in the open market and earn 5-7% a year in real dollar terms)!

She’s made her bed now though. Selling costs probably make it a bad call to sell in this market. Can’t imagine making a bad investment AND having to stand by it due to high transaction costs. At least it only costs me $5-$10 and 5 minutes to get out of the bad positions I put myself in!

#55 Timmy on 01.22.18 at 7:03 pm

2 bedrooms in Vancouver rent for $2600/ month

#56 Your terms on 01.22.18 at 7:08 pm

@my terms – 34

Sounds like a liberal voting millennial paradise. Leave work at 3:30. Take Friday’s off to drive to the cottage. Sit on the dock with bearded friends eating children’s cereal, drinking PBR, and smoking hard to find afghani cigarettes (because they are hard to find and are super cool) complaining that work doesn’t have any meaning. Then beg the government to do something to make a house near trinity bellwoods affordable as prices are craaaazy.

#57 Paul on 01.22.18 at 7:14 pm

#21 Midnights on 01.22.18 at 5:43 pm

Fake news, Garth says there’s lots in his town.

#58 InvestorsFriend on 01.22.18 at 7:14 pm

Ian, I’ve been a bit over the top in my responses to you. I should not do that.

#59 vanreal on 01.22.18 at 7:15 pm

The bigger question is why would anyone buy a condo in Calgary or Edmonton. I take it oily city is code for those two places.

#60 Chaddywack on 01.22.18 at 7:17 pm

It’s totally illegal, but most people in the Vancouver area don’t even declare their rental income so loss provisions wouldn’t even come into play. It’s just cash money under the table.

Also it’s not policy or law, but generally CRA gives you three years of losses as practice….after that it’s game on, but I also saw CRA get on someone I knew with a massive rental loss after only one year in the red since they decided there was never a prospect of a gain within the next 10 years at least.

As with anything in life, govern yourself accordingly, and if you’re not declaring rental income all it takes is a pissed off tenant to report you to CRA when you try and hold their damage deposit for a lame reason :)

#61 sean on 01.22.18 at 7:18 pm

As an Gen Xer with Boomer parents and post-secondary age millennial children, I think inter-generational disparities are going to be a key issue over the next 20-30 years. This will particularly be the case as the Boomer cohort shrinks, and the Millennials move into their prime voting years and fully understand that their taxes are higher and societal returns lower than those experienced by previous generations.

Obviously it’s Garth’s blog, but for me having some “angsty” Millennial input is useful to avoid this being a Boomer/Xer echo chamber (possibly after some time on the bench for bad behaviour to encourage better manners in future :-)

#62 JSS on 01.22.18 at 7:20 pm

Three words for real estate investors:

“XRE in TFSA”

#63 crowdedelevatorfartz on 01.22.18 at 7:24 pm

@#8 Permanently Banned Millenial

Ahahahahahahahahahahahahahahahahahahaha.

#64 Bezengy on 01.22.18 at 7:25 pm

If you’re losing money renting to a good tenant, what happens when you get a bad one? I was landlord for 25 years, and trust me, good tenants are hard to find, just ask any landlord.

#65 acdel on 01.22.18 at 7:34 pm

Good informative post today Garth, I learned a few things regarding on what can and cannot deduct on renting out a suite.

#66 down_boy on 01.22.18 at 7:38 pm

” The logic is simple. If you invest in something to create taxable income (a profit) then the CRA will let you deduct costs which exceed that income for a reasonable time – until profitability is achieved. If there’s no expectation of profit because no tenant will pay enough to carry your condo, ever, then tough. The CRA has every right to (and may eventually) disallow the losses/expenses you wrote off against your salary.”

What if it’s not a sideline rental, but a small business, like I dunno, blueberries? It takes massive investment in the first year, then growth over seven years before a crop. All with constant maintenance, water, fertilizer. Might not show a profit for 10-15 years. But blueberries are a food, and the payoff in health, nutrition benefits the greater good. How long can a small business write off expenses with the expectation of profit many years out?

#67 BTTT on 01.22.18 at 7:44 pm

turner math: where $0 of your mortgage payments is considered to be building you equity.

Sure the cost to operate the rental is $700 more than the incoming cashflow, but at one point the owner will sell and recoup equity.

Paying back debt is paying back debt. Meanwhile the losses are real. – Garth

#68 Prematurely Banned Canadian Millenial on 01.22.18 at 7:44 pm

BANNED

#69 Bitcoinnaire on 01.22.18 at 7:46 pm

Excellent post.

“Investment” condos are such a tragic mis-allocation of resources. Who ever gave Canadians the idea that this was the way to proceed in the first place?

Stories of wild capital gains during that short run-up in values, I’m sure. The bear is back now.

#70 Bob Dog on 01.22.18 at 7:51 pm

$700.00 per month! Thats almost my entire monthly beer budget. Glad I rent.

If half of canada is writing off their rental losses, wont that affect government tax revenue in a negative way?

Forget Buffet, there are actually 10 types of people in the world. Those who understand binary and those who don’t.

#71 Damifino on 01.22.18 at 7:59 pm

#14 Nonplused

A proper rental building is owned entirely by one company or individual. That way you don’t have to worry about condo boards and the scale is there to pay for maintenance and also thugs to make sure the rent is collected and any damages are paid for. The last thing you want to do is own one unit in a multi-story high rise. You will have close to no say about anything.
———————————-

Nailed it!!

#72 steph on 01.22.18 at 8:00 pm

No rational argument can change their beliefs.
Delusion is self inflicted and self destructed.
Let them fall.
They might understand better after they realize they were foolish.
Or maybe not. History has a funny way to repeat itself.
Some things never change.
Some do.

#73 T on 01.22.18 at 8:04 pm

#17 Toronto Tim on 01.22.18 at 5:29 pm
To the deluded,

——————

Lol!

‘To the deluded’…

By any chance are you the current president of treb, Tim? Only a know it all realtor would post something like this.

Again – I will point out you are referencing high net worth neighbourhoods, rich outliers when discussing real estate.

Take a look in the rest of the gta where $90k combined income families have been purchasing $750k – $1M ‘starter’ properties. Look at Brampton, Mississauga, Pickering, Whitby.

It is more than outrageous you would point to very rich neighbourhoods as indicators of the overall market health and market participants.

Do some more research. Get back when you have a clue.

#74 Cca question on 01.22.18 at 8:11 pm

Anyone have insight on claiming cca on the building portion of a rental property?

#75 Dan.t on 01.22.18 at 8:14 pm

Give it up Garth, only house matters in Canada. Even if you lose money you win. The best thing is that you don’t have to tell friends and family that you actually are losing money in RE because they will disown you.

Just buy and then if you have doubts, ask any other local, then buy. Simple. You can not lose money in real estate. Get over it.

Money means jack. Debt and house are awesome. You simply can’t lose. Ask any mortgage broker, real estate agent or nice lady at the bank who wants to enslave you to 25+ years of debt servitude and they will tell you the same…duh!

Buy and if you can buy a few negative cash flow rentals because..this beast can not be tamed. You will never lose.

Tell me how my advise is in 6 years:-) Wait, tip me in BTC:
1GCjMxh4WmGRncVbDSoxW9PLjZaJsiRSeC

#76 Bobo on 01.22.18 at 8:15 pm

Buying for price increases is gambling, investors buy cashflow and ROI.
I stopped buying rentals 5 years ago when returns and cap rates became to low. The properties I still own were all purchased only if the return on investment (down payment) was a minimum of 15%. On top of that was reduction of principal, any increase in value is a bonus. This is the way most older investors I know did it. If you buy this way you will not loose. Other wise its a gamble – hard to find any deals these days

#77 Andrew Woburn on 01.22.18 at 8:24 pm

#53 Taxdude on 01.22.18 at 7:01 pm
As a side note, if I were renting out at an honest fair market value and taking a loss, I wouldn’t worry to much about the CRA disallowing my losses in the first few years. Courts have held that as long as you can expect to turn a profit eventually (in nominal, not real, dollars), the losses would be allowed. If she has to get into the minutia with a CRA auditor about it, it will be quite clear that as the mortgage gets paid down there will be a lower interest expense and, in the long run, the property will turn a taxable profit.
=====================

On balance, based on my experience in the tax trenches, I would agree with Taxdude on this point.

Most of the people I ever worked with at CRA were average middle class joe’s with no burning desire to crucify ordinary people and had far more rabbits to chase than some hapless landlord with three years of losses. Of course, some weren’t, which can turn things into Russian roulette for taxpayers.

The situations that were more interesting were like the wealthy car dealer who was writing off his hobby farm and exotic cattle against his dealership income. His prospects of net income within the relevant century were approximately zero which turned out to be equal to his deduction.

#78 Peter on 01.22.18 at 8:25 pm

Maybe I’m just dense, but I really don’t see how a tax write off turns money loosing properties into a win. Suppose you were loosing $700 per month and the CRA allowed you to claim all of that against your income. So what? At best, the CRA is subsidising you roughly $350 per month, but you’re still loosing $350 per month. The property is still a blood sucking albatross. The CRA has simply slowed the haemorrhaging.

#79 Canadian Millenial Can't You Just Post Once a Day? on 01.22.18 at 8:27 pm

why do you have to dominate the thread? Actually if I was the moderator I’d have a rule. 2 posts a day, not more

#80 Capt. Serious on 01.22.18 at 8:29 pm

Today’s post could have been titled Morons 2.0.

#81 Mark on 01.22.18 at 8:32 pm

“Dow up 142 point, TSX down on a day in which both gold and oil are up?”

Yup, the TSX is so terribly hated. I love it. Keeps it dirt cheap for me to continue buying hand over fist.

A disaster for me personally would be if the TSX rapidly went to its fair value which I calculate to be somewhere between 30 and 40,000 based on long-term historic trendlines and the likely trajectory of interest rates in Canada.

#82 M on 01.22.18 at 8:36 pm

What Tina described is the slow and ugly death of Canada housing bubble.
We should rejoice.

Tina should sell, take whatever she can get then massively short HCG MIC and TSLA on a 2 years time horizon. She will come out VERY rich out of it.

Do babes have guts for something like this ? I doubt it. Not many guys have… and regarding RE, babes more than men (yes..the sexist hard truth) are hopeless.

#83 Toronto T on 01.22.18 at 8:44 pm

@72 T

Who the heck cares about Brampton, Pickering and Whitby?

Glorified garbage dumps of builder grade quality homes with postage stamp backyards. Why would anyone want to spend 90 mins in traffic each way to live in those areas?

Even more important in this market to distinguish the affordability of homes at the neighborhood level. The neighborhoods in the best areas are not at the same risk level as Pickering. The top neighborhoods are at 3-5x income. That is very low for mega cities. it will take a lot for these hoods to decline, which even Garth isn’t forecasting.

So if you wait for a market crash you might be able to buy a home in the burbs at a discount. But, then you may have waited 5-10 years, and in the end, you live in a particle board house in the middle of nowhere.

Though by then the driverless car will shorten the commute?

#84 mathman on 01.22.18 at 8:54 pm

#17 Toronto Tim

Anyone making claims as dumb as you has to be a realtor. Congrats on cherrypicking some of the most balling hoods in the GTA. Mind as well throw in downtown Oakville and Forest Hill while your at it!

Using your stats, if I look at hoods with 1.2-1.8 Million detached, you see average household income of 75k up to 140k was the highest I found in a quick search.

The hoods you picked have very few homes, so one person reporting $5 Million/year completely skews the average up. My old CEO lives in Baby Point, probably the reason the average is so high – what is the median old Tim? I’d say closer to 400k for Baby Point, lots of Drs and low level execs.

The fact of the matter is people with 100k combined income are carrying 700k mtgs all over this city and especially in the burbs. If you make $227k or more as an individual you are in the top 1%, you have cherrypicked the top .25%.

Math

#85 Ronaldo on 01.22.18 at 8:56 pm

#8 Prematurely Banned Canadian Millenial on 01.22.18 at 5:10 pm

BANNED
——————————————————————
He/she gets an “A” for persistence. Reminds me of my older son when he was a child. Would keep pushing until he got a yes answer. On the other hand, it was that same persistence that resulted in him becoming a very successful businessman.

#86 crowdedelevatorfartz on 01.22.18 at 8:59 pm

@#78 Cant you just post once a day?
“why do you have to dominate the thread? ”
++++++

Unfortunately.
In this unfair, dog eat dog, globalist society.
We havent prepare the youth to “lose” every once in a while.
“Participation Awards for everyone ” instead of “Sorry, you came fourth go sit over there and clap for the winners when they get their medals…” has created a generation of entitled whiners that expect kudos for failure….
Nah. Let Screwed Canadian Millenial post again and again and again until their typing fingers bleed….
Banned is banned.
Eventually they’ll figure it out.

#87 Smoking Man on 01.22.18 at 9:05 pm

#67 Prematurely Banned Canadian Millenial on 01.22.18 at 7:44 pm
BANNED

https://youtu.be/MeE2E7nqe0w

Is this what you were trying to say.?

#88 joblo on 01.22.18 at 9:12 pm

This is reassuring, All is good :)

http://edmontonjournal.com/business/local-business/edmonton-chamber-of-commerce-president-optimistic-nafta-will-be-saved

#89 Dr. Talc on 01.22.18 at 9:13 pm

My bank RBC teller said:
” You’re pre approved for a$5,000. interest free (for one year) loan to buy an RRSP.”

There it is folks: our banks are subsidizing tax avoidance with impunity, something the CRA site said they were ‘fighting globally’

,

#90 Ace Goodheart on 01.22.18 at 9:13 pm

Re: #66 BTTT on 01.22.18 at 7:44 pm

“Sure the cost to operate the rental is $700 more than the incoming cashflow, but at one point the owner will sell and recoup equity.”

Ok cool. Works for me. So you give me $1700.00 per month for 25 years. I’ll charge you $700.00 per month as a “fee” for holding your money for you.

At the end of the 25 years, I’ll give you your money back, minus my $700.00 per month fee for holding onto it for you.

Sound fair?

You’ve just been had by the condo industry.

All a new condo is, is a machine for moving money. The folks who build them don’t have a dime to their names. They pump the project, get enough pre-sales to get financing, and then the bank money flows in, the condo goes up, and the units are sold for more than the cost of borrowing.

The builder walks away with money that you borrowed to purchase. 25 years later when you sell, you get back what you put in, minus your $700.00 per month.

Builder gets paid immediately. You wait 25 years.

Builder makes a percentage (usually around 25%) off the total amount that they invested, OF OTHER PEOPLE’S MONEY, into the project.

In other words, they borrow, using the buyers as collateral, while pumping the project using your deposit money as advertising funding. They then pay everyone back and keep the difference.

You spend your own money, pay someone else $700.00 per month to hold it for you, and then have to wait 25 years to get it back (minus $700 per month).

Who do you think is winning here?

Oh and while this is all going on, the beautiful old city that you paid to live next to, is bulldozed to build condos. So you get to live next to a bunch of ugly concrete condo buildings and go out to dinner at chain restaurants that you can find in any suburban strip mall.

#91 Walter Safety on 01.22.18 at 9:14 pm

CRA doesn’t have the manpower to police compliance .
CRA is hardly a model of efficiency. AI helps them flag taxpayers accounts but somebody has to do the work and apart from fraud they only go back 3 to 4 years .
So if you have rental losses as a individual which in the scheme of things are small ( say 10%) of your regular income ,your still paying taxes .You have almost 0 chance of even getting an inquiry in that situation.
Likewise with interest deductibility, why pay the loan off?
Greater Fool wisdom is to not pay your non deductible home mortgage of but rather invest in a balanced portfolio so why not make a deductible interest expense perpetual?

#92 Taxdude on 01.22.18 at 9:16 pm

Re: #76 – Thanks for your concurrence. I agree, the folks at CRA are looking to tick a box and if you aren’t up to some seriously egregious stuff they will let your piddly rental losses go.

Things they don’t like to see average joe do:
Rent out their condo at a loss to family.
Rent your Whistler condo on airbnb when you can’t make it up there and try to write off all your costs without allocating personal portions.
Renting below fair market value (even not to family… for example, friends or Syrian refugees).

Renting for anything less than FMV (unless rent control mandates it) is going to be an easy red flag for a CRA auditor to reassess.

I don’t think it serves Garth’s readers to take an overly conservative position on their genuine rental losses. Sometimes markets suck and that is part of being in the landlord business (even for lengthy periods of time).

#76 Andrew Woburn on 01.22.18 at 8:24 pm
#53 Taxdude on 01.22.18 at 7:01 pm
As a side note, if I were renting out at an honest fair market value and taking a loss, I wouldn’t worry to much about the CRA disallowing my losses in the first few years. Courts have held that as long as you can expect to turn a profit eventually (in nominal, not real, dollars), the losses would be allowed. If she has to get into the minutia with a CRA auditor about it, it will be quite clear that as the mortgage gets paid down there will be a lower interest expense and, in the long run, the property will turn a taxable profit.
=====================

On balance, based on my experience in the tax trenches, I would agree with Taxdude on this point.

Most of the people I ever worked with at CRA were average middle class joe’s with no burning desire to crucify ordinary people and had far more rabbits to chase than some hapless landlord with three years of losses. Of course, some weren’t, which can turn things into Russian roulette for taxpayers.

The situations that were more interesting were like the wealthy car dealer who was writing off his hobby farm and exotic cattle against his dealership income. His prospects of net income within the relevant century were approximately zero which turned out to be equal to his deduction.

#93 InvestorsFriend on 01.22.18 at 9:19 pm

Burning Down The House

It has been confirmed that today’s homes made of glue and wood chips burn very hot and fast.

I noticed it maybe 15 or 20 years ago when we had a lot of huge condo fires in Edmonton that burned extremely fast and completely.

In the 1970’s it seems to me that the only houses that burned down were really old and had stoves or fireplaces for heat.

In those days newer homes were made of 2 by fours with 2 by 12s for floor joists. Real plywood sheathing and plywood or tounge and groove for the roof and floors. Gyprock as we called it covered the walls and was a fire break. I just don’t remember any of these burning down although I am sure there were some.

Now, they burn so hot and fast that fire fighters often cannot enter to rescue anyone for fear of flashover and also falling through burned out floors. There is VERY little time to escape,

The gypsum board fire break is still there. But the house is totally open on the main floor (a concept I always hated given noise pollution) so no fire break there. All the wood including the joists are made of glue and woodchips. The furniture is also apparently far more flammable.

Anyhow, the fire chiefs want to mandate sprinklers and it is hard to disagree. With million dollar houses we can afford $20k or whatever for sprinklers and especially if it is less than 10k as it will likely be plastic tubing.

Also there was a foam coating available for the joists called “no-burn” but I don’t think it ever caught on.

#94 Ronaldo on 01.22.18 at 9:28 pm

#28 SoggyShorts on 01.22.18 at 6:03 pm

#14 Nonplused on 01.22.18 at 5:23 pm
I never did understand condo math. After all, if renting out condos was so lucrative why wouldn’t RIETs be buying them all up left right and center?
***************************
Exactly.
The only difference between a condo and an apartment is who owns it. If renting out a condo made sense, then shouldn’t there be more apartments being built?
—————————————————————-
People don’t realize why condos came to be in the first place. Back in the early 70’s when the NDP came into power and imposed rent controls developers said fine, if you want to do that, we will stop building rental properties. And that is exactly what happened. So now, we ended up with shortage of rentals and higher rents and then the government had to get into the business of building affordable housing which resulted in BC Housing and Development Corporation. Now developers started building condominium properties and in effect transferring all the problems associated with rental units onto the individual owners. I was one of those first purchasers as were some of my co-workers. At the time, the cost represented around 2.5 times my annual salary and the cost to service the mortgage, etc. was around 1/3 of my gross income (not family income). Very affordable. Today, not so much.

#95 LivinLarge on 01.22.18 at 9:31 pm

CCA, “Anyone have insight on claiming cca on the building portion of a rental property?”… I presume that you are aware of the effect that using the CCA has on your adjusted cost base and capital gains taxes when you sell? On the upside capgains are the incomes treated most favorably by our tax system, at least for now that is.

#96 dr. talc on 01.22.18 at 9:32 pm

And who decides what a reasonable period of time might be to allow them? Guess. It’s not the taxpayer.

Bill Morneau uses the term ‘reasonableness test’.
With language like that one thing is sure: taxpayers will not be treated equally

#97 T-Rev on 01.22.18 at 9:34 pm

Yup, all true Wizened One. I’ve got a positive cash flow place, and I think it’s a sh*t investment. Bought it in e-town with the expectation of capital appreciation. The opposite has happened, so even though it coughs money every month the value has dropped 10% in 2yrs, so I’m behind. Plus when you weigh the opportunity cost of the capital, its a dog that i’d like to dump. Better off in an index fund with no chance of a special assessment, which is coming because of recent issues with the heating system. Owning rental property at current housing and rental prices only makes sense if property is going up. Leave being a landlord to the pros who have whole building blocks, and who invested the capital to build purpose built rentals on a large scale. You’re not going to get rich with a second property in the next 30 yearsbthe way your parents did in the last 30. Other asset classes will outperform.

#98 acdel on 01.22.18 at 9:39 pm

#84 Ronaldo

Sure, but there is a difference between being a pain in the ass and thinking that one know’s it all to one that
show’s some respect and tries to learn from others that have gone through it.

This is a free site that allows us to express our views, but by judging to the comments above, including me, she needs to grow up! Although Smokie had a crush on her! :)

It’s up to the boss!

#99 Phylis on 01.22.18 at 9:40 pm

#78 post once… the general recommendation would be to start your own blog.

#100 Andrew Woburn on 01.22.18 at 9:48 pm

#77 Peter on 01.22.18 at 8:25 pm
Maybe I’m just dense, but I really don’t see how a tax write off turns money loosing properties into a win. Suppose you were loosing $700 per month and the CRA allowed you to claim all of that against your income. So what? At best, the CRA is subsidising you roughly $350 per month, but you’re still loosing $350 per month. The property is still a blood sucking albatross. The CRA has simply slowed the haemorrhaging.
======================

Yup. For some reason, people are hypnotized into thinking tax losses are not a real losses. Somehow rich dudes are screwing the gub’mint and putting cash in their jeans.

There’s no free tax loss lunch. If you are at a 50% tax rate, you can get 50 cents back on the dollar but only after you’ve spent or borrowed the dollar. It’s never a win unless you’ve been deducting personal expenses against business income. This works until you’re caught. Then it’s Vaseline time.

#101 Smoking Man on 01.22.18 at 9:52 pm

If you think rents are insane in Toronto. Check out my hood. Corona Del Mar California on Zillow.

You won’t beilive it.

#102 millmech on 01.22.18 at 9:54 pm

#49 Saint Herb
Here is one that is pretty close to 1% a month, I bet if you offered $84,000 you could get it. Quite a few out there just got to look though.
124 BOUCHIE STREET, Quesnel, British Columbia, V2J 1L8
MLS® # R2223924

#103 Didn't do it again Canadian Millenial on 01.22.18 at 10:04 pm

BANNED

#104 Tony on 01.22.18 at 10:05 pm

Re: #21 Midnights on 01.22.18 at 5:43 pm

The Globe and Mail would tell you anything. The fact is when property prices fall, rents fall. Calgary resales fell about 25 percent since November 2014 and subsequently rents fell 20 percent. The same scenario is very likely in the entire GTA.

#105 Tony on 01.22.18 at 10:10 pm

Re: #95 dr. talc on 01.22.18 at 9:32 pm

The loose rule of thumb in the past used to be three years. I don’t know if that changed over time or not.

#106 millmech on 01.22.18 at 10:15 pm

By the way not declaring net rental income is fraud, no time limit on it and the clock starts compounding the year it starts. Just think when the cash starved government starts really digging and cross references addresses, ten years of penalties and interest compounded monthly. Little homeowners will be crushed as they can not afford the legal fight.

#107 RBC Teller on 01.22.18 at 10:16 pm

#88
#88 Dr. Talc on 01.22.18 at 9:13 pm
My bank RBC teller said:
” You’re pre approved for a$5,000. interest free (for one year) loan to buy an RRSP.”

Lemme guess, offer only valid when participating in overpriced RBC Mutual funds?
No thanks.

If you can get straight up cash, no interest, then it becomes interesting, as you can put it in a self-directed RSP trading account, and reap 5% dividends off the 5k, a free $250,- after which you immediately pay off the loan.

#108 Smoking Man on 01.22.18 at 10:17 pm

Davos is on. T2 on the jet. His plan to get investment into Canada. Trust us. Seriously? the assault he just did on small business And anyone will trust him.

Delousinal to say the leased. Hope he’s still there when Trump drops in to give them all the T1 solute.

Google it kids.

#109 Bored Accountant on 01.22.18 at 10:23 pm

Actually, the CRA’s position quoted by Garth is not supported in law. You can deduct losses so long as the losses were incurred in earning income from a business or property, and the losses aren’t capital losses. Doesn’t matter that you are not making a profit or that you don’t expect to make a profit for the foreseeable future. The “reasonable expectation of profit test” was thrown out by the Supreme Court in Stewart v. R. 15 years ago. The government has draft legislation to bring back the test but the changes are still in draft and have been a long time now. Of course the CRA can still reassess you, but I doubt the Appeals division of the CRA or the Tax Court would uphold the appeal. But you still lose money and time defending yourself.

Regardless, what I quoted is genuine CRA dogma. Good luck fighting it. – Garth

#110 Yorkville Renter on 01.22.18 at 10:30 pm

negative $700/mo and just-barely break even on paper?

*shudder*

#111 45north on 01.22.18 at 10:34 pm

Bezengy: If you’re losing money renting to a good tenant, what happens when you get a bad one? I was a landlord for 25 years, and trust me, good tenants are hard to find, just ask any landlord.

“I was a landlord” past tense

The past is about to collide with the future. In the past, there has been a slow and gradual process to remove much of the incentive to own a residential property and rent it out. Less incentive has reduced the number and choice of rental properties. In the future, a declining housing market is going to take a good portion of the middle class out of home ownership. They will have fewer and poorer options to rent.

a story:

we rented out the upstairs to a young girl with a baby; my wife and I cleaned up a stroller and gave it to them. A few days later, the boyfriends moved in. According to the Ontario Landlord Tenant Act I couldn’t kick them out. One dark night, two of Toronto’s finest stood behind me while I told the boyfriends to leave. The next day the girl and her boyfriends moved out. Thank God for the Toronto police.

http://www.greaterfool.ca/2013/04/26/all-in-this-together/#comment-238876

#112 Ace Goodheart on 01.22.18 at 10:38 pm

Running rentals sucks even when you are making money. You’re basically your tenant’s butler.

Spent Saturday re-sealing the 100 year old skylight on my building. Every six years, scrape off the old waterproof coating, clean up with some heavy duty scrubber, and then re-seal. Process takes about 4 hours. Luckily Sunday was a nice day to spend on the roof.

Guy who owns the building attached to mine spent $30K replacing all three of his skylights about six years ago.

They all leak now. Can’t re-seal them. Have to sue the company that put them in. Meanwhile, the water seeps through.

All skylights leak. Give them about 5-6 years. They will leak.

I like my 100 year old tin skylights. They don’t make tin like that anymore and the frosted glass is really pretty, old style stuff that you can’t get nowadays. And as long as I scrape off the old tar and replace it with new tar, every six years, they are waterproof.

Hardest $12,000 per year that I make is running that old building. Looks like I have to do more pointing on the North wall in the spring, bricks are starting to spall again.

Can’t wait for the new subway to open…….last rental….ever.

#113 Mortgage Backed Securities on 01.22.18 at 10:40 pm

Those interest rates are not calming landlord spirits…

Commercial Mortgage Backed Securities ETF closes at a 6-month low as 10-Year Treasury yields hit a 40-month high. $CMBS -charliebilello

#114 Dee on 01.22.18 at 10:51 pm

I dread the day my landlord figures this out. But until then, I’ll keep paying $1700/mo to rent a place (Leslieville, semi) that would sell for $600k easy.

#115 Gotta Get Out of Calgary on 01.22.18 at 10:54 pm

#89 Ace Goodheart on 01.22.18 at 9:13 pm

“You’ve just been had by the condo industry.”

Agreed. I have always believed that condos are the “timeshares” of residential real estate.

What do you actually own?

#116 Maple Sugar on 01.22.18 at 11:02 pm

#80 Mark on 01.22.18 at 8:32 pm

“Dow up 142 point, TSX down on a day in which both gold and oil are up?”

Yup, the TSX is so terribly hated. I love it. Keeps it dirt cheap for me to continue buying hand over fist.

A disaster for me personally would be if the TSX rapidly went to its fair value which I calculate to be somewhere between 30 and 40,000 based on long-term historic trendlines and the likely trajectory of interest rates in Canada.
***************

This guy calls the TSX illiquid, and he provides some compelling arguments ( + colour charts!). The rising popularity of passive index ETF’s is certainly keeping a lid on speculative churning, at least in my house.

http://www.pinnacledigest.com/tsx-venture-investing/canadas-stock-market-liquidity-crisis/

#117 Entrepreneur on 01.22.18 at 11:03 pm

Had to reread some of the rules, time to change the tax laws to make it easier. Renting at one time was only use for a short duration as it is not a making-money proposition, usually. The last line was a funny but Brad Lamb is your friend (realtor friend, that is).

And when in negative territory time to move onto other avenues.

It is too bad that some kind of fund/tax could not be set up to take from the companies that extract resources and put into green energy since it takes money and time Time for a proper transition.

#118 Bad Cowboy on 01.22.18 at 11:16 pm

‘#80 Marc….agreed. Buy low sell high. Time in the market, not market timing. I am also buying USD as it swoons. Love that low hanging fruit…and…as the inexpensive P/E’s make for compelling long term buys we also enjoy some lip smacking fat dividends. Some days I feel like one of those movie characters who rolls around on a bed of easy money. Having said that, I see my US stocks on a tear and don’t ignore that it could remain on trend for at least a few more years.

#119 T on 01.22.18 at 11:23 pm

#82 Toronto T on 01.22.18 at 8:44 pm
@72 T

Who the heck cares about Brampton, Pickering and Whitby?

Glorified garbage dumps of builder grade quality homes with postage stamp backyards. Why would anyone want to spend 90 mins in traffic each way to live in those areas?

Even more important in this market to distinguish the affordability of homes at the neighborhood level. The neighborhoods in the best areas are not at the same risk level as Pickering. The top neighborhoods are at 3-5x income. That is very low for mega cities. it will take a lot for these hoods to decline, which even Garth isn’t forecasting.

So if you wait for a market crash you might be able to buy a home in the burbs at a discount. But, then you may have waited 5-10 years, and in the end, you live in a particle board house in the middle of nowhere.

Though by then the driverless car will shorten the commute?

——————

Right, I forgot, everyone works in the city… there aren’t any jobs anywhere else but the centre of the world, Toronto. If you ever left the city you might find there is a lot of life outside of that polluted cesspool. I lived in Toronto for years, left recently, and you couldn’t pay me to move back. Almost every other major city in North America is nicer; from weather to infrastructure to architecture to jobs. Toronto is extremely sub-par. I don’t get why Torontonians think it’s so nice.

Garth forecasting? I don’t read that anywhere. What I get from Garth is the state of things, where value is for those whom are searching for it, and how to maintain balance in all things life.

Fact is purchasing housing in the GTA is a terrible investment, especially at this stage of the various real estate value affecting cycles. If you are looking at is as an investment, this matters greatly. If not, who cares as long as you have the cash or income to carry.

#83 mathman on 01.22.18 at 8:54 pm

He has it dead on.

Keep pumping out the uneducated and uninformed posts, realtor – you have lots of time on your hands for it these days.

#120 T on 01.22.18 at 11:26 pm

To all who care to know, anecdotal but recent (this past week).

I have a realtor friend who just helped an early thirties couple purchase $1.3M property in one of the towns I mentioned – even helped them negotiate the lender take back second mortgage (at nearly 10%) as they didn’t qualify for the total mortgage necessary. Does he care he helped them go into lifelong massive unscalable debt? Nope, all he cares about is that fat commission cheque.

Disgusting – and evidence millenials are helping push this market.

The realtor is also a millenial.

Greed, greed, greed – for all those involved in this transaction.

#121 Ronaldo on 01.22.18 at 11:45 pm

The 10 most unaffordable cities for housing. Vancouver still ranking #3.

https://www.theguardian.com/cities/gallery/2017/jan/23/10-most-unaffordable-cities-housing-in-pictures

#122 Ronaldo on 01.22.18 at 11:47 pm

Here is a better link.

http://www.cbc.ca/news/canada/british-columbia/demographia-international-housing-study-vancouver-ranks-3rd-1.3947668

#123 Paul on 01.22.18 at 11:53 pm

#97 acdel on 01.22.18 at 9:39 pm
#84 Ronaldo

Sure, but there is a difference between being a pain in the ass and thinking that one know’s it all to one that
show’s some respect and tries to learn from others that have gone through it.

This is a free site that allows us to express our views, but by judging to the comments above, including me, she needs to grow up! Although Smokie had a crush on her! :)

It’s up to the boss!

__________

I think she’ll be back by next week (albeit on a very short leash).

#124 Leo Trollstoy on 01.22.18 at 11:55 pm

Millenials are called snowflakes cuz they rant and rave and then, when disciplined, cry and beg

SAD!

#125 Leo Trollstoy on 01.22.18 at 11:58 pm

Wow gold still at $1300 USD for what, the fifth year now? What a winner that has been! Lol

#126 Notagreaterfool on 01.23.18 at 12:26 am

http://torontorealtyblog.com/archives/20272

Fun realtor facts

#127 Smoking Man on 01.23.18 at 12:37 am

I knew God sent me to California for a reason. Epa centre of liberal insanity. It happens her first then comes to Ontario.

Get this. California govt want to confiscate 1/2 of the Trump tax cuts.

Watch money fly to the fly over States.

Dr Smoking Man
Gonzo reporting from the front lines.

#128 Oft deleted much maligned stock.picker on 01.23.18 at 12:38 am

Hah, IMF grudgingly admits that Trump’s tax cuts will boost the entire global economy, not just the US……but…Le Garde days “it’s not enough” . Do these docialist wankers ever put down the song sheet and give credit where credit is due? Listen to Trudeau….it’s the 2008 Obama campaign almost word for word….” I’m all for the middle class”…..” Tax the rich”. This is in the.msin caused by Trudeau hiring David Axelrod who wrote the Obama and Clinton script. Every economist who pronounced that the economy would crash under Trump is eternally an idiot. Justin Trudeau is an idiot for hiring Hillary Clinton’s failed campaign manager…..and this is why Canada’s economy is failing as was the Obama evonomy…..crawling at less than 1% growth…..same as Canada when the truth is laid bare.

#129 acdel on 01.23.18 at 12:49 am

Ladies and Gentlemen; allow me to introduce you to another “Big Short”, it just keeps giving and giving, you are most welcome!

http://www.dailymail.co.uk/money/news/article-5292879/City-operators-millions-following-Carillions-demise.html

#130 jane24 on 01.23.18 at 12:54 am

One bed condos are NEVER forever homes. One day you will have to sell and guess what in a down market buyers want and can afford two bed condos not 500 sqft boxes. In the 1989 downturn it was impossible to sell studios and one-bedders for any money at all. First time time buyers could suddenly afford the second step – a row or semi house.

Remember that the best and smallest loss is always the first loss. Don’t chase the market down

#131 acdel on 01.23.18 at 1:29 am

If I were an American, at the elections, I would probably not have voted due to not being terribly drawn to Trump but especially not to Hillary; the worst of the worst! Sorry Garth, we know you loved her!

But I have to admit; although not perfect he is drawing on me; especially playing the Dems on the shut down, I am indifferent right now but intrigued!

Anyways, different topic for another day!

This story got my attention,no, not on Trump, but about our i&8%$ T2, oops!

http://nationalpost.com/opinion/andrew-coyne-an-attractive-place-to-invest-are-you-serious-prime-minister#comments-area

#132 Dolce Vita on 01.23.18 at 1:51 am

#54 Timmy

$2600/mo with a 2.5% mortgage, 25 yr. amortization will pay for a:

$580,400 mortgage principal (excludes any other costs).

At 3.14%, 25 yr. amortization, the $2600/mo pays for a (again, excludes any other costs):

$541,150 mortgage principal.

Inexpensive condo or bought many years ago?

#133 Nonplused on 01.23.18 at 2:03 am

#116 Entrepreneur

“It is too bad that some kind of fund/tax could not be set up to take from the companies that extract resources and put into green energy since it takes money and time Time for a proper transition.”

It’s called “Royalties” and it is as old as the British Monarchy. Not that they put the money into green energy, they build weapons of war instead, but nobody in the Commonwealth gets to extract resources without paying the crown. They never have. The possible exception being the CPR, which did get fee simple land for building the railway. All that land is owned by Encana now and it is all shut down because the oil and gas is gone.

#134 Dolce Vita on 01.23.18 at 2:07 am

#83 mathman

Do not remember the specific areas (perhaps you can drill down in this CANSIM table better than I) but in Toronto there were these many people with income of $250,000 and over in 2015 (“individuals, taxfilers and dependents”):

62,650

Median total income (dollars) = $31,650.

With a median like that, it makes me wonder how people can afford to carry mortgages in Toronto let alone, cover loss producing “investment” properties like condos.
___________________________

http://www5.statcan.gc.ca/cansim/a47

#135 Dolce Vita on 01.23.18 at 2:10 am

Sorry #83 mathman, StatsCan will not create a link to a filtered table.

Search for:

CANSIM table 111-0008.

#136 The Eye on 01.23.18 at 2:12 am

Ladies and Gentlemen, if you have a bomb shelter, it is time to stock it up and move in. Not that it will help for more than a few weeks but hey you paid for it.

#137 acdel on 01.23.18 at 2:22 am

What do think about this fellow Albertan’s or Canadian’s that could care actually give a crap?

Serious opposition to upgrades to oil pipelines that have been in service to the coast for fifty plus years and yet B.C. are dumping there natural gas into Alberta causing mayhem. Never mind that they are dumping hundreds of millions of litres of raw sewage into the ocean; never mind all those nasty little copper, coal, zinc, gold, etc mines are doing to their province.

My point is that this is all ridiculous; think on how many hundreds of billions could be going to our social services; research to new alternatives, millions of job losses directly and indirectly and for what??? Politics, idiotic special interest groups that are the biggest hypocrites?????

http://business.financialpost.com/commodities/the-natural-gas-sector-is-in-jeopardy-producers-spar-with-transcanada-during-tense-pipeline-hearing

#138 Mark on 01.23.18 at 2:44 am

Multiple offers are back in January:

https://www.youtube.com/watch?v=_t-nwUISp3g

#139 T on 01.23.18 at 3:46 am

#116 Entrepreneur on 01.22.18 at 11:03 pm

It is too bad that some kind of fund/tax could not be set up to take from the companies that extract resources and put into green energy since it takes money and time Time for a proper transition.

—————

Ah, the Robin Hood approach. Nice.

#140 Midnights on 01.23.18 at 4:07 am

Can You Rent and Still Be Wealthy? from Debt Free in 30 in Podcasts. https://itunes.apple.com/ca/podcast/debt-free-in-30/id914550159?mt=2&i=1000399757947

#141 sunseeker on 01.23.18 at 4:44 am

SMC….don’t go away mad,just go away….I’m sure somewhere out there needs a broken record.

#142 Ace Goodheart on 01.23.18 at 7:09 am

RE: #130 acdel on 01.23.18 at 1:29 am

https://www.thestar.com/news/world/2018/01/22/trump-let-states-make-poor-people-work-for-their-health-care-in-kentucky-many-say-theyre-now-facing-a-dead-end.html

People don’t seem to see this.

If you are sick in Kentucky now, and you lose your job (cause you’re poor, you work at a precarious position, and when you try to take sick leave, they fire you), then they also cancel your medicare.

You then have to begin a process to be deemed “medically fragile” so you can get your health care coverage back. All the while you are still sick, but you can’t see a doctor anymore.

Trump is great if you are one of two people:

1. A wealthy American

2. A non American, citizen of another country, who is investing in US stocks.

Otherwise, he is a disaster.

#143 Gravy Train on 01.23.18 at 7:23 am

#107 Smoking Man on 01.22.18 at 10:17 pm
“Davos is on….”
Yes, but not for Melania. She won’t be accompanying her husband, the Donald, to Davos due to “scheduling and logistical issues.” :)

#144 Trumpocalypse2018 on 01.23.18 at 7:42 am

TSUNAMI HEADING FOR THE WEST COAST!!

https://www.cnn.com/2018/01/23/us/alaska-earthquake/index.html

#145 under the radar on 01.23.18 at 8:09 am

Writing was on the wall for years. People speculating in condo’s were thinking the rising tide would make them money . Some did. If you bought before 2011 you have nearly doubled your money in capital appreciation.
Condo’s bought with cash (2011) will likely generate a 4% return if your lucky. Condo’s financed will be negative. All old news. # 75 was on the money. Guy on the street leveraging to buy a condo as a “rental property” never was smart if yield was the goal.

#146 crowdedelevatorfartz on 01.23.18 at 8:16 am

@#102 Banned Canadian Millenial

Webster’s Dictionary: Ban
(located, ironically enough, between these two words)

Banal: trivial, commonplace, unimportant

Ban : Forbid, prohibit, authoritative prohibition.

Banshee:gaelic mythology, a female spirit whose wailing warns of imminent demise

#147 Rooster on 01.23.18 at 8:18 am

#127 Oft deleted much maligned stock.picker on 01.23.18 at 12:38 am

Hah, IMF grudgingly admits that Trump’s tax cuts will boost the entire global economy, not just the US…… Every economist who pronounced that the economy would crash under Trump is eternally an idiot.
*************

I reserve that label for the people who believe economists. Now the world yawns when the US agreed to raise the debt ceiling yet again. Although the world debt clocks show they are in good company:

http://www.usdebtclock.org/world-debt-clock.html

The non-GAAP “reporting”, and focus on cash-flow instead of profit will come back to haunt investors in heavily indebted companies. Sooner or later ……..

It’s awful quiet ….. too quiet ….. the VIX is at 2007 levels. Bet accordingly.

#148 Tater on 01.23.18 at 8:50 am

Toronto Tim on 01.22.18 at 5:29 pm
To the deluded,

Stop talking about averages. Do a tour of neighborhoods in Toronto and you will see that incomes do support prices in Toronto. And, in fact, when you compare prices relative to incomes, Toronto can be a fantastic place to live. MLS has all the information you need to inform yourself as I shared below.

All this talk about average incomes in Toronto and average home prices is delusional.

The average person in Toronto cannot afford a single detached home. And definitely not in a good school district near the subway. There aren’t many of those homes and will only be reserved for the successful.

Let’s take a look at some of the prized neighborhoods and the incomes that support these homes as shown below.

And remember, this is just reported income, this does not include capital gains or dividend income on T4’s.

The takeaway is, Toronto is a city where you can make it big. And, if you do, the house prices are not out of reach relative to what you can earn. In what other cities can people make that kind of money and only on 4-5x income to live in the best neighborhoods?

Instead of hoping for lower prices, your focus should be to take advantage of what Toronto offers and make more money. Perhaps the reader’s of this blog should knock on some of these neighbors doors and ask them how they did it. And maybe they can learn how someone that lives in Lawrence Park is pulling in 1.3 Million every year at the age of 41?

And if you can’t make it big in the city then move to Ottawa. You can work for the government, collect a pension, and move back and rent in Toronto and maybe, one day, write a blog.

No more whining and waiting. Get out there and make it happen.

BABY POINT

Median age – 42
Average income – 932k/year

https://www.realtor.ca/Residential/Single-Family/18690806/84-BABY-POINT-RD-Toronto-Ontario-M6S2G3-Lambton-Baby-Point#v=n

KINGSWAY

Median age – 39 years
Average income – 650k/year.

https://www.realtor.ca/Residential/Single-Family/18757082/35-KINGSWAY-CRES-Toronto-Ontario-M8X2P9-Kingsway-South#v=n

ROSEDALE

Median Age – 42
Average Income – 736k/year

https://www.realtor.ca/Residential/Single-Family/18902883/19-WHITNEY-AVE-Toronto-Ontario-M4W2A7-Rosedale-Moore-Park#v=n

LAWRENCE PARK

Median age – 41
Average income – 1.3 Million / year

https://www.realtor.ca/Residential/Single-Family/19005265/122-ROCHESTER-AVE-Toronto-Ontario-M4N1P1-Bridle-Path-Sunnybrook-York-Mills#v=n
—————————————————————-Some fine cherry picking here. By finding a small pocket of very wealthy homeowners you are dramatically overstating income in this city. As per the 2016 census, the cutoff for the top 1% is 300k in the Toronto area. So, let’s take a look at homes just outside the census area of your examples to get a little perspective, shall we?

Just around the corner from 84 Baby point is this home, where average income is 160k https://www.realtor.ca/Residential/Single-Family/18968166/234-JANE-ST-Toronto-Ontario-M6S3Z1-Lambton-Baby-Point#v=n

Just down the street on the Kingsway, we have this home, average income 204k: https://www.realtor.ca/Residential/Single-Family/18978951/9-THE-KINGSWAY-Toronto-Ontario-M8X2S9-Kingsway-South#v=n

Middle of Rosedale, average income 283k: https://www.realtor.ca/Residential/Single-Family/18993074/166-DOUGLAS-DR-Toronto-Ontario-M4W2B7-Rosedale-Moore-Park#v=n

Next area over in Lawrence Park, average income 403k: https://www.realtor.ca/Residential/Single-Family/18801404/26-BUCKINGHAM-AVE-Toronto-Ontario-M4N1R2-Lawrence-Park-South#v=n

#149 torontorocks on 01.23.18 at 9:10 am

yes. Toronto is the most coveted city in the world, commanding premiums for homes and rents. Everyone is scrambling to get here. Clearly. There are students sent here from abroad because its easy to get in. Their first stop post grad? Back home or the US, London or any of the other first class cities you can pick.

Toronto is so first rate that they decided to force a socialist tram system on the people by 1) using Miller’s overpaid for streetcards and jamming them up our a$$ by shutting down King Street to cars; 2) simultaneously shafting the business owners that put their livelihood into street traffic, which is now gone (on King St); 3) having their left wing socialist bike riding d-bags threaten to boycott ANY dissenting restaurateur, which goes to the “either you’re with us or you’re done” and 4) refusing to acknowledge it was a mistake, despite pouring millions into recutting the streets and having police sit there and harass innocent people who get caught out on King; offering bogus coupons for dining on king and then, having a festival on the street to draw traffic.

Not to mention a transit system that is as new as it was 50 years ago.

#150 Ian on 01.23.18 at 9:19 am

Investors Friend

The problem with buy and hold is that it died in March of 2000 at the market top.

I think a far better roadmap these days is Trend Following by Michael Covel, the new fifth edition, which I highly recommend everyone on here buy.

Part of its message is, don’t predict things and just go with the trend. That applies to me too, as I’ve been saying on here for a while that the US stock market is insanely, stupendously overvalued. But as Garth points out, if you load up of a graph (say of QQQ), any trend follower would be long the market. Until it shows signs of deterioration, that’s the direction to be in.

The strange thing that’s happening now is gold is ALSO up, and UUP well trending down.

One day sitting with Smoking Man looking at the USDCAD pair, we were looking at the Renko plot of it. He also uses a trend following approach which works well with forex.

Don’t ever assume someone is right. Think for yourself! That’s rule #1.

#151 crowdedelevatorfartz on 01.23.18 at 9:32 am

@#143 Trumpocalypse 2018

Tsunami headed for the west coast.

++++++++

So sorry to disappoint my ghoulish amigo.
Tsunami warning has been cancelled.

Though sitting through a 7.8 in Kodiak Alaska will make it hard to stay on a toilet….

#152 Andre on 01.23.18 at 10:12 am

I share your views on the lack of fundamentals to support the appreciation of Canadian real estate; my opinion about it and a desire to try to make sense out of this insanity was the reason I found your blog in the first place. It has been more than 10 years that I have been “preaching” to family and friend that investing in RE in Canada/Australia/HK/Brazil is risky and that eventually the market would have to correct.
I live now in Northern Canada and again I am faced with the very strange feeling that as long as people are capable to “fit” their expenses in their monthly budget this insanity will not end. We have “camps/cabins” that are basically a money drain in the middle of nowhere priced at 200K – 400K; lots of people driving 50 – 80K trucks; lots of people “owning toys” ( boats, skidoos, seadoos….)… I am starting to feel that the we are the insane ones :) … the correction will not happen until people are maxed out of credit (credit cards, line of credit….)… no fire sales… I would start to look for signs of a correction not at the MLS listing but a the repo information (that would be a great stats to follow) as a indicator of when we should expect the correction to come….. until then… we will continue to preach to the deaf ears

#153 Goargos on 01.23.18 at 10:24 am

A one bedroom condo renting for $1300?
Please show me where.

#154 Try Again on 01.23.18 at 10:34 am

This is funny. Why such a hate on landlords?

After saving very hard, I bought 3 apartments 2 years ago around Vancouver. Rents cover ALL expenses with a few hundred left over each month and the 3 apartments have appreciated in the hundreds of thousands.

Tell me it was a bad investment? Others will call it blind luck, but I timed the market that I saw heading to the moon.

#155 Duke on 01.23.18 at 10:52 am

Worse yet, your mortgage payment is not rental expense. This means, Tina is $700 negative cash flow from renting her condo, but she will still pay taxes on $730 per month at the highest tax bracket she will get.

Her loss is not just $700, but it is slightly higher than that.

In short words, she is screwed.

#156 LivinLarge on 01.23.18 at 10:53 am

Andre: “I live now in Northern Canada and again I am faced with the very strange feeling that as long as people are capable to “fit” their expenses in their monthly budget this insanity will not end.”…TOO TRUE BY HALF.

You have nailed the “intangible/emotional” human nature factor that unfortunately governs buy decisions for real estate. Well at least the principal residence market. We can’t wail and cry here with our person predictions of armageddon in principal residence market but far more than valid financial decision making is controlling the process. Nesting, child rearing and just the peace of mind of knowing you have the same roof over your head as long as you can find a way to make the monthly mortgage and tax payment is an incredible motivator and controls the entire process.

Sadly though, there are many ways to “make the monthly payments” that are debilitating and life sucking but those are in the future and average Joes and Janes only live in today.

#157 yo too much on 01.23.18 at 10:55 am

Only reason to spec or own a rental is future gains. Most rentals are cash flow negative, a pain, and will reduce your quality of life unless there is a great ROI.

Owning a primary is a good idea only if the rent vs buy calculator works out based on legitimate numbers; usually, it doesn’t though.

People saw this story and bought way too much into it:

Joe bought a house for 400k with 5% down. House went up to 800K in 5 years. Now everyone wanted in for as many houses as they could buy with the minimum down payment.

Hence, when the values start to fall, the exits might be too full.

#158 “When the debate is lost, slander becomes the tool of the loser.” ― Socrates on 01.23.18 at 11:00 am

Banned SCM? Too bad.

While I don’t agree with much of what he posted, I do appreciate views that challenge my worldview. His posts are usually backed by supporting links from reputable sources.

His tone comes off too aggressive for my tastes but frankly who can blame him for being combatitive when each of his posts generates at least a dozen personal attacks… Multiple posters refer to him as a girl for heavens sake – how childish is that?

Only Garth knows what he said that was the final straw, and ultimately this is his sandbox. To be clear, I am definitely in favour of boundaries here and appreciate how hard that is for Garth to moderate. In my opinion SCMs posts raise the level of debate here, even if I don’t agree with his conclusions most of the time. Banning him makes this even more of an echo chamber

He has even mastered proof reading and spell check.

My 2 cents.

Giver – AB

#159 mike from mtl on 01.23.18 at 11:26 am

Looks like TPP is happening. Either this is a pressure tactic for the NAFTA nego or TPP was plan B.

I strongly believe it is plan B.

#160 Ace Goodheart on 01.23.18 at 11:29 am

Re #114-

That has always perplexed me.

If you “own” a condo, what do you actually own?

Near as I can figure it, the condo “owner” is purchasing “air rights” through a corporation, for rights to own air space within a common space controlled, but not owned by the corporation.

#161 Victor V on 01.23.18 at 11:39 am

Ontario household debt rising, increasing economic risk: Accountability Office

https://www.bnn.ca/ontario-household-debt-rising-increasing-economic-risk-accountability-office-1.976178

TORONTO — Ontario’s fiscal watchdog says household debt in the province has increased since 2010, and is projected to continue to grow, which could spell trouble for the economy as interest rates also climb.

Ontario’s Financial Accountability Office says low interest rates have fuelled spending in the province and the household debt has grown by 5.6 per cent on average each year between 2010 and 2016.

The FAO says that during that same period, growth in household disposable income grew by only 3.4 per cent on average, per year.

It says the average Ontario household owed nearly $154,000 in 2016, that’s up from $119,000 in 2010.

The budget watchdog says that a sharper than expected interest rate hike could force households to cut back on spending and have negative implications for the broader economy.

The report attributes the growth in household debt primarily to residential mortgages.

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

Worth repeating…”The report attributes the growth in household debt primarily to residential mortgages.”

#162 Ian on 01.23.18 at 11:52 am

Zolo GTA data just now…985 sold, a new one year low!

Graph ugly!

Also, what’s that I see in the inventory curve? A potential slowing of decline and reversal upwards?

#163 LivinLarge on 01.23.18 at 12:06 pm

Ace #159…that is precisely my understanding as well. That’s the explanation I got back in the 80s or 90s.

If we’re both wrong then I’m “all ears” to read a more correct definition.

#164 HaHaHa on 01.23.18 at 12:11 pm

Another Warren Buffet fun fact….. still lives in same house bought in 1958 for 31500 dollars in Omaha Nebraska. Calls it the third best investment of his life. Kind of puts it in perspective when the richest man on earth(on any given day) doesn’t seem to care on how his digs look to the rest of the shallow masses

#165 InvestorsFriend on 01.23.18 at 12:13 pm

#149 Ian on 01.23.18 at 9:19 am
Investors Friend

The problem with buy and hold is that it died in March of 2000 at the market top.

I think a far better roadmap these days is Trend Following by Michael Covel, the new fifth edition, which I highly recommend everyone on here buy.

********************************************
Ian, some people surely do well on trend following. But basically half the people who try to beat the market can do so ONLY at the expense of the other half trying to beat the market. I never mentioned buy and hold, but ALL of the buy and hold crowd can match the index if they simply buy it and hold.

I am not an index investor nor a Buy and Hold investor particularly.

Buffett noted that the AVERAGE active investor MUST trail the AVERAGE buy and hold investor AFTER COSTS.

From the 2016 annual report letter:

” If Group A (active investors) and Group B (do-nothing investors) comprise the total investing universe, and B is destined to achieve average results before costs, so, too, must A. Whichever group has the lower costs will win. (The academic in me requires me to mention that there is a very minor point – not worth detailing – that slightly modifies this formulation.)”

“And if Group A has exorbitant costs, [Hedge funds] its shortfall will be substantial. There are, of course, some skilled individuals who are highly likely to out-perform the S&P over long stretches. In my lifetime, though, I’ve identified – early on – only ten or so professionals that I expected would accomplish this feat.”

Ian, I agree we should think for ourselves.

But if you knew that your thought was opposite to Buffett’s you would want to think long and hard about why you might be wrong.

#166 Mike in Edm on 01.23.18 at 12:46 pm

While on the (somewhat) topic of Calgary or Edmonton, I think this B20 business and higher interest rates is already starting to take a toll on prices. It could just be seasonal, but I’ve noticed a ~10% drop on average. Still lots of sellers out there that are completely out to lunch (over priced and have only dropped their price 1% since November), but I think the ones that want/need to sell are ‘getting’ it.

#167 Stan Brooks on 01.23.18 at 12:48 pm

Another day with TSX down while oil and gold are up?

Fundamentals?

Yes, but overlooked and slightly different from the ‘norm’.

1. TSX is a local market, not a global one. No foreign investors are interested in it, it is a very small economy.

No matter what kind of sales pitch the socks guy and his ministers would pretend to be pulling off in Davos, there will be no inflow of capital here.
We are too insignificant on global scale.

BTW I am very interested who is paying T2 and wild bill tickets and fees for participation in that forum, so they can rub shoulders with the world’s really rich and powerful and build personal connection?

We, the taxpayers whom they (the french villa, the blind trust, the numbered companies, the lucky timing for sales of corporate shares, the trust fund, the private island, yacht, jet vacations, the pension laws that benefit specific companies, the acknowledged ethics viloators) call tax cheats.

Trilling times to be paying taxes in this country.

2. The indebted population has no money to invest. Instead due to idiotic policies (just look at the BOC leadership and the (complete lack of) confidence they radiate) the relatively well off have to sell shares to survived due to skyrocketing inflation of real stuff (food, gas, rents, housing, assets, education, health).

So net outflow of funds from TSX, not inflow. Moving money into safe stuff and spending them instead of growth investments.

3. Idiotic liberal policies at all levels, including criminal assault on small businesses, made up agendas, promoted minimum wage hikes at expense of the businesses, lies, lies and more lies including deferral of electricity cost to future generations in Ontario (thinking that 300 billion + in debt is not enough), artificial carbon taxes, CPP increase,….

4. Pathetic paid off by the budget media presstitutes whose propaganda states that T2 agenda in Davos is protection of the middle class (not the elite that they serve and whose taxes they refuse to increase, including promised stock option tax, but hey, we are talking about bill’s buddies on bay street here, not about some plumber, doctor or lawyer) and ‘progressive’ agendas.

—————————–

So consider the above when considering TSX as under-priced and assessing the future value of the currency.

I would not be a surprise if we are outpaced 3:1 by emerging markets in growth.

And did I mention NAFTA?

—————————
One more time an advice to lucky lottery ticket owners aka as home owners in GTA, Vancouver: remember, all lottery tickets have an expiration date. Claim it while you can.

Cheers to all Registered pension plan owners.
Buy lubricant companies.

Bit hairy wild bill is coming after you and is going to hurt.

#168 Another Deckchair on 01.23.18 at 1:12 pm

@157

“His tone comes off too aggressive for my tastes but frankly who can blame him for being combatitive when each of his posts generates at least a dozen personal attacks…”

Like you, I do like learning and exploring. Every day is a gift, and I try to make the most of it. I’m sure many, many of us reading Garths’ blog think the same way.

If you go back and read the first postings by SCM, and read the responses, I think you’ll see that there was little, if any dialogue coming from SCM, just more diatribe. I also think you’ll see that dialogue was tried, but did not work.

Thanks, but given a choice of firehose of diatribe, or dialogue, I’ll choose dialogue every time.

There are lots of bright people with alternative views, but they are polite and open-minded, and *they* learn from others, too.

Just my thoughts… ;-)

SCM

#169 Victor V on 01.23.18 at 1:17 pm

Tim Hudak: The Trudeau government’s newest squeeze on the home-buying middle class

http://business.financialpost.com/opinion/tim-hudak-the-trudeau-governments-newest-squeeze-on-the-home-buying-middle-class

#170 n1tro on 01.23.18 at 1:24 pm

#60 sean on 01.22.18 at 7:18 pm

Obviously it’s Garth’s blog, but for me having some “angsty” Millennial input is useful to avoid this being a Boomer/Xer echo chamber (possibly after some time on the bench for bad behaviour to encourage better manners in future :-)
—————
Input is useful. Garbage arguments with links to opinion editorials, racism, ageism, blatantly false accusations eg. TFSA was an evil plot for the rich not realizing Garth was the one that initiated it, etc….. Is never welcomed.

If the mantra of don’t overleverage in one asset, avoid getting moist (as it pertains to housing/debt), immigration being a net benefit to society, etc is an “echo chamber” to you, then stop reading and go make sure your kids have a safe so their voices are heard.

To the one that must not be named….Suck it up buttercup and take your banishment like a “man” or an adult as you claim to be.

#171 Stan Brooks on 01.23.18 at 1:37 pm

All indications are: it soon will be over folks.

https://ca.finance.yahoo.com/news/crunch-time-nafta-negotiators-open-154256396.html

Smokey, you might consider staying permanently in US as the NAFTA visas will disappear…..

As for the Florida Canadian sun-birds….

This single failure of the liberals: destruction of NAFTA is sufficient alone to destroy life of generations of Canadians.

Once we kiss the big rich markets of US good-buy, who are we going to export to? Oil Bitumen to China?
Compete with low cost labour in India? the wages should be 1.5 dollars for that, not 15.

NAFTA renegotiation was completely feasible with very few small amendments and compromises.

Now we will see what big tariffs and duties mean for an economy oriented pretty much on resource extraction and cheap labour for export to US.

The big boom is coming.

#172 Newcomer on 01.23.18 at 1:39 pm

#151 Andre on 01.23.18 at 10:12 am
….I am starting to feel that the we are the insane ones :) … the correction will not happen until people are maxed out of credit (credit cards, line of credit….)… no fire sales…
———-

Having been there for the correction in Japan, I doubt that it is different this time, but even if it is, that does not make people who stay out of debt insane. For much of history, ordinary people lived their whole lives in debt to the owners of the land they worked or the companies that employed them. It worked out great for the creditors and was stable for the debtors. We are now in a period in which people have more debt than they did, say, fifty years ago. It could all come tumbling down tomorrow, but it may also stay this way for a long time. That doesn’t make it a good idea to participate.

#173 Banned long enough! Canadian Millenial on 01.23.18 at 1:47 pm

BANNED

#174 n1tro on 01.23.18 at 1:49 pm

#157 “When the debate is lost, slander becomes the tool of the loser.” ― Socrates on 01.23.18 at 11:00 am
—————
So when Garth was being accused of creating the TFSA to help the rich elites, that was not slander? Thus making said accuser not a loser? I’m confused. Was there any “reputable” sources used then and explain how your world view was expanded at that time?

Echo chamber….there’s that word again. The comments on this blog rarely agree on anything other than the majority of posters and Garth find one person annoying. The reasons for such annoyance isn’t even agreed upon.

As for gender accusations, who knows and who cares. All i know is that if someone accused me of being a female i wouldn’t respond “…I’m really a boy…” <—- look it up couple months back.

#175 jess on 01.23.18 at 1:50 pm

ace
and don’t forget this investigations were going on BEFORE the election
WASHINGTON

The FBI is investigating whether a top Russian banker with ties to the Kremlin illegally funneled money to the National Rifle Association

Read more here: http://www.mcclatchydc.com/news/nation-world/national/article195231139.html#storylink=cpy

Torshin investigation signals a new dimension in the 18-month-old FBI probe of Russia’s interference. McClatchy reported a year ago that a multi-agency U.S. law enforcement and counterintelligence investigation into Russia’s intervention, begun even before the start of the 2016 general election campaign

Read more here: http://www.mcclatchydc.com/news/nation-world/national/article195231139.html#storylink=cpy

Spanish authorities tag Torshin for money laundering

Torshin, a leading figure in Putin’s party, has been implicated in money laundering by judicial authorities in Spain, as Bloomberg News first revealed in 2016. Spanish investigators alleged in an almost 500-page internal report that Torshin, who was then a senator, capitalized on his government role to assist mobsters laundering funds through Spanish properties and banks, Bloomberg reported

Read more here: http://www.mcclatchydc.com/news/nation-world/national/article195231139.html#storylink=cpy

http://www.newsweek.com/ivanka-trump-diamonds-caught-alleged-money-laundering-scheme-757168

#176 Stan Brooks on 01.23.18 at 2:22 pm

#171 Newcomer on 01.23.18 at 1:39 pm
#151 Andre on 01.23.18 at 10:12 am
….I am starting to feel that the we are the insane ones :) … the correction will not happen until people are maxed out of credit (credit cards, line of credit….)… no fire sales…
———-

Having been there for the correction in Japan, I doubt that it is different this time, but even if it is, that does not make people who stay out of debt insane. For much of history, ordinary people lived their whole lives in debt to the owners of the land they worked or the companies that employed them. It worked out great for the creditors and was stable for the debtors. We are now in a period in which people have more debt than they did, say, fifty years ago. It could all come tumbling down tomorrow, but it may also stay this way for a long time. That doesn’t make it a good idea to participate.

———————————

Good observations.

However now indebted people have nothing valuable to pay back for that debt.
– expensive labour costs in a global world
– lack of innovation and competitiveness.
– unattractive weather
– small local economy entirely dependent on the rich neighbor south who is divorcing us.

Old British unimaginative land owner/slave labour/extraction model that never worked since the gloomy end of the British empire.

Oligopolies/owners, retarded economy and hopeless slaves with no hope.

Give the a carrot, guys.

And fire wild bill.

#177 jess on 01.23.18 at 2:22 pm

#128 acdel on 01.23.18 at 12:49 am

BIG SHORT ? how bout the BIG LONG

liquidation of Carillion will probably run for a decade or more and is likely to generate millions in fees for accountants and lawyers.

Here’s a few :

…”Lehman Brothers, a major casualty of the 2007-08 banking crash, entered administration and liquidation in September 2008. Its liquidator PwC has already raked-in over £600m and is on course to collect £1bn in fees. The liquidation may be finalised by 2024. The fraud infested Bank of Credit and Commerce International (BCCI) was forcibly closed by the Bank of England in July 1991. Its liquidation was finalised in May 2012 and the liquidators chalked up fees of $656m (£415m). Perhaps, the record for prolonged liquidation goes to the Israel-British Bank which collapsed in 1974 amidst the secondary banking crash. In September 2009, after 35 years, PwC announced that the liquidation has been finalised…’

REad more @
https://leftfootforward.org/2018/01/heres-why-the-carillion-scandal-will-last-for-decades/
==========================

#178 IHCTD9 on 01.23.18 at 2:32 pm

#157 “When the debate is lost, slander becomes the tool of the loser.” ― Socrates on 01.23.18 at 11:00 am
Banned SCM? Too bad.

While I don’t agree with much of what he posted, I do appreciate views that challenge my worldview. His posts are usually backed by supporting links from reputable sources.

His tone comes off too aggressive for my tastes but frankly who can blame him for being combatitive when each of his posts generates at least a dozen personal attacks… Multiple posters refer to him as a girl for heavens sake – how childish is that?
_________________________________________

SCM is a Woman, so I refer to her as such.

She offered zip. Quotes from the Toronto Tsar and other “non-partisan” sources. Just about every assertion she made had to take her linked “back up” way out of context.

Garth gave her more than her fair share of opportunities to smarten up this time (and last time). But, in typical brat fashion; she couldn’t keep her big yapper under control.

Perhaps some day after she can control her Pie-Hole, she may be back once more to wax lefty, and chase Smoking Man around for a date.

#179 IHCTD9 on 01.23.18 at 2:36 pm

#173 n1tro on 01.23.18 at 1:49 pm

As for gender accusations, who knows and who cares. All i know is that if someone accused me of being a female i wouldn’t respond “…I’m really a boy…” <—- look it up couple months back.
_________________________________

Yep – that was glaring.

#180 T on 01.23.18 at 2:43 pm

#153 Try Again on 01.23.18 at 10:34 am
This is funny. Why such a hate on landlords?

After saving very hard, I bought 3 apartments 2 years ago around Vancouver. Rents cover ALL expenses with a few hundred left over each month and the 3 apartments have appreciated in the hundreds of thousands.

Tell me it was a bad investment? Others will call it blind luck, but I timed the market that I saw heading to the moon.

—————

No one hates landlords at all.

At this time no one will be able to tell you it was a good or bad investment until you sell and realize your gains (or losses). You can then socialize all costs and revenues with the group and the calculations can begin.

However your story doesn’t make sense. Saving very hard to then buy 3 apartments is odd. If you said 1 at a time over a few years it it may have been a more belieavable story.

#181 Ian on 01.23.18 at 3:03 pm

Investorsfriend

sidebar: loathe to mention SCM, but Smoking Man’s visualisation of a stray cat in a garbage can is hilarious!

The thing to keep in mind with Buffett, I think you pointed this out earlier, is often he does sweetheart deals with the management of the firms he’s interested in, which gives him access to instruments not available to the public. Did this with Solomon, and with Home Capital too. So that’s a strong advantage.

I believe he is wrong on Home Capital because 1) of the enormous, historically high housing bubble we are in, and 2) the B-20 effect on subprime.

The HCG chart until yesterday was awful. It was like 2 January marked the beginning of the end. Red bars everywhere. I’m convinced the top was in December, we’ll see if I’m right.

#182 Penny Henny on 01.23.18 at 3:08 pm

#173 n1tro on 01.23.18 at 1:49 pm
As for gender accusations, who knows and who cares. All i know is that if someone accused me of being a female i wouldn’t respond “…I’m really a boy…” <—- look it up couple months back.

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

Yeah that struck me as weird too (I was going to use the word queer but I didn't want it to be taken out of context).
I think most men would have replied ' I'm a guy'

#183 jess on 01.23.18 at 3:19 pm

The formidable and powerful Taganskaya organization of which Torshin is allegedly part is recognized by the US and the EU information and intelligence services (including Europol and the FBI), according to the dossier about Torshin from the Spanish Civil Guard. Its activities include the appropriation of companies using violent or fraudulent methods, bank scams, extortion and the carrying out of contract killings.

In 2004 Spanish prosecutors created a formal strategy to “behead” the Russian mafia. The Russian dissident Alexander Litvinenko, an expert on Russian organised crime, helped the police investigation. It was Litvinenko who, according to US diplomats, coined the phrase “mafia state”.

A public inquiry last year into Litvinenko’s murder heard that he was due to give evidence to Spanish prosecutors. A week before the meeting in 2006 he was murdered in London with radioactive polonium.
https://www.theguardian.com/world/2016/may/04/spain-issues-arrest-warrants-for-russian-officials-close-to-putin

Madrid 3 ABR 2017 – 08:42 CEST SPAIN

The 2nd Special Central Unit from the Civil Guard’s Emerging Risks Group spent at least two years recording dozens of telephone conversations between Alexander Porfirievich Torshin, a former Russian senator with close ties to Vladimir Putin and Donald Trump, and his trusted confidante in Spain Alexander Romanov.
https://elpais.com/elpais/2017/04/02/inenglish/1491138070_991108.html

https://www.theguardian.com/us-news/2018/jan/18/trump-nra-fbi-alexander-torshin-russia-investigation

Investigators for three congressional committees probing Russia’s 2016 operations also have shown interest in Torshin, a lifetime NRA member who has attended several of its annual conventions. At the group’s meeting in Kentucky in May 2016, Torshin spoke to Donald Trump Jr. during a gala event at the group’s national gathering in Kentucky in May 2016, when his father won an earlier-than-usual NRA presidential endorsement.

An FBI spokesman declined to comment on the investigation.

Read more here: http://www.mcclatchydc.com/news/nation-world/national/article195231139.html#storylink=cpyhttp://www.mcclatchydc.com/news/nation-world/national/article195231139.html

#184 InvestorsFriend on 01.23.18 at 3:30 pm

Restaurant Math – Servers Win

The Keg franchise company was just sold to Cara for $200 million. They don’t own the restaurants but they own the concept and set all the rules and do the advertising.

Meanwhile the Keg Income royalty Fund is asepaerate entity that trades and has value because it gets a 4% royalty or franchise fee off the top line. It’s worth MORE than the franchise company and has a value of $233 million based on getting 4% off the top line.

Meanwhile North Americans have somehow decided that servers deserve 15% at a minimum off the top in addition to their wages. If they average 16% that is FOUR times what the Royalty fund gets and that’s in addition to their wages. The capitalized value of 16% of revenue is apparently close to a billion dollars ($233 times four)

The Servers are getting in tips four times what the KEG income fund gets and apparently also about four times what the franchise company was getting.

I highly doubt that the manger / owner of a KEG makes a bottom line profit of 15%.

Is there something wrong with this picture?

#185 IHCTD9 on 01.23.18 at 3:32 pm

#153 Try Again on 01.23.18 at 10:34 am
This is funny. Why such a hate on landlords?

After saving very hard, I bought 3 apartments 2 years ago around Vancouver. Rents cover ALL expenses with a few hundred left over each month and the 3 apartments have appreciated in the hundreds of thousands.

Tell me it was a bad investment? Others will call it blind luck, but I timed the market that I saw heading to the moon.
______________________________

Hopefully your timing luck will hold out – as you will need to time your exit just as nicely to realize any of those paper gains.

I had several co-workers back in the day who told me how much they “made” on Nortel too.

Except they didn’t.

They could not crystalize their gains at 120.00 as it was going to go up to 150.00 very soon without a doubt. Instead they tobogganed to the bottom hoping it would come back the whole way down.

If you’ve made 300 grand in two years and have not sold yet, you won’t, too attached to your big winners. I’ve seen it too many times.

If the market tips over, you will have just days to sell those apartments before you begin to lose your gains.

You are going to have to sell when your apartments are still appreciating and everything looks rosy. 1 day late and you’re screwed.

You got a lot of skin in the game, it’s not going to be easy.

#186 technical analysis? on 01.23.18 at 3:34 pm

perhaps Garth can explain the collapsing USD …. and what it means.

Hardly looks like a ‘collapse’ to me. – Garth

#187 MF on 01.23.18 at 3:45 pm

2018 “Best Countries Report” according to US news and world report ranks Canada as number 2.

Reasons cited: most business-friendly, most modern, entrepreneurship, quality of life, starting a business, most forward-looking countries, headquartering a corporation, raising kids, transparency, green living, education, retiring comfortably, women.

-https://www.cnbc.com/2018/01/23/us-news-world-report-the-top-10-best-countries-in-the-world.html

As I have been saying for a while, our stability/boringness is what is attractive…especially in a world riddled with corruption.

MF

#188 MF on 01.23.18 at 3:54 pm

#183 InvestorsFriend on 01.23.18 at 3:30 pm

“The Servers are getting in tips four times what the KEG income fund gets and apparently also about four times what the franchise company was getting.

I highly doubt that the manger / owner of a KEG makes a bottom line profit of 15%.

Is there something wrong with this picture?”

-No there is not. It’s just you (serious). People can tip whatever they want, even though there are norms (15% like you said). It’s a practice that allows people without specific skill sets to make a livable wage. When they have more money in their pocket they buy more crap.

Are we against others having money now? If you don’t like it, then become a server.

Besides, most servers may stay at a place for a very short time. I’m sure they could not care less about the fund that you are talking about.

MF

#189 technical analysis? on 01.23.18 at 4:04 pm

Hardly looks like a ‘collapse’ to me. – Garth

_______________________________________

maybe you haven’t looked at a chart of the USDX. lowest level in over 3 years. down 12% yoy … it’s in free fall… i’m sure your resident technical analyst can explain it to you

Bitcoin is in ‘freefall.’ The US$ is right where the Americans want it to be. Duh. – Garth

#190 Wiggleroom on 01.23.18 at 4:07 pm

Since when is being called female an insult? Are you people still in grade school or what? Come on, grow up.

#191 Balmuto on 01.23.18 at 4:08 pm

“#154 Duke on 01.23.18 at 10:52 am
Worse yet, your mortgage payment is not rental expense.”

The interest on your mortgage IS an expense, and is tax-deductible (against your rental income). The principal payment is not, nor should it be, because you’re essentially paying yourself (by increasing your equity).

You are paying down debt, not increasing equity. That only happens if the property maintains its value. Don’t count on it. – Garth

#192 Cottingham a bargain on 01.23.18 at 4:11 pm

#66 BTTT on 01.22.18 at 7:44 pm
turner math: where $0 of your mortgage payments is considered to be building you equity.

Sure the cost to operate the rental is $700 more than the incoming cashflow, but at one point the owner will sell and recoup equity.

Paying back debt is paying back debt. Meanwhile the losses are real. – Garth
———-

The above really does seem to be the difference between Garth’s thinking about building equity in the increased payment costs over rental income, which he seems to disconnect by as unimportant, and guys like me who see the long term value in the proposition and who have done exceptionally well with the equity pay down principle.

Not judging Garth. It’s just that I have seen this opposing viewpoint in this site so many times and have determined that it really seems to be a blind spot for the non believers .

#193 Ray on 01.23.18 at 4:28 pm

#149 Ian
I find Heiken-Aski candlesticks to be a nice blend between Renko plots and regular candlesticks. For me, I can visualize the trend dynamics better.

#194 Stan Brooks on 01.23.18 at 4:32 pm

#186 MF on 01.23.18 at 3:45 pm
2018 “Best Countries Report” according to US news and world report ranks Canada as number 2.

Reasons cited: most business-friendly, most modern, entrepreneurship, quality of life, starting a business, most forward-looking countries, headquartering a corporation, raising kids, transparency, green living, education, retiring comfortably, women.

-https://www.cnbc.com/2018/01/23/us-news-world-report-the-top-10-best-countries-in-the-world.html

As I have been saying for a while, our stability/boringness is what is attractive…especially in a world riddled with corruption.

MF

———————-

blessed are the poor in spirit for theirs is the kingdom of heaven

UK and Canada have no place in this rating.

#195 PastThePeak on 01.23.18 at 4:38 pm

#167 Another Deckchair on 01.23.18 at 1:12 pm
#173 n1tro on 01.23.18 at 1:49 pm
& to all the others with similar comments.

Completely agree. I don’t see any echo chamber in here – lots of different points of view on almost every topic. Garth might call out the Millennials (in a humorous way) more than others, but it does fit in with the Bank of Mom phenomena (pretty sure the parents of most boomers have passed along…).

However, only one “person” in my time here has been a troll. He/she/it/they/zir engaged in very clear trolling behaviour – posting inflammatory information with the express purpose of hijacking the comments around the poster, rather than the topic at hand. How many posts were by this person, and then in response? Often over 50%. Hardly was a “dialogue” going on.

Anyways, Garth’s blog and he can do what he wants. Personally I find it better without, as there can indeed be more discussions (from all sides of the spectrum) without the shouting and baiting.

And for some that might read this and claim me/we are snowflakes that want our safe spaces – no. I am not shy to take on any and all opinions. Don’t always have the time to write, but actually quite like the debate. SCM was just a small barking dog though – like that pesky one from Loony Tunes. Annoying, and if they won’t shut up, then you inevitably will move away from the noise, but not something that you really give much thought to.

#196 Stan Brooks on 01.23.18 at 4:40 pm

#186 MF on 01.23.18 at 3:45 pm

Feeling good about yourself and ignorance is paramount for the slaves to be happy.

You have to feed it to them constantly.

#197 Penny Henny on 01.23.18 at 4:56 pm

#183 InvestorsFriend on 01.23.18 at 3:30 pm
Restaurant Math – Servers Win

The Keg franchise company was just sold to Cara for $200 million. They don’t own the restaurants but they own the concept and set all the rules and do the advertising.

Meanwhile the Keg Income royalty Fund is asepaerate entity that trades and has value because it gets a 4% royalty or franchise fee off the top line. It’s worth MORE than the franchise company and has a value of $233 million based on getting 4% off the top line.

Meanwhile North Americans have somehow decided that servers deserve 15% at a minimum off the top in addition to their wages. If they average 16% that is FOUR times what the Royalty fund gets and that’s in addition to their wages. The capitalized value of 16% of revenue is apparently close to a billion dollars ($233 times four)

The Servers are getting in tips four times what the KEG income fund gets and apparently also about four times what the franchise company was getting.

I highly doubt that the manger / owner of a KEG makes a bottom line profit of 15%.

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

but he eats for FREE

#198 TheDood on 01.23.18 at 5:03 pm

#186 MF on 01.23.18 at 3:45 pm
2018 “Best Countries Report” according to US news and world report ranks Canada as number 2.

Reasons cited: most business-friendly, most modern, entrepreneurship, quality of life, starting a business, most forward-looking countries, headquartering a corporation, raising kids, transparency, green living, education, retiring comfortably, women.

-https://www.cnbc.com/2018/01/23/us-news-world-report-the-top-10-best-countries-in-the-world.html

As I have been saying for a while, our stability/boringness is what is attractive…especially in a world riddled with corruption.

MF

__________________________________________

Here is what was quoted in the article about #2 Canada;

2. Canada
Also in the top 10 best countries for: most business-friendly, most modern, entrepreneurship, quality of life, starting a business, most forward-looking countries, headquartering a corporation, raising kids, transparency, green living, education, retiring comfortably, women.

Most business friendly? OK (LOL!)
Most modern? OK (OMG really?!)
Entrpreneurship? OK
Quality of Life? OK (LOL!)
Most forward looking countries? OK (LOL!)
Headquartering a corporation? OK (Is this whay they’re all leaving? – How many international company’s have their headquarters in Canada anyway?)

When you see these kinds of articles, simply scroll to the bottom to see the links to the other trash they’re “reporting”. Tells you all you need to know about how seriously you should take the info.

#199 Stan Brooks on 01.23.18 at 5:22 pm

#196 Penny Henny on 01.23.18 at 4:56 pm

but he eats for FREE

———————

This is illegal. Each employeer provided meal has to be reported on your T4 form as a taxable benefit.

#200 LivinLarge on 01.23.18 at 5:51 pm

Another open question, this one is totally open.

“Bank of Mom”…why do so many of you folks get your colons knotted by a parent just giving a child cold hard cash when they want to? Give it to a child or pay 30-53% tax on its earnings. If giving it doesn’t disadvantage the parent then what’s concern is it of anyone else.

Is this just envy because someone else gets something your parents can’t or won’t give you? Or do you resent that someone else’s gift to their child somehow inflates the price you might pay for a different house when you aren’t here griping?

Sure, it would certainly be a better “investment” if the child waited until the market corrected and the gift went farther but really, so what????

#201 IHCTD9 on 01.23.18 at 5:51 pm

#191 Cottingham a bargain on 01.23.18 at 4:11 pm

… building equity in the increased payment costs over rental income…

———-

That’s the same thing as getting a second job and investing your paycheque.

You’re working harder, and sacrificing more trying to keep a bad investment in the black.

You’d better pray the market doesn’t turn against you – you’re shelling out every month on top of rental income to keep the dream alive. The hope for appreciation is all you got left for your efforts.

#202 SoggyShorts on 01.23.18 at 6:34 pm

#130 acdel on 01.23.18 at 1:29 am
If I were an American, at the elections, I would probably not have voted due to not being terribly drawn to Trump but especially not to Hillary; the worst of the worst! Sorry Garth, we know you loved her!
**********************************
This kind of logical fallacy annoys me.

“I don’t like Trump”
-“So that must mean you love Hillary!”

No, that’s not how things work.

#203 maxx on 01.23.18 at 8:05 pm

#86 Smoking Man on 01.22.18 at 9:05 pm

“#67 Prematurely Banned Canadian Millenial on 01.22.18 at 7:44 pm
BANNED

https://youtu.be/MeE2E7nqe0w

Is this what you were trying to say.?”

Hilarious Smoke, thanks for the guffaw – we could add a measure or ten of high-pitched yowling and some sheet metal noises from it banging around inside of the garbage can.

Booyah Garth!

#204 Mirabelle on 01.24.18 at 10:21 am

http://www.cbc.ca/news/canada/toronto/volatile-housing-price-drop-1.4501010

#205 jess on 01.24.18 at 11:38 am

kelly leitch goes back to what she is not what she was supposed to be?

http://ottawacitizen.com/opinion/john-ivison-shunned-values-crusader-kellie-leitchs-political-career-comes-to-its-inevitable-end/wcm/36ff9779-d205-466a-aedd-91bdc2d3bfbf