Couldn’t have put it better myself. I’m still kicking myself, 8 years later, for not being keener when my parents were mulling buying a condo downtown when I started university for me to live in, and rent out later on. I was making less than $10 bucks an hour then, so the $150,000 it would have cost for a nice Toronto condo at the time seemed like all the money in the world to me.

I agree Vancouver’s real estate is insane right now. Toronto isn’t quite as bubbly, but looking at all the buildings going up here, it’s hard to shake the feeling that some will get burned.

Which is why I’m stashing cash in dividend stocks right now — not that they’re cheap

As the Vancouver RE continues to boom, the lingering question is when will this bubble burst? My question is how does New York City get to where it is now? I don’t have any hard facts infront of me but relative to the major cities like Chicago and New York…isn’t Vancouver cheap?
I’m hopeful that the price will not tumble like it did back in the mid 90’s. Slight correction is OK.

We (wife and I) too got lucky when we got into the market 5 years ago. We sold our place early this year and the equity gained on the old house enable us to relocate to a neighbourhood where we can comfortably raise our young son. We couldn’t get into the same place now if we are just starting out.

Could you shed some light on the management fees you pay on the condo? If not hard dollars, perhaps interm of percentage of the rent?

Good luck with your next purchase.

As for NYC, they have RE prices, but also high rents, and high incomes. The price of rents is set by what people can afford, which is linked to their income. In Vancouver that has been relatively flat. The price of RE has become way too detached from those fundamentals in our market. Either rents have to rise, or prices will fall. I can’t see rents rising too much without a significant rise in average income.

Again, thank you for sharing your experience. And FJ, great work on the site.

JW, sorry I forgot your last question on fees. The company takes a portion of the revenue (40%). It seems like a lot, but they do handle pretty much everything that comes up, which is nice, and the return is still higher than me looking for my own tenants.

I agree its a lot, but they have all kinds of marketing to keep my suite full of high paying clients, plus cleaning, etc.

Keep in mind that even after this cut my return is double what it would be handling my own regular tenants.

420sf is small, but not uncommon in downtown Vancouver and other major cities.

Warren: Have you been tempted to sell at any point in the recent highs of the Vancouver RE market? It sounds like you feel that the market has peaked and will decline soon, wouldn’t it make sense to sell if that’s your feeling?

Presumably you could get a better return investing the money elsewhere given that rent and property values are so out of whack…

What steps will you take to fund your principal home? From a tax-deductibility point-of-view, you can deduct mortgage interests against your investment properties but not your principal home. Problem is your investment property is already mortgage-free. Better check with an accountant on this.

I did consider selling earlier this year. I have been doing CCA tax writedowns which I would be taxed on in addition to capital gains. Since I have concentrated on paying the mortgage I have some extra RRSP room from previous years. I was considering selling and topping up the RRSP.

However my main goal is long term cash flow, and with my new rental arrangement I’m getting more cash for less effort. At this point it truly is passive income. I am expecting a decline in the asset value, but that shouldn’t change cash flow, and will still be a positive gain from my initial purchase price. I expect it will never get close to that low again. (would be about a 60% drop)

My principle residence will probably be funded from savings, and possibly the RRSP home buyers plan, I understand it is not restricted to only your first home. Any primary residence purchase is at least a few years off here, so that allows me to diversify in the mean time, building up non-RE assets.

Again, this is just an alternative. I’m not responsible for your finances.