Peter, perhaps I should qualify that statement a bit. First of all I should say those types of opportunities don’t come along everyday, and if you find one, that is obviously an ideal outcome which doesn’t always happen either. Basically I’m just talking about a decent home fairly priced with multiple revenue streams (something with at least one legal suite) in a decent area, bringing in decent rent. From what I’ve seen/experienced, to be responsible with your money and “add” something to the community in the form of a decent home at a decent rent with a good responsive landlord that actually cares about his tenants – and make this work financially, it’s not “sluml-ording” (you can bring in high cash flow, but it certainly comes off to me as predatory) but it’s not buying a $300,000 east-side home either. It has to be affordable but in an area that attracts stable renters.
Also, when I talk about getting your inital investment back I’m talking about buying a home as a primary dwelling, so if you wanted to, (to the shagrin (spelling?) of many) currently you could put just 5% down and then turn the home into a rental some time in the future and start to get your deposit back. Although this comes with hoops and inconveniences you have to be willing to go through, and there are of course unexpected expenses that may arise.
So, as with anything, a risk, (buying a new furnace will certainly put a dent in you cash flow) and not realizing that, but just thinking its “easy money” as Bookrat said can certainly lead you down the path to trouble.
But I think a well thought out decision in the right situation can give you something close to the ideal situation I outlined before.

“Even using credit, even at these prices there are opportunities in which you can get back your inital investment within a year (plus have the mortgage covered), and pull in twice your mortgage in rental income going ahead.”

I certainly agree that there are still opportunities for a RE investor but this seems hard to believe. I am very much an amateur at RE investing so perhaps there is some whole segment that I might be missing. Could you provide any more details? Are you talking about Saskatoon real estate?

Jeremy, take the entire quote from context: MHO is that people like this, who are are leveraged to the hilt and think that RE landlording is a path to easy money (emphasis added) cause many problems for themselves and others

If you need me to go further on that statement, please let me know, but I think that it’s pretty self-explanatory. I consider ‘contributing to a societal viewpoint that RE only ever goes up, and that houses should be looked at as investments and not dwellings’, ‘driving up the average price of houses beyond where the average income can afford them’, ‘contributing to a global RE crash’, and ‘forcing other taxpayers to share the pain of a risk they didn’t take through government bailouts via CMHC or Fannie/Freddie’ in the category of “causing problems for others”. Your mileage may vary.

I think his best bet would be to keep his existing house and apply whatever he receives from rental revenue (lower suite) towards his mortgage (he only owes $230k). I think that if he worked at it by the time he had to refinance in 3-5 years he could have it paid down by 25-50%, which would place him in an excellent financial position.

2.25% ($50k +$41.5k rental -$26k taxes -$26.4k mortgages -$7.2k p.tax/insurance = $31.9k)
3.75% ($50k +$41.5k rental -$26k taxes -$32.7k mortgages – $7.2k p.tax/insurance = $25.6k)
5.25% ($50k +$41.5k rental -$26k taxes -$39.7k mortgages – $7.2k p.tax/insurance = $18.6k)
7.0% ($50k +$41.5k rental -$26k taxes -$48.6k mortgages -$7.2k p.tax/insurance = $9.7k)

Bookrat
I’d be interested to hear what problems you think landlords create for themselves and others.

Even using credit, even at these prices there are opportunities in which you can get back your inital investment within a year (plus have the mortgage covered), and pull in twice your mortgage in rental income going ahead. So for now you’ve significantly increased cash flow, and when interest rates go up you’re covered. If you’ve established good credit and you can make something out of nothing – pay it back within a year, increase your income and build equity in a home I think that’s intelligent.

Promised tax cut up in the air
http://www.thestarphoenix.com/news/Promised/2267668/story.html
“Further education property tax cuts promised by the Saskatchewan Party under a new funding system for school divisions may not happen in 2010, a casualty of the government’s financial woes, Education Minister Ken Krawetz said Wednesday.”

You keep forgetting that we’re living in Backwardsville now, where all things are possible and nothing is likely. Silly goose!

Try reconciling these choice tidbits:

A) “Housing will likely get pricier in the coming months”

With

B) “The housing market still faces obstacles, as mortgages have become more difficult to handle for many Canadians amid challenging labour conditions. This is likely to persist until the economic recovery is well established and job creation is sustained next year.”

Huh?

I think the net and the desire to be first has led to some sloppiness. Statements like, “With prices set to gain…” are just plain stupid.

“Even in tough times, property holds on to its value.”
Perhaps in its value as a ‘home’, but not always in a monetary sense. Still, this has to be better than “Now has never been a better time to buy!” or “You’re richer than you think!”.

…and you’ll love the Realtor quote at the bottom.

How does this crap get published?

An equally good question to be asked, though, is where the (current) ~$1M estimated annual operating budget for River Landing is going to come from starting in 2013?

http://tinyurl.com/ykf7ye2

City manager Murray Totland laid out a somewhat bleak financial picture for River Landing, including the concession that some of the $1 million needed to maintain the site annually could hit the mill rate in 2013.

With delays in getting private-sector investment in the site, some of the $1 million in operating costs will inevitably effect the property taxpayer in 2013, Totland said.

Should have built the casino.

“Norm, that’s not entirely accurate”

No? I copied and pasted it from the SP story, but it’s entirely possible they have mischaracterized what he said. “No more interest in developing there” seems fairly clear to me.

“There’s more to real estate than speculation.”

Exactly!!

Well, I think there’s been enough propaganda from the RE and finance community to more than warrant an opposing viewpoint from someone like GT. I won’t disagree that the message or delivery is sometimes harsh, but maybe that’s occasionally what people really need to hear. There were a lot of people that really needed to sell (who did), and probably a lot of people who waited to buy (and probably continue).

There’s more to real estate than speculation. Or at least there should be, with a house being a home first and an investment second. When the concern becomes ‘what is the monthly cost’ vs. ‘what is the cost’, I think that speaks volumes. It’s one thing to gamble with your own money; it’s entirely different to be gambling with someone else’s money for the next 35-40 years.

Rick, I think Meridian is the only other company that’s expressed any genuine interest, probably for many of the reasons you indicate. Embarrassing would be a mild understatement. In some cultures, ritual suicide would be appropriate; but perhaps political suicide is sufficient here.

I mostly agree with what you’re saying. Canada and Australia’s economies are both commodity-based, but there are some key differences in key trading partners, which will in likely mean some key differences in how their respective economies both weather the recession and come out of it. I came a cross an interesting site lately, which explains some key points in their differences here.

“Remember – only 3% of Canadian exports go to China; 75% head for the U.S.A. By way of comparison, 24% of Australian outbound shipments are destined for the hot Chinese economy while only 6% go to the U.S.A. In other words, relative to Canada, Australia enjoys 8x the Chinese exposure and has only 1/12th of the orientation to the much softer U.S. consumer market.”

There’s more information in the original newsletter here.

…

Battellino said today that Australian households have a larger capacity to sustain higher hose prices when compared to incomes than households in countries such as the U.S.

“Australians seem to spend less of their income on non- housing consumption than is the case for U.S. households, with a significant part of this difference explained by lower health costs,” Battellino said. They “therefore have greater capacity to service housing loans.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=amhLLcmS807I&pos=6

I view Australia as a decent proxy for Canada’s economy given how closely tied our two economies are to commodity prices. Now we are specialized in very different commodities, Canada is much more oil-based while Australia’s biggest export is iron but nevertheless commodities as a whole tend to move together. Hopefully we can ride the next wave with them.

Re Ken Achs: “His company has made three different proposals on the site that “were more practical than grandiose,” but has no more interest in developing there, Achs said in an interview Thursday”.

“After all, we’re talking averages:”

I agree, and on average, people who have followed Turner’s advice have lost. Again, I’m not suggesting that his logic is unreasonable. I am skeptical about those who are most certain about their opinion, and those who seem to take pleasure in characterizing those who disagree with them as defective, ignorant, greedy, evil, etc. After many years, I am pretty much convinced that his insights are as limited as any other economist.

Al,

I can’t speak about Manulife but I can’t think of any reason why one shouldn’t consider going with them. When I did my last mortgage I told my broker what was most important to me and let him do the groundwork to bring me the best product that suited me.

What are the factors that one might want to consider? I’d say rates and pre-payment privileges. Anyone else have any other suggestions?

“I won’t minimize the potential seriousness of the housing situation in Canada, and I expect that Turner is probably closer to right than he ever has been but I can’t help but wonder what he’d say to the many he convinced to sell their homes in a hurry last fall, only to watch the Canadian average climb 20%.” For many who were stretched financially or speculating, it probably wasn’t a bad exit point, and it certainly could have been worse. After all, we’re talking averages: in Saskatoon, you’d still be up YOY if you sold last Fall and bought or built this Fall. Real estate in cities like Toronto and Vancouver is a gong show, anyway.