Ontario Tax Sale Property Forum
Tax Sale Forum => General => Topic started by: Rob on July 24, 2006, 07:27:09 PM
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I've had a few questions about people teaming up to purchase, manage and sell a tax sale property. There seems to be a lot of people with different skill sets and teaming up may help them.
If you are interested in teaming up with someone let the forum know in this thread.
Tell everyone what skills you have and what skills you need.
For example:
Someone might be good at reno's.
Someone might be good at the actual bidding process, title searches, etc
Someone might have capital and wish to invest it
Someone might be a real estate agent and can help sell a property.
If you are interested in teaming up. Post a message in this thread and lets see what connections can be made.
Remember. If you wish to send someone a private message:
Use the IM icon to the left side of their post. Or email them directly from mail icon on the left the side of their post.
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I would be interested in something like this. I have many unique connections and skills that would be useful. I don't mean to toot my own horn but I'll list some things that anyone teaming up might find useful:
-I grew up in a family of building contractors and I have built my own 1600 square foot cottage from the foundation up.
-I am very familiar with most parts of cottage country in ontario and can tell the difference between valuable land and worthless land
-I have connections with people that will clear land for much cheaper than anyone you'll find in the yellow pages
-I have sucessfully flipped properties in Florida before without using a real estate agent
-Some capital is available at my disposal
I think the key thing is that different people have different timeframes in mind. I would be looking at fairly quick turnaround of 2-6 months per property. Anything longer and you could often make more return on your investment in other ways.
Example: Some people buy properties and sit on them for 12 years and then brag that they doubled their money. Meanwhile if they factor in property tax and land transfer tax the end up with a 5% annual return on their investment, but could have had double that return in a average mutual fund and with ALOT less work.
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This seems really interesting. Wouldn't it need to be done through some type of business? This way the people involved have some type of protection!
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I'm interested in "apprenticing" with someone who is investigating/bidding etc.
Basically, my cash flow has been tied up for this year..unless I get creative. This year I paid off my mortgage in Toronto, got married, bought a few acres of land in NB, and left my job to pursue another degree....so I likely won't be buying many properties :)
My goal would be to learn the ropes in regards to all the facets of making deals like this happen, and also have an excuse to check out properties and attend auctions/sales as a hobby.
As far as skills/experience go...
- A fair handyman, having owned multiple rental properties in Toronto and done most repairs/maintenance myself. Accomplished at landscaping from my NB roots..everything from organic gardening to golf courses
- Familiarity with some of NB since that's where I spent the first 20 years of life
- Some experience in real estate dealing...residential in Toronto, land in NB
- Fair financial acumen , CSC courses , perversely well read on personal finance and personal income tax
- Computer skills...plenty. "Wasted" too close to a decade doing all sorts of crazy things at IBM
Want i want...
Short term:
- Get my hands dirty...so to speak. Would like to follow an experienced person through the process of investigating, visting, deciding to bid, bidding. Willing to lend any of my skills listed above in exchange for the learning.
Long Term:
- Likely implement skills gleaned above in picking up properties in NB, and possibly a cottage lot in ON if I end up staying here long term.
About me:
(Simply to know a bit about where I am coming from financially,etc)
29, Married, Debt Free, Active
Assets (estimates): House 300-350k, RRSPs 80k, savings 30k, house+land in NB??? priceless/worthless since I don't plan on ever selling it
Income: about 60k from various sources until I start my teaching career
Education: Computer Science, Starting UofT in Fall to pursue an Education degree and become a high school math/physics teacher
So as one can see from my financial scorecard I'm pretty house-rich, cash-poor and not planning many large expenses until my teaching career begins at which point all of that would pretty much be disposable income..that will be in a year or two so if some old hand wants to show a newbie the ropes I'm in.
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Sounds interesting,
Depending on the "rules" of the game and the expectations I may be able to contribute.
I have ten years of rental property exp. Here and N.B.
Pretty handy with a hammer.
Have about 30g to work with of my own.
Have bought and sold 2 Tax sale props. both vacant land, 100 acres and 2 acres.
Currently involved with a few other people and activly looking for a property.
Looking for a quick flip only.
Any one looking join our very informal group or looking to start a new one let me know. Most of the "partners" are looking to in vest smaller amounts 5 to 10 Grand each.
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I'm interested in "apprenticing" with someone who is investigating/bidding etc.
Basically, my cash flow has been tied up for this year..unless I get creative. This year I paid off my mortgage in Toronto, got married, bought a few acres of land in NB, and left my job to pursue another degree....so I likely won't be buying many properties :)
That part of your post just caused a pit in my stomach!
If you have a paid off mortgage, you're almost crazy not to reborrow the money against your house.
Where else can you get a 4.5% (or lower) loan than by remortgaging your house? Nowhere.
How many investments out there today will get you a higher return? Many.
Bottom line is, having your money tied up in your house is poor financial planning. You're denying yourself a fairly easy $8000 or so in income for the benefit of being able to say you own your house free and clear. Is $8000 significant? Well, over 30 years, and compounded at a modest 6% interest.. that's an additional $670,413.42 you will get from good financial planning vs. bad.
Paying down your mortgage in this day and age instead of investing that money is a very questionable financial tactic.
My advice is to sit down with a financial planner.
Good luck!
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In theory yes. But if you just put the money into a bank account or a GIC you won't be getting a higher return. If you decide to go a different avenue the element of risk exists. You could make 20% or better but you have the chance of losing principle if you are not careful in fees and lost asset value.
I think it really depends on the person and what level of risk they are confortable with. There is nothing wrong with having the home they live in paided off fully.
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I haven't been on for awhile...been a little under the weather, then with the Long Weekend and all..I'm a teacher and have my own small school, so this last few weeks was actually hectic.
Anyways, we have a small informal investment group that meets every second Wednesday in the west of TO. We've done many interesting things, but would be interested in having others join.
Email me privately if you're interested.
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In theory yes. But if you just put the money into a bank account or a GIC you won't be getting a higher return. If you decide to go a different avenue the element of risk exists. You could make 20% or better but you have the chance of losing principle if you are not careful in fees and lost asset value.
I think it really depends on the person and what level of risk they are confortable with. There is nothing wrong with having the home they live in paided off fully.
No decent financial planner (other than one working for a bank) would ever recommend a GIC as an investment. Provincial, or Municipal bonds are VERY VERY low risk, as are preferred shares in many companies.
It's a bigger risk to just let your money sit their doing nothing. I just wish people would realize that.
If I sold all of my investments I could fully paid off my Toronto home, and my executive cottage in Muskoka. However, if I had never invested my money in the first place it would be doubtful that I could own either outright.
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Hey Speed
You seem to run with a fast crowd. I don't like the way that you want me to risk my hard earned estate. My assets are fully paid and I have money stashed away in RRSP's and GIC's to boot. A homeline mortage gives me the liquidity I need to do whatever deals I want to with money I haven't spent yet. I would never think of going your route unless I had a solid investment in my site.
I'm an accountant by profession, but I don't seem to be as good at numbers as you. Good luck, and try not to get too burned.
My advice to the youngsters is to pay off their house as quickly as possible. These low rates won't stick around for long.
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Hey Speed
You seem to run with a fast crowd. I don't like the way that you want me to risk my hard earned estate. My assets are fully paid and I have money stashed away in RRSP's and GIC's to boot. A homeline mortage gives me the liquidity I need to do whatever deals I want to with money I haven't spent yet. I would never think of going your route unless I had a solid investment in my site.
I'm an accountant by profession, but I don't seem to be as good at numbers as you. Good luck, and try not to get too burned.
My advice to the youngsters is to pay off their house as quickly as possible. These low rates won't stick around for long.
Everyone has their own opinions. I have a financial planning background, not an accounting one. I could show all the math for my numbers if anyone is interested. I invented Freedom 35 for myself. :)
Being an accountant, I'm sure that you're familiar with the "Smith Manoevre". How can anyone argue with effectively making their mortgage tax-deductable, plus getting a return on the money? I've been doing this myself with my own primary residence for several years now and there really is very little (if any) risk involved. None of the investments are tied to the stock market directly, and the loan that I use to make the mortgage tax deductable is fixed rate, but can be paid off at anytime. So the worst case scenario would be interest rates shooting up to 15%, in which case I could simply sell most of my investments and pay off the house.
On a closing note..I have one more piece of probably unwanted advice ;) Get rid of those GIC's!
You can get much better returns on a Gov't of Canada Bond, and with more liquidity since they are traded daily on the bond market. If you really want to get tax efficient, take the GIC money and get preferred shares in the bank that you have the GIC's with. You'll get probably 3x the returns, plus instead of being taxed as income, you'll be taxed as dividends and have the benefit of the canada divident tax credit. The risk differential is if the bank went bankrupt since the GIC's are CDIC insured. However, preferred shares are the first to be covered by liquid assets so it would be near impossible for a bank like TD to ever go 100% bankrupt overnight.
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Hey, I think we are both saying the same thing. Any mortgage I have ever had has been tax deductable = as I have only had one to purchase and sell property and a coupla businesses. The GIC's are a temporary repository for surplus monies while I seek out my next target, and I am quite comfortable with that. You can't get to this point in our lives however if you are still burdened by the cost of a mortgage and debt load of most young families.
good luck with it.
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any one with comments on buying in the state of NY, I would like to purchase something that would be a quick flip and I have about 60k to get the job done. No real experience in this, I just started looking around when this chunk of money fell into my lap.
anyone looking to go in on something together? Any comments would be helpfull about the state of NY Preferably in new York city! ;D
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Just curious. How do you get a tax deductable mortgage? I thought that was only possible in the US.
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Home mortgages in Canada are not tax deductible. What is tax deductible is a loan you take out (with your house as collateral) to make investments. I have done this for years. The Smith Manoevre talks about a vehicle for making your home mortgage, or a part of it as it gets paid down deductible against investment profits, and you essentially take the equity you have built up out of it to invest. You need to talk to a financial advisor (stay away from accountants), that knows a lot more about this and deals with it daily - check out a freedom 55 type guy. You might want to try a personal message to Speedfreaksteve (he invented freedom 35).
do some homework first, for example go to:
http://smithman.net/
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Home mortgages in Canada are not tax deductible. What is tax deductible is a loan you take out (with your house as collateral) to make investments. I have done this for years. The Smith Manoevre talks about a vehicle for making your home mortgage, or a part of it as it gets paid down deductible against investment profits, and you essentially take the equity you have built up out of it to invest. You need to talk to a financial advisor (stay away from accountants), that knows a lot more about this and deals with it daily - check out a freedom 55 type guy. You might want to try a personal message to Speedfreaksteve (he invented freedom 35).
do some homework first, for example go to:
http://smithman.net/
It is amazing how these simple strategies of making home mortgages tax deductible are not well known to the public. What is even worst is that many consultants are not comfortable with using these tactics.
You really need to look for the right consultant, as probably 7 out of 10 will insist that this is not appropriate in “your case”.
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Re: Teaming Up
« Reply #1 on: July 26, 2006, 12:45:26 PM »
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I would be interested in something like this. I have many unique connections and skills that would be useful. I have built homes in the GTA as well as done an electrical apprenticeship.
I can also be a financial backer with a quick turn around 2-12 months.
Always interressted in talking, big projects dont scare me.
regards
Dave
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If large deals don't scare you, give me a call 416-938-6245 to discuss a large property acquisition a group of us is making for a subdivision in eastern Ontario.
Initial 50k investment, with great/amazing ROI.
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Home mortgages in Canada are not tax deductible. What is tax deductible is a loan you take out (with your house as collateral) to make investments. I have done this for years. The Smith Manoevre talks about a vehicle for making your home mortgage, or a part of it as it gets paid down deductible against investment profits, and you essentially take the equity you have built up out of it to invest. You need to talk to a financial advisor (stay away from accountants), that knows a lot more about this and deals with it daily - check out a freedom 55 type guy. You might want to try a personal message to Speedfreaksteve (he invented freedom 35).
do some homework first, for example go to:
http://smithman.net/
It is amazing how these simple strategies of making home mortgages tax deductible are not well known to the public. What is even worst is that many consultants are not comfortable with using these tactics.
You really need to look for the right consultant, as probably 7 out of 10 will insist that this is not appropriate in “your case”.
It's really only an appropriiate option unless you've established a decent amount of equity in your home. You're not reallly going to be able to do it with 25% equity or less for example. You basically need enough equity that a bank (or private lender) would be willing to give you a loan against the equity you have in your home.
This strategy has become widely accepted by many financial planners in Canada. You'd really be surprised. I think that the reason that it is not so widely known to the general public is twofold. One, it's fairly complex to the lay person and most people don't want to be doing stuff with their money that they don't understand. Secondly, I'd say only a relatively small percentage of the Canadian population have enough equity in their home to do this full fledged, however anyone with a mortgage can usually get a modest home secured line of credit and do a mini-Smith maneuvre with it.
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I have a home improvement and renovation business in Kitchener-Waterloo area and often worked for clients who needed medium to large home renovation (remodeling bathrooms, basements, framing, flooring-ceramis, hardwood, laminate, plumbing, drywall, decks and fences, some electrical and many odd things. I'm new in this tax sales business, but a lot more familiar when talking about hands-on aproach. I thought I could tackle the market on different way, making improvements for guys who won the bid and learn more by being in contact and working for them. I'm also lookind for a cottage land in the Bruce peninsula. It is somehow safer to go through mls or stay here and hunt for a good deal?
Stefan
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I would be interested. I am a real estate agent in the Beaches (Toronto), and can help in terms of valuating properties.
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Gap,
That sounds interesting... I would be interested to hear more about this. Especially with regards to the plan of subdivision and how it falls into the Greenbelt Plan and intensification studies. I am a planner by trade and am always on the look out...
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Some of you may know that I've been off the board, after barely getting on, because of some sort of mystery issues with my computer and the board. I'm now back on, and have been re-reading this post, and, in view of economic developments, it sure reads different now!
Some young folk just starting out might look at finding others of a similar mind and economic situation, with a view to partnering up; I know a few who have made out quite well, but had legal agreements that covered absolutely EVERYTHING.
Others may consider a line of credit instead of a mortgage: still deductible, can be paid off anytiime, no payments when you don't need the available money, interest only, but amounts available will vary with the current value of your surety, so you may have to pony up some payback cash or additional surety as the economy floats up and down.
I'm curious: can anyone bring me up to speed as to what happened to the proposed subdivision development in estern Ontario?
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"Others may consider a line of credit instead of a mortgage: still deductible, can be paid off anytime, no payments when you don't need the available money, interest only, but amounts available will vary with the current value of your surety, so you may have to pony up some payback cash or additional surety as the economy floats up and down."
Borrowing against a house is a sure fire way to financial suicide. NEVER borrow against the house except for home improvement. History has shown that every 6 to 8 years the stocks collapse. The entire failure of the US economy is based on the fact that they write off their mortgages and therefore never pay off their houses. Somehow they have been convinced to spend their equity on a plasma and a vacation instead of paying off their mortgage.
Most peoples retirements are ( or should be) planned around the selling of their house(s). NEVER under any circumstances risk your house or borrow against it. PAY IT OFF and then buy a second, rent it out, (let a stock investor pay your mortgage) . Repeat as much as possible.
10K in stocks will lose money, 90% of stock investors lose money. Its not " if a stock will lose money..it is when". Very few can getout at the right time.
.. 10k paydown on a mortgage will save you 1 year and 25 K in payments over the mortgage life.
The only way to lose in a real estate collapse is if you have no equity., If you have equity , who cares what the market does as your house will be worth less but so will the bigger one you want to move up to. When stocks collapse the money is gone forever..even if you don't sell , its gone. When houses collapse you are only in trouble if they call your mortgage or line of credit. The house will regain value in no more then seven years and will still average 7% a year increase even with the collapse factored in. Only the fools who buy at the peak and PAY WAY TOO MUCH ( IE 2 million for a townhouse in Oakville) lose.
When nortel goes from $140 to 60 cents...its gone. Bell from 34 to 20 its gone, Stocks are money and are NOT AN ASSET
As per the TSX indices , don't believe the positive figures over the years. They pull out under performers weekly to fudge the numbers ( IE nortel isn't in there anymore) It may be down 50% over the last six months, Its down way more than that if you do the real numbers
"In December 1996 Bre-X stock qualified for inclusion on the prestigious TSE 300 "
Dow is the same scam, Underperform..you are gone from the propaganda ( wheres Kodak on the Dow Jones..former blue chip)
The only true financial freedom is obtained the day you burn your mortgage. No investment will ever be as good, or as solid, as a paid for house. Anybody trying to convince you to borrow against a house should be beaten with a baseball bat.
As per Freedom 55 ...Better look at every 401K in the US try Freedom 85 now , 2000 collapse, 2002 collapse, 2008 collapse
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A number of very good points. Paying down your mortgage and not borrowing on it for risky venture.
10K in stocks will lose money, 90% of stock investors lose money. Its not " if a stock will lose money..it is when". Very few can getout at the right time.
Another good point, timing the market is not the way to invest, but I can't agree with everything. Warren Buffet would certainly disagree with the first part of the quote. I would never suggest that people invest in the stock market if they feel uncomfortable with the risk or they do not understand it. [Warren Buffet never invested in something he did not understand]. However, real estate is just one form of investment. I think it is good to have a balance. Ignoring the market as an investment tool and putting everything in real estate is only exposing yourself to greater risk.
Everyone I know who has invested in the market has taken a kicking lately, so it is difficult to sound reasonable making the case for the stock market. At this point in time we are seeing 2004 prices. Fear has taken over the market for now but Greed never disappears. If you are not able to manage your investments yourself because of time or experience it is very difficult to find an investment professional to trust your life savings with. Like in every profession, real estate agents, financial planners, there can be a bad one that can take advantage of the situation. In today's market there are great buys, under valued stocks, with very low PE ratios. If you like the stock market and you have cash, now is a good time to average in.
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Sure some make money..That would be the Buffetts, Dominion securities, etc. The average retail investor (victim) is simply fodder for the machine. Your investment counsellors at the the bank have a whole one week course , Go to Edward Jones and take a look at the "expert" and see if he has a paid for Porsche or a leased dodge minivan .. bet on the minivan
If you have money and want to play the stocks , go ahead blow your brains out, but the vast majority of people are better off just paying off the mortgage and keeping out of the stock game. There is people paying 28% interest on a credit card and yet going out and buying stocks..shake your head violently
The stock market was created so people could buy a share of a company. It is now simply paper trading with no underlying value..Yahoo at 1000 times revenue..give your head a shake.
Every investment expert now spews "Don't sell the share, it will come back" Which means " Your moneys gone, but if you don't sell it yet you wont figure out how badly you have been screwed and you may actually be stupid enough to buy more crap from me. If you don't buy anymore I will have to go back to selling Amway"
Get rich quick , means get poor quicker...Slow and steady wins the race. Stick to basics...Pay off debt, pay for house, when equity builds , you can look at a rental piece and let a stock investor rent it from you and pay your mortgage..shake and repeat..
99 percent of investors do not even look at financial, they read yesterdays article in the star and run out and buy what the clown told them to buy. Only a few people ( who are highly skilled and do massive research ) or the insiders make money on stocks. If you ask 100 retail investors what is the uptick rule and short positions , 99% will simply scratch their head...and run out and flush their money down a mutual fund toilet because my investment adviser (former teller) at the bank told them to.
Buffett( who is the example used by every clown selling shares) doesn't buy shares..he buys companies.
Everyone I know who has invested in the market has taken a kicking lately
You could repeat that statement every 5 years. Any retail investor has not made money in stocks in the last 10 years, You may make on some but lose on more. Everyone is simply trying to recover what they lost and when they finally get it back ( 5 years from now) it will simply toilet again due to 1000 different excuses of the day.
Yes there is a few undervalued deals ( Royal Bank) but most are still junk. Hell Nortel is selling its only asset and preparing for the big tank in 18 months. ( Everyone in the game knows they are trimming off the good divisions and sticking the shareholders with the dead carcass, but no "expert" will tell you and will still sell you the stock)
Everyone talks about buying goggle at 100, No one mentions it at 697 when its now 303. no one mentions Nortel at 120 (32 cents) , Air Canada at 7 (0) ( Judge who voided the shares is now a partner at Air Canada's law firm , how convenient) , bell at 40, rim at 150 -now 47 ( 3 times now and they still don't learn) Yorktons fraud, Royal bank illegal trades, Bre-x, Enron, remember Ballard at 200...yup last trade 1.20 , GM at 90 ..oops 3...the pricks are calling 2 for target ( means the shorters are feeding) Royal bank 60 oops 29 , Microsoft buy in 98 for 20 sell today for 19.
If you bought IBM at 4 in 1962 , even at 80 today you would be better off with a savings account. Real estate kills it
Hell apparently now you can steal 50 Billion and only get house arrest, or sell a trillion in junk bonds and have the taxpayers bail you out. I wont even mention the IPO scams. Publically traded companies don't even have to use a standard accounting method, " We added 20 years of future profit and posted it as this years profit"...what the hell is that..
If the average person simply focused on paying off the mortgage of their house they will be miles ahead of any other method of investment. Even if the market collapses, you will lose 20% at max ( 2 or 3 years EQUITY) and it always comes back and averages back to 7% a year..no stock investor can claim the same. Lets not mention that your house is capital gains exempt so the 7% is tax free
Using the TSX index you have lost 40% in the last 3 months and you will never get it back ( yes the index will reclimb after the spindoctors shift out all the bad companies and Bullsh*t the numbers to make it look good again) Remember the index is the best performers so imagine what the real numbers are.Many people are out 80%
Real estate collapse..lose money on paper but have a warm place to sleep while you ride it out ..Stock loss..lose real money and lose your house too.
If you want to play the stocks..Pay off your credit cards, have 6 months to a year of mortgage payments in the bank. Then take money you can afford to lose and toss it in the stock market. DO NOT LISTEN TO ANY "EXPERT" and runaway from mutual funds. Watch the shares and never ever ride them down, they go down,sell them ..its only 20 bucks to trade and you can buy them back next week. Holding losing stocks is a complete suckers bet and the biggest lie ever told. Sell the dogs, buy the deals , Averaging is a placebo to make you feel better, It makes sense on some ( buy Royal bank at 29 ) but a dog is a dog and you are sticking good money behind bad on many.
NEVER EVER BORROW TO BUY STOCKS OR TAKE EQUITY OUT..NEVER
Am I disgruntled investor..Nope..I learned in the 2000 tech collapse when I lost 20K in three months (which was a cheap lesson) In the last 4 months when all the stock investors have been crying , I have made out quite nicely in real estate (and currency) . There are members on here who have bought real estate south of the border in the last year and made 20% just on exchange. I'm setting cash up for shopping next summer.
Of course all real estate "safety" is of course presuming you aren't a flipper or paying thru the nose in a trendy area..IE million dollar knockdown in oakville on a 100 ft lot. Then you are just greedy and stupid and deserve to get slaughtered.
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We're getting off the purpose of the thread, however, correct that the TSX has collapsed, the housing market is down. Realestate takes longer to recover than the stock market and the realestate market has not hit bottom yet, while the stock market has. The TSX is on sale, now is the time to buy. If you have money invested in the stock market and mutual funds, as long as you haven't put all your eggs in one basket, you'll eventually recover (I've been crying the past few months since I've lost over 80K in mutual funds, should have made the switch to a bond fund and should now be switching back to income and eventually equity funds). OPEC has reduced oil supply, we haven't yet seen the rise in oil prices, they've been going down, but with the supply cut, they'll go up again, once the oil prices rise, so will our dollar. There will never be peace in the middle east, at least not in this decade or the next and any turmoil in those regions spikes the prices. When our dollar was at $1.10 U.S and when one of our major banks bought out an american bank, who thought of investing in U.S $ G.I.C's which at the time had a higher interest rate?
All eggs should not be in one basket and realestate should be part of your basket as well as mutual funds, GIC's and Bonds. In tax sales, we cannot lose unless we pay fair market value and then the market takes a dive. I think we know better than to pay fair market value in tax sale properties.
Personally, I have no knowledge of renovations, minimal tax sale knowledge, a little bit of money to invest and add to my basket, have a condo which is being paid off by renters. Considering investing a little capital and teaming up though don't have much to contribute other than a little capital.
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I know this is off topic but I just have too put in my 2 cents. The stock market is a suckers bet like pfm1011 has stated. I have family memebers that are FA's and investment advisors, guess what all but one of them lost money is this latest downturn. Buy and hold is for suckers, sure over long term(20-30 years) it will make $ but that money would be made in a thousand different ways as well. The only difference is if the market takes a turn for the worse and you happen to be 55, well then you are SOL.
The problem with FA's is that their incomes and jobs depend on selling stocks, 95% do not think for themselves, they just rehash whatever their brokerage/bank economists forecast. The DOW is at 14000, great time to buy, DOW at 10000 great time to buy, DOW at 8000, great time to buy, same as realtors. Notice a pattern here? Its always a great time to buy. Never a good time to sell. Most reatail investors know nothing about the market. When(not if) the DOW hits 5000 or below, then in might be a good time to buy.
Here is how I see it, there are thousands of brokerages(Buffets etc..) who have huge cash posistions on hand, do you see them picking up these "bargains", nope. They are all preserving capital, so if these brokages with their huge teams of lawers doing due diligience do not see opportunites then why should the small time guy buy in to the market?
One of the important points that no one in the media is talking about is the fact that a lot of commercial brokerages (JPMorgan, Chase etc..) have switched to become commercial banks in order to access the TARP funds(700 Billion bailout package in the US). Guess what, under commercial banking reg's leverage is capped at between 5-10 times capital. No more 20,30,40 to one leverage on the stock;s they trade. Without that leverage and easy access to credit the DOW will never again hit 14000 without hyperinflation, which in that case it would be a mute point anyway.
All of the big 5 banks in Canada issued shares last year to raise captial, what does that tell you? Banks issuing shares when their stock is at 5-7 year lows? They must be desperate.
The markets are an ocean of sharks, small fish have to be careful out there.
Happy New Year to all
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I sold quite a few of my funds and put the money in bond funds when the market started to go down. The only money that I lost was money that I kept in aggressive equity funds and resource funds, which I won't switch now since its too late to put it all in bond funds, and will ride it out, knowing there will be an upturn in the stock/fund market in 2009. Now, I'll switch out of the bond funds and back into aggressive equities and resource funds. Quite a few of my funds are registered, I also saved on taxes.
Real estate will continue to decline during 2009 and 'flatline'. The difference between the markets is that with funds and stocks, you require to watch it daily and be prepared to sell (or switch) quickly. With realestate, you can sleep at night, things don't happen so fast and it will never be worth nothing. As stated, you can always rent out property if you can't flip.
Question:
Does a home based business qualify writing part of the mortgage and taxes off on your taxes?
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If you have a home office you can write off a reasonable portion. If you use 15% of your house for office and storage you can write that off. Additionally your phones, internet part of your hydro etc can be expensed to the company.
Everything that you spend on the business can be expensed but as always, be honest and be sure you can justify the expense should you every get audited. You cant write off your garage because you park you car in it and use your car for business.. but you can claim it if you store stock in it.
http://sbinfocanada.about.com/od/homebusinesstax/a/hbbdeductions.htm (http://sbinfocanada.about.com/od/homebusinesstax/a/hbbdeductions.htm) Its not great but gives you an idea.
In regards to your resources /oil they are the largest scams out there so be careful as most of the oil stocks that popped up over the last few years need minimum 50 US a barrel to break even and are Alberta based business ..therefore scams.. Alberta Stock exchange ( now toronto "venture" ) Venture noun 1. an undertaking involving uncertainty as to the outcome, esp. a risky or dangerous one: ( TSX Venture, they even warn you in the name)
As per stocks hitting bottom..There is still a pile of junk that will drop and die..they will mod the indexes to give a good show and the "market makers " will be churning up fraud orders all day long to "stimulate " the market...
In case you didn't know there are "marketmakers" who's sole job is to make fake trades of shares that aren't moving or are trading too low or high. This is done to "stimulate the market" So when you see a stock trade at $5 you could be seeing a real person buy or a Marketmaker trying to "stimulate" money out of your pocket selling you junk..Absolutely true and completely legal..Welcome to wall street Mr retail investor (victim)
Twinn , The banks actually aren't that low if you follow the splits over the years, Also I believe Scotia did NOT actually churn out shares . In case you forgot the Montreal accord is not in place yet but it calmed the market for a year while the banks tried to cover up the losses. ( Canadian banks lost tens of billions in the subprime but kept it quiet and each bank slowly leaked their losses instead of all of them coming out in August 07 and saying..oops...If they had all come out at once there would have been a run on the banks and a complete collapse of the economy so they did handle it well. I mean we should be happy to give the teachers fund 1 billon to help them out, heck they share their profits with us...(Each citizen of Canada has been presented with a bill for $1000 for the honour of bailing out bay street, remember that when you send in your tax payment)
In case you need a reminder
http://www.thestar.com/Business/article/558215 (http://www.thestar.com/Business/article/558215)
By the end 32 billion of taxpayers money will be used to bail the out the banks, teachers funds, unions , brokerage houses etc in Canada ( 18 billion gone already) , The result is we save the bay street scammers, no one goes to jail and they get to repeat the scam under a different name..It was called S&L scandal in the 90's, (135 billion) ABCP in 07 , ( 700 billion) what can we call it in 2013..( 2.1 trillion) hmm lets make up a silly name..should call it the 'we should have learned in 1929 that wall street is a scam and shot all the brokers" Crisis .."Good thing we had the second world war to forget about the great depression"
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If you have money and want to play the stocks , go ahead blow your brains out, but the vast majority of people are better off just paying off the mortgage and keeping out of the stock game. There is people paying 28% interest on a credit card and yet going out and buying stocks..shake your head violently
If the average person simply focused on paying off the mortgage of their house they will be miles ahead of any other method of investment. Even if the market collapses, you will lose 20% at max ( 2 or 3 years EQUITY) and it always comes back and averages back to 7% a year..no stock investor can claim the same. Lets not mention that your house is capital gains exempt so the 7% is tax free
Long rant there! Everyone is entitled to their opinion though.
I think the problem with stocks is that the "average joe" are now all investors and just buying whatever the guys on TV are telling them to do... this created a bunch of less sophisticated investors that didn't know how to react when things went sour. Then you have the bunch of people that are "investors" but they're really just gamblers but its more acceptable if your addiction is risky stocks.
20 years ago.. buying stocks on a daily basis was 99% left to the pro's.
Also, paying off your mortgage faster when its extremely low interest like it has been at least for the last 12 years, is a crazy idea... ok maybe that's a harsh word.. I'll say "overly conservative".
You can get a better payout in a number of ways (bonds, preferred shares, etc). Psychologically, sure its nice to pay the mortgage off.. but long term its better to just look at the whole balance sheet and make your money work for you EVERYDAY.
Nothing wrong if you end up with $500,000 in a brokerage account (conservatively invested) and a $100,000 mortgage.
On that note, real estate in the US has become the new stock market. I was in Florida last week and saw parents buying their 25 yead old kids living at home houses for $30000 just to get them out of their own house.
If you use the reasoning of paying down your $250,000 mortgage on a home and then its worth $75,000.. then what do you do? I'm glad my mortgage (and most others on here) is in Canada at least.
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Hello Everyone,
I have been watching with interest the many varied comments that have been made in the "teaming up" but now "pros and cons of investing" and have finally decided to comment.
I lost my job trucking within the auto industry and have decided to go on my own into the income property market. I have other skills but refuse to live in a tent in the bush, thank-you very much. We bought a house 3 years ago for $45K (POS, not tax sale) with tenants which has done us well. It allowed us to pay off our mortgage and now have a $200,000 secured line-of-credit that I would like to use as leverage in placing cash offers on du,tri and fourplex properties. Offers that are conditional upon financing seem to scare away sellers in todays market. Once my cash offer is accepted, I would work with my mortgage broker, pay off the line-of-credit with a mortgage on the income property and do it again. No CMHC, lower purchase price, save money. Right? Anyone wishing to throw a wrench into my plan, please do so. Free advice gratefully accepted.
I have built my own house and shops over the years. I am much better at swinging a hammer and twisting wrenches than reading the financial post. Someone suggested going to Edward Jones, which I did. She recommended to not borrow to invest in stocks, bonds, mutuals, etc. If I wanted to try smaller amounts ($10-20K) after I own properties, that is fine, but stay away from bigger $$$. That was good to hear. We had some investments ($30K) a couple of years ago with a "financial counsellor" at TD bank. What a joke. Withdrew everything and now very glad that we did.
Great site. Lots of info. Best of luck to all.
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now have a $200,000 secured line-of-credit that I would like to use as leverage in placing cash offers on du,tri and fourplex properties.
I have a bud that has done exactly that and over the last 30 years has accumulated two dozen singles that he owns and rents out. Tenants are paying the mortgages, and properties have appreciated in value. He has occasional problems with bad tenants, but is generally very picky on his rentals, and never advertises them since that brings in the unwashed and if you refuse them you have potential law suits. This is his retirement plan. It has worked for him very well...word of advice, stay away from anything bigger than a fourplex, and don't rent to students (housing that would appeal to them would have to be close to a University, and therefore carry a premium anyways, and the insurance will be ten times normal)...unless you want to buy the one that I have for sale of course.
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Morning Frank,
Thanks for the response. My mortgage broker warned me of the 5plex and larger. Gets into the commercial end of things and the rules change. That is my plan also, making this my retirement income.
We have a line-of-credit now but in the process of bringing it up to the max. The bank wants to charge me $500 to do this. I refused to pay their exorbitant fee and we are still battling over it. Should have it all worked out today. Is $500 normal to put a charge on title?
Thanks
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A house for 45K 3 years ago? Where? Or did you mean 450K?
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$45,000. In Vienna. It was a power of sale. The bank started out at $89K. The price continued to drop and when I got it the listing price was $55. The RE agent suggested I put in $45 and they took it. She told me after that they just turned down $47 the week before. I got lucky.
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47K houses wow .Im in oakville...47K wont get you a garden shed ;D
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20 years ago.. buying stocks on a daily basis was 99% left to the pro's.
Thats my whole point of the rant..The average person should just stay away from shares and leave it to the pros who can afford to and expect to take a hit once in awhile. My uncle made millions in stocks over 60 years and I used to help him at year end..and watch him take 500K losses and laugh " I will make it up next year" Total pro who could afford the ups and downs. He had millions in real estate , mortgages , bonds etc so the stock was just a small part of a balanced portfolio.
Any pro reading my rant didn't lose in the last 3 months as they shorted RIM or can write down the loss against previous gains or other investments. But the average person who is the target victim ( Edward Jones in strip malls..wake up people, your financial adviser is beside a variety store and a pizza pizza) Cannot afford, and should not play with stocks.
The increased scamming of the general public has turned the market into a joke and a suckers bet. Day trading ( 96 % lose money) , 5 dollar trades, bullboards , etc etc
I don't know if you noticed but over the last 3 months there has been a ton of ads on TV by banks and financial advisers ...absolutely insulting..""I know you lost 50% in sept..come to CIBC for advice from our 1 week trained adviser ( bank teller with bonus if she meets victim target)
CIBC doesn't mention all their client lost the same, Its just a scam. Edward Jones steal CIBC client, CIBC steal Jones client, One frying pan to another frying pan..keep sucking the blood till dry
Nothing wrong if you end up with $500,000 in a brokerage account (conservatively invested) and a $100,000 mortgage
Absolutely..but what about the other 99% of the population who have a 300K mortgage on a 340 house, 20K in credit cards and , 30K in stocks that is now worth 10 if they are lucky. You forget that the average person is 3 months from financial failure due to credit load..These people should not be in the market or taking equity out of the house.
"Conservatively invested" Say Bell, Rim, RBC, Exxon and Barrick,Teck ,IBM and Microsoft. Very conservative portfolio...Probably only down 50%, Dump the rim and teck and probably only 40% of you life savings gone.
Unfortunately most people cannot afford to buy the bargains as they have no liquid left and they aren't getting bailout loans like the banks. We finance the bay street bailout..we don't benefit from it.
Two years ago the government let American banks come into town and sell 40 year, no money down mortgages..they banned it a year later but they can still sell them until this April. ( that will be the death blow to the condo market) Yes thats right, anyone who took them,,6 billion in canada ..is now 20% negative in their equity..Spring should be fun.
And for you pro's , did anyone notice that July 07 the US markets eliminated the up-tick rule and 4 weeks later the subprime crash began..all to the delight of the shorters...nothing suspicious there at all
"The rule had been in effect since 1938, but the SEC removed the rule on July 6, 2007, after saying it was ?obsolete.?
August 07 the subprime collapse and all the banks get shorted, ....means all the general public gets screwed out of your life savings and the entire world economy collapses...
If you in anyway believe that the stock market is based on free market economy, you are a fool. It is a complete insiders game.
"If you are at a poker table and you don't know who the sucker is..its you"
yet another rant, time to get a hobby
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Interesting concepts.
And I think investing - we are looking for "honest" well run companies..for the stock market shares that are offered.
Horse races are a different story. ..betting on horses you take your chances.
The current regulators will never be able to keep up with Wall Street,
The internet "blog world"...will help.
The media has also been slashed, no business, or in depth investigation anymore...
no one can afford it anymore....buyer beware more than ever!
The basic's still applies.
1) We all need a roof over one families head
2) Food on the table
3) Insurance to cover what you own.
Paying down your home (is) the best thing to do asap. The money saved on interest even though at 6% is significant. paying it off 10 years early can save you thousands, more than the stock market mutual funds will ever do. Flipping property? You need "extra" money to such a risky business. You have to be prepared to take a loss. Or infact able to afford to take a loss..Because really property take money, financing and costs to hold..over a period until it is resold. Especially rentals, it needs maintenance and finaning costs! Anyone telling you differently is as niave as your "dream" to become independently wealthy over night.
Unfortunately the public that buy 250-300k houses, and carry debt on credit cards, buy new cars and compete with the "Smiths" really are naive in terms of what one "really" needs or can afford (see latter).
My family has never considered buying a "home", car or anything of significant investment - over our budget. I have always bought USED cars, USED houses, USED furnishing etc. Why one would buy a new home not only creates "debt" but urban sprawl, it is NOT Toronto the good anymore. Its all about MONEY! That's why I left T.O in 1998, just in time...to know the difference one is missing with manyof you there!
To me an investment is not just one for ROI. Or for "flipping".
Paying down your home IS the best thing the general Joe can do...especially when a home is bought within ones means!
The "flippers" here may have a different reality...but frankly I think the main issue is people buying beyond ones means.