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MasterD 08-27-2006 05:42 PM

Major OT: Buying a condo...
 
Hey all,

I've started slowly looking for condos in my area, I'd like to buy one next summer and I want to see prices, what fits in my budget, etc etc.

Now, I have a question: does anyone know what's the max recommended proportion of a budget that should be used on housing? Is it 20% of your "brut" (pre-taxes) revenue or am I way off?

Thanks

Ludo 08-27-2006 05:54 PM

I think it's no more than 30% of your gross income (pre-tax) that should be dedicated to housing. I could be wrong.

ChemiseBleuHonnete 08-27-2006 06:12 PM

Quote:

Originally Posted by MasterD (Post 6371198)
Hey all,

I've started slowly looking for condos in my area, I'd like to buy one next summer and I want to see prices, what fits in my budget, etc etc.

Now, I have a question: does anyone know what's the max recommended proportion of a budget that should be used on housing? Is it 20% of your "brut" (pre-taxes) revenue or am I way off?

Thanks

talking about that, my parents just bought a condo in Sutton a few weeks ago. I'm looking forward to see it.

Garry Valk 08-27-2006 06:15 PM

Quote:

Originally Posted by Ludo (Post 6371252)
I think it's no more than 30% of your gross income (pre-tax) that should be dedicated to housing. I could be wrong.


General measure in the financial industy is GDS, Gross Debt Service Ratio. The standard is 32%, ie if your housing costs (taxes, mtg payment, condo fee, heating) are more than 32% of your gross (pre-tax) monthly income, you are probably pushing it. Most FI's measure condo fees at 50% as well, by the way.

HabsoluteFate 08-27-2006 06:30 PM

Personally I don't look at these percentages...had my girlfriend and me used these we would have ended up buying a house that is about 50% more than what we paid for...

we ended up choosing something we both loved at a price that we could still go and do stuff and have a life...plus that also leaves extra money should something unforeseen happen

Can't wait until we take posession on September 27th

MasterD 08-27-2006 06:34 PM

Quote:

Originally Posted by Garry Valk (Post 6371347)
General measure in the financial industy is GDS, Gross Debt Service Ratio. The standard is 32%, ie if your housing costs (taxes, mtg payment, condo fee, heating) are more than 32% of your gross (pre-tax) monthly income, you are probably pushing it. Most FI's measure condo fees at 50% as well, by the way.

Cool, thanks.

Quote:

Originally Posted by HabsoluteFate (Post 6371406)
Personally I don't look at these percentages...had my girlfriend and me used these we would have ended up buying a house that is about 50% more than what we paid for...

we ended up choosing something we both loved at a price that we could still go and do stuff and have a life...plus that also leaves extra money should something unforeseen happen

Can't wait until we take posession on September 27th

Yeah, but this being my first move out of my parent's, I dont know what "a price I can still go and do stuff and have a life" is... I just finished school 2 weeks ago, and I haven't had a reall full paycheck yet, so I can'T just go out of my way and do a budget right now. Plus, I'm not gonna have my real salary for another 6 months since I have a professionnal exam to go through in february/march...

Of course I don't want to spend the full 32% and be tight for a few years, but now that I know 32% is the max recommanded, now I can see what 25-28% is and go from there...

beowulf 08-27-2006 06:46 PM

What is your area? I would not go condo, harder to resell and the condo fees are a *****. I just bought a nice "executive" townhouse, 1900 square feet and I got a higher morgage because of the lack of condo fees.

MasterD 08-27-2006 06:54 PM

Quote:

Originally Posted by beowulf (Post 6371478)
What is your area? I would not go condo, harder to resell and the condo fees are a *****. I just bought a nice "executive" townhouse, 1900 square feet and I got a higher morgage because of the lack of condo fees.

I'm in Laval... I'd go anywhere from the northern montreal (ahuntsic, etc.) to the southern north-shore (blainville, terrebonne, bois-des-fillions, etc)

I personnally wouldn't mind going farther, but I work at Hopital du Sacré-Coeur, and my girlfriend is still a student at Ahuntsic Cegep, so we want to be somewhat close from there...

My problem with buying a house is that I'm not so sure I'm ready to handle all the side responsabilities like mowing the lawn and gardenig and what now... I'm still living at my parent's and so is my gf, so we've never been in an apartment yet.. not used to taking care of ourselves really. I basically want to go in apartment without giving my money away.

Habsaku 08-27-2006 07:42 PM

You shouldnt see mowing the lawn as an obstacle, most houses in Montreal dont have big terrains. It's just things you get used to, you should really look at the price and the location of the house, the other stuff is not hard to live with.

tinyzombies 08-27-2006 08:07 PM

Condos aren't a great investment if you are looking for appreciation. And you give away so much cash in fees. But a house will cost just as much to maintain and heat. But a house will appreciate (especially if you are handy) and you could probably find a deal depending on where you would be willing to live. The Montreal market isn't tapped out yet.

Generally, your salary should be spread out like this (though you can move it around, but this is the basic starting point):
Housing-35%
Other-25%
Transportation-15%
Debts-15%
Savings-10%

You probably have school debts, but they are likely small since education is so cheap here. And if you work downtown, you can probably save a lot of money and take the Metro and shift money to another category. Etc.

Pascal 08-27-2006 08:57 PM

Houses in Terrebonne really rocketed in value in the past yrs.. the house we bought for 88k about 8 years ago is now worth 160-170k.

Nice place to live though, but not if you like to be close to the action in Laval and Mtl.

Markov79 08-27-2006 09:48 PM

Right now the housing market is grossly overpriced. Ten years ago my parents' home was valued at less than 100k. Similar homes in the same area are going for 250K now. It may be different in a year but don't force yourself to buy when you'll be getting ripped off. If you feel you can stomach another few years with your parents or live in an apartment it might be worth it when it comes time to buy. The average homeowner is a baby boomer who is getting to that age where they don't want the hassle of maintaining a property. Give it five-ten years and the market will be flooded with properties.

Another course is to find a friend who works in mortgages and get from him a list of people behind on their payments. You can get a house on the cheap by offering the soon to be homeless something for their homes even if it is far less than what it is worth. But you'll need to be handy because most people who can't pay their mortgage can't pay for repairs either.

HabsoluteFate 08-27-2006 10:00 PM

People here make some good comments about condos....
If they feel its time to fix everyone's roofs (even if yours seem fine) you will get billed on it on top of your normal condo fees...if your going the condo way perhaps your better off renting...

whatever you end up buying you will end up having to have a minimum of probably 3 years living there to lower the risk of losing money if you sell it...but the housing market is unpredictable so i personally wouldnt buy something unless you feel you'd be happy to still be in there for 10+ years
if you look at it that way and your coming out of school perhaps waiting a couple of years once you have a better job and can afford something better is the way to go....

I would go with a house if you can...if you can't then perhaps a townhouse

personally we bought a house that we intend to fix up although you obviously have to be careful with those as well and you have to be willing to spend the time learning to fix it...but can be a good return on investment within a few years....labour done by yourself is always cheaper than labour done by someone else

in the end though of course it is your choice and who knows a condo could be perfect for you

MasterD 08-27-2006 10:16 PM

Can anyone fill me in on what those townhouses are? a french translation maybe would make me click...

Montrealer 08-27-2006 10:40 PM

Quote:

Originally Posted by MasterD (Post 6372453)
Can anyone fill me in on what those townhouses are? a french translation maybe would make me click...

maison en rangée

Talent Analyst 08-27-2006 10:46 PM

Hmm ... Don't buy condo .. too much expencive and you got always problem ... you hear everyone in the block and if you got water in your house because of the people in top of you , you will have many problem ..

Why invest 200 000$ (average) in a little condo when you have nice house at the same price and you got returned from your tenent .

Munchausen 08-28-2006 12:22 AM

I'm looking to buy also. But I want to be downtown because of my job and because I like it there. Unfortunatelly the prices downtown are just insane. 200K won't even get you a 4½. I think buying downtown is a good investment though. It's the place where the prices skyrocket the most. Downtown real estate is a gold mine. I've seen lofts there bought for 120K 5 years ago that now resell for 200K+.

beowulf 08-28-2006 04:53 AM

Quote:

Originally Posted by Munchausen (Post 6372981)
I'm looking to buy also. But I want to be downtown because of my job and because I like it there. Unfortunatelly the prices downtown are just insane. 200K won't even get you a 4½. I think buying downtown is a good investment though. It's the place where the prices skyrocket the most. Downtown real estate is a gold mine. I've seen lofts there bought for 120K 5 years ago that now resell for 200K+.

Real estate is crazy anywhere. My parents house in the west island was bought about 20 years ago for 200k or so and these days they are getting real estate agents telling them they could get 500k minimum and probably even more. Hell I just bought the townhouse in south ottawa in an area called Barhaven. It is sort of like the west island 20 years ago. The place I got cost me 236k but talking to some locals including my uncle who lives in Orleans and they all say that the place will gain at least 10k over the next couple of years easy if not more. Real estate in most of Canada is going crazy.

montreal25m 08-28-2006 06:12 AM

Condo Life
 
If you are looking to buy a condo, it is all about location. I bought a condo Jan. 2000 along the lachine canal, on the water...ground level for $100,000. A year ago, sold it for $192,000 and bought a house in Kirkland (Timberlea). The thing I notice now or miss now is everything is taken care for you. My condo fees were dirt cheap, around $75 a month because there was only one entrance to my place, no hallways, elevators or even a pool that would jack up that price. I recommend it to anyone under 30, great way to start off. Again though, make sure you have a good location.

Montrealer 08-28-2006 08:21 AM

Quote:

Originally Posted by beowulf (Post 6373358)
Real estate is crazy anywhere. My parents house in the west island was bought about 20 years ago for 200k or so and these days they are getting real estate agents telling them they could get 500k minimum and probably even more. Hell I just bought the townhouse in south ottawa in an area called Barhaven. It is sort of like the west island 20 years ago. The place I got cost me 236k but talking to some locals including my uncle who lives in Orleans and they all say that the place will gain at least 10k over the next couple of years easy if not more. Real estate in most of Canada is going crazy.

True, but there are little signs here and there that the bubble is going to burst (real estate is cyclical and every boom is followed by a bust, especially once the economy cools down and over-leveraged people with insane mortgages start defaulting, flooding the market with bank owned property).

I'd say the bust is going to occur within the next five years; the market is literally overheated right now.

Linkage: http://www.theglobeandmail.com/servl...Story/Business

Munchausen 08-28-2006 09:06 AM

Quote:

Originally Posted by beowulf (Post 6373358)
Real estate is crazy anywhere. My parents house in the west island was bought about 20 years ago for 200k or so and these days they are getting real estate agents telling them they could get 500k minimum and probably even more. Hell I just bought the townhouse in south ottawa in an area called Barhaven. It is sort of like the west island 20 years ago. The place I got cost me 236k but talking to some locals including my uncle who lives in Orleans and they all say that the place will gain at least 10k over the next couple of years easy if not more. Real estate in most of Canada is going crazy.

Yes I think it's probably of sign of our strong economy at the moment. But there's no secret there, the higher the demand, the higher the prices, and downtown Montreal the demand is through the roof. You just have to look at new condo projects being built there, all the affordable (300K or less) units are selling like hot cakes. So much so that I visited a project near the Bell Center on René-Lévesque and went back 2 weeks later for a more in depth research about 2 units I was considering, they were both gone! They can charge wathever they want, keep building cheaper and smaller while jacking the prices, people are still buying.

I think I'm at the worse possible time to buy but I said to myself that I would not "settle". If I can't find anything I like on all fronts (location, price and space), I'll wait for the market to drop.

Habber 08-28-2006 09:16 AM

Key to buying real estate is doing your homework, which you seem to be doing. Waiting to purchase because of market conditions isn't the best idea, because no one can say for certain what's going to happen. If you know the market well, you will be able to find undervalued properties.

I'm on my 5th mortgage right now, and have done really well buying/selling every time.

IMO 32% GDS is pretty conservative. I've maxed out my GDS every time I've bought. You have to consider things like do you have kids, overall debt and earnings potential. If you're young and starting out your career, you might be getting 10% yearly raises, and you may be able to pay off a bunch of short term debt.

psychonaut 08-28-2006 04:01 PM

The rural areas will bust, but in the city I think not as much. Like ppl said the baby boomers are the one paying all the land, so now they are going back to the city where they are close to the service.

So for myself im waiting 3-5 years to buy, mostly thinking we will prob have a other referemdum wiche might bring down the prices or atless slow it down a bit. Looking back the year after the referendum would of been the best!

But for the original poster, I think you should rent first not go out and purchase a place right away even if its the way to go. Also I hope you and your girlfriend are doing everything 50/50 if not PLEASE talk to you notaire!!

MasterD 08-28-2006 04:14 PM

Quote:

Originally Posted by psychonaut (Post 6376190)
The rural areas will bust, but in the city I think not as much. Like ppl said the baby boomers are the one paying all the land, so now they are going back to the city where they are close to the service.

So for myself im waiting 3-5 years to buy, mostly thinking we will prob have a other referemdum wiche might bring down the prices or atless slow it down a bit. Looking back the year after the referendum would of been the best!

But for the original poster, I think you should rent first not go out and purchase a place right away even if its the way to go. Also I hope you and your girlfriend are doing everything 50/50 if not PLEASE talk to you notaire!!

Of course I am... if she dumps me she takes 50% of the debt load :D ;)

Thanks for the advice everyone, bu tI'm pretty sure I'm buying a condo... UNLESS I can't find anything worthy (but I think I have already), then I'd rent a cheap apartment for a year and continue looking.

PS to whoever said I'D get a 10% raise... I'll be a nurse, so no 10% for me, more like whatever raise is on the "échelle salariale" the government forced on us last december...:madfire:

Garry Valk 08-28-2006 04:16 PM

Quote:

Originally Posted by Talent Analyst (Post 6372572)
Hmm ... Don't buy condo .. too much expencive and you got always problem ... you hear everyone in the block and if you got water in your house because of the people in top of you , you will have many problem ..

Why invest 200 000$ (average) in a little condo when you have nice house at the same price and you got returned from your tenent .

Because the $200,000 house is 50 km from downtown, and the condo is around the corner from work. And the one thing you cannot buy is time.


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