Last week "Heidi" asked: "When is the best time to buy a home in Edmonton?" We regularly get questions on our blog that Sara says I should turn into a blog post, because there are probably more people wondering about the answer to that same question. I try to respond to all the serious questions posted in the comments but sometimes I'm just not able to answer every question.
So, the real answer to Heidi’s question depends on the reason you are buying a home. Is it purely an investment or is it a home to live in? I'll assume that you are asking about buying a home. If you'd asked me that question before 2005 I'd have answered "September, last two weeks of December and first two weeks of January are generally great times to buy in Edmonton."
However, since 2006 the typical trends have been off kilter and predicting just about anything has been almost impossible. The best time to buy is still when you have low personal debt, and income that is increasing and stable. These should be your primary considerations. You should always consider real estate a long term decision and purchase sometime you will be happy living in for a long time.
Alternatively if you are looking for a condo it is still a bit of a buyers market in Edmonton (meaning there are more condos for sale than buyers looking to buy one). If you’re after a single family home under $500,000, demand is reasonably strong and inventory is fairly low making it more of a sellers market – much more of a seller's market than we typically see at this time of year.
Real estate marketing is so risky and if you overlook something, it can gulp you completely. Always be careful with whom or what you are dealing with. By investing in foreclosure homes in Canada, one can be benefited.
Just buy a condo under 5 years old for 30 G’s cash in Vegas and say screw this frozen hyperinflated place.
http://www.realtor.com/realestateandhomes-search/Las-Vegas_NV/beds-1/baths-1/price-25000-35000/type-condo-townhome-row-home-co-op?pfbm=4
Vegas is a great place to live…What’s the unemployment rate like there?
Where Edmonton’s rate is headed.
Dave Ramsey (financial show radio host) suggests buying a house when:
-you are debt free
-when you are planning to live there for at least 5 years
-if you are married, when you have been married for at least a year
-where the mortgage payment is no more than a 4th of your take-home pay on a 15 year fixed mortgage
-if you’re going to buy an investment property, pay cash
I think that’s good advice.
And when people tell you you are “throwing away money on rent” ask them how much of their monthly payment is actually going to pay off their principal (usually almost nothing, if they just bought their house), and how much they pay each month for their mortgage interest, utilities, taxes, and home maintenance.
Dave Ramsy should have clarified that to “If your a complete financial idiot then follow these simple rules”.
1. you are debt free.
2. when you are planning to live there for at least 5 years.
3. if you are married, when you have been married for at least a year.
4. where the mortgage payment is no more than a 4th of your take-home pay on a 15 year fixed mortgage
5. if you’re going to buy an investment property, pay cash
Number 5 is definitely for financial idiots… Never ever ever ever pay cash for investment property. There are by far better uses for cash than putting it into an investment propery that generally have minimal rates of return. Plus if you can leverage, leverage. First rule of real estate investing is “You should always buy investment property with other peoples money”, period. If your lucky enough to buy an investment propery with only 5% down that provides a 10% annual return of investment, jump all over that money making machine. If not stay away, renting a property is not worth the aggravation or the headache that some renters can give you .
Yeah, investing at 5% down is a great idea. Especially when the market crashes. That’s actually what Dave Ramsey did originally. He was leverage to the hilt, then the market crashed, then he lost everything. The fun thing about buying with cash (or at least with a strong cash position) is that you don’t lose everything and have to declare bankruptcy if the market drops and you can’t find a renter. Lots of people used leverage down in the states (borrowing against their houses to invest in the stock market). It didn’t work so well for them.
BTW, that 10% annual return that you’d get with your mortgage would be more like 20% if you weren’t paying all the expenses associated with a mortgage.
Besides, I thought the banks wouldn’t give you a mortgage on a rental property without at least 25% down.
Read the post again, please.
“If your lucky enough to buy an investment propery with only 5% down that provides a 10% annual return of investment, jump all over that money making machine.”
Yes you can get a 5% down mortgage if you have great credit and existing assets. Plus I wrote “that provides a 10% annual return of investment”. Understand what the means? If it doesn’t pay you 10% a year after expenses, stay away, get it now.
He was leverage to the hilt, then the market crashed, then he lost everything
So I guess this Dave Ramsey must be the King of the financial idiots? I just can’t imagine a person telling people the wrong way to do things because he’s has no idea what he is doing…. What next…
Tara in this world you have to take some risk to get the higher return. If you don’t like risk, then buy Government bonds and tell Dave Ramsey to quit advising people on things he surely seems to know nothing about. It seems the only thing that Dave Ramsey has learned from his rooky financial mistakes is to sit on his hands, you would think he would have learned more but I guess some people never do.
The fun thing about buying with cash (or at least with a strong cash position) is that you don’t lose everything and have to declare bankruptcy
It’s fun to lose 100% of your money compared to 5%…. The more money you put in the more money you personally lose if you ever have to declare bankruptcy. Understand how that works now.
BTW, that 10% annual return that you’d get with your mortgage would be more like 20% if you weren’t paying all the expenses associated with a mortgage.
The only extra expense your paying is interest and it’s deductable, which is a good thing. All other expenses are paid by the owner regardless of whether or not there is a mortgage.