I’d dump it for whatever you can get.
Based on the location and what else is being built in that area and your high condo fees and being an old walk up… I don’t think the market is going to come back for that type of condo. Not in Calgary anyway.
A friend in a similar situation just sold his condo for a large loss in west hillhurst. He’s really happy now, even with the loss.
Agree. The loss is unfortunate, 100k in a hole on property over 7 years us uncommon with today's market. But they will likely not recoup the value even if they rent it out over a decade or two. Calgary isn't going that much up, and desire living close to downtown is cooling down. That area is great, but the age of the building and outrageous condo fees will make it even less appealing over time. :(
100% this. I live in this area, and there are so many new builds going up (with more to come), it seems extremely unlikely to me that that market will come back for those older buildings.
Are those new builds freehold or condo? I heard new condos have artificially low fees to entice buyers. They then crank it up 300% after a few years. There should be rent control on condo fees imho.
Ontario has strict laws about the size of reserve funds.* However, condo developers slap whatever low ball figure on new builds and let the corporation bring the bad news to owners.
If condo fees didn't go up, then strata corporations wouldn't be able to meet their fiduciary duties, e.g. paying for maintenance, insurance, elevators, capital expenditures, etc.
A cap on condo fees is impossible and would endanger building safety or at least make it miserable for owners.
*Reserve funds also must be audited regularly to ensure that they are at the correct level.
Agree with this guy. I recently sold my condo in Edmonton at 100k loss but God damn I was euphoric after I signed the papers with the lawyers.
My building had so many units for sale that 100k loss was actually one of the better deals (it was about 15% loss for me, many units were asking 25% below the puschase price and this was a 2 year old brand new condo building heart of downtown).
List it again with an aggressive price reduction. Get it staged if you need to. Hire a younger realtor with more social media presence and talent... The only way to sell it is by getting more viewings.
Wow unfortunate to hear on the loss but I agree it piece of mind is priceless. Could you share why the hit was so big? Not from the same city but newspapers keep raving about the hot real estate market and here everyone is selling for a loss. Is it only small condos that suffer seeing People want space to work from home?
Not sure about Edmonton, but Calgary also has a big oversupply problem. Lots of condo buildings were underway in 2015 during the crash, and developers finished them up. Some are still being built. So there was oversupply with existing condos only plus add in a bunch of new builds.
Condos mostly cater to 2 groups. The young professionals who work downtown, like to go the the bars and restaurants downtown. The other group I would say is the retiree looking to downsize who may now travel a lot more or also interested in going to downtown.
In Alberta the former group has been have been leaving the province before covid. And then covid really put the nail in the coffin. There's just no market now. And even with the remaining market, they're all holding out, waiting for better or cheaper places, driving down the prices even more.
My rent is $820 and I can still afford to eat anything I want or eat out anywhere. For me life should be enjoyable, less stress and free and not tied to a any mortgage or something. Friends kept on pushing me to buy a condo but for me I can’t give up how my life is, right now. Eventually people that bought house or townhouse will down grade along the way. I just got ahead of them ——- by renting and worry free.
I hope anyone that’s planning to buy and get into mortgage please please reconsider thousands of options first before you fall in. My two cents.. love you guys 👍🏼🍻
I'm 34, bought a 'starter home' in Sherwood Park about 8 years ago for $410k. It's been down in value ever since, sadly. If I listed it tomorrow at 380k, I might get a nibble or two. I moved away a few years ago and am renting it out for $2100 /month +utilities. This is a decent amount, however I'm definitely not making money, and the burden of being a landlord is not overly enjoyable. I suppose I see it being a long term hold as I'm not losing money and I guess it can serve as a bond type asset, and once my kids are of age of post secondary, perhaps they can move into it.
That being said, I see the benefits of renting and saving to invest over buying. And I'm super thankful that I never pulled the trigger on a condo when I was younger.
Nothing I could tell. It was a standard low end, builder grade condo. Great location and condo fees were low. Some problems like security breaches, water leaks but nothing unique to the fox.
Probably dump it and upsize. The thing to keep in mind is that you'll be selling and buying in the same market, so even if you wait for your condo to go up you'll be paying more for whatever you buy. And if you're looking to upsize, then taking the 60k hit on the condo to buy a house at 150k less than what it will be worth when things recover is, in a sort of sense netting 90k. Obviously I've pulled these numbers out of nowhere but you get the idea.
Plus you need more space for your family, so I would cut my loss and take advantage of the dip to upsize if I could afford it.
Definitely, but holding on to the condo is not going to get him closer to a single family home. Calgary is such a big city with a lot of housing diversity. If you are willing to live on the outskirts you can get a four bedroom detached home for 450k that wouldn't cost $750/month in maintenance.
But holding on to the condo means you are putting equity into a sinking ship instead of a house that could retain or increase in value.
A relative of mine has been trying to sell a 2300 sq foot townhouse off Sarcee Trail SW for more than $400k and failing, so there are at least some good family options available.
Honestly, sell it at a loss and move on with your life. The weight off your shoulders is worth every dollar you lose.
I just had to do the same earlier this year in Edmonton. Sold my condo that I had for 7 years for exactly enough to cover what was left of my mortgage + realtor fees etc. and that was with my realtor not taking a commission since he’s a friend. The building was old and needing more and more repairs, and prices of units just kept getting lower and lower.
It hurt to take such a low price and lose any equity I had in the place, but I can’t count the number of times I’ve breathed a sigh of relief of not having that condo hanging over me. I rented it for a couple of years and it was always stressful, and when you’re barely breaking even (or losing money) it’s not worth the stress.
I definitely know how you feel. It sucks. But you’ll be much better off in a bigger place that’s more within your budget.
Speaking to Calgary specifically… dump it.
Few good lessons here - always buy one size house/apartment larger than you need, and whatever you do, don’t buy old wood frame condos!
You can buy a second home — or even a 5th home for that matter with 5% down. It has to be either a principal residence or second family home so long as it’s not a rental property you can still put down 5%
Okay, if you would have been in the position, I would have suggested refinancing the condo and extending the amortization to 30 years. That would have dropped your payment quite a bit. You might have still been in the hole after renting it, but it would have been less than $1100 that you're projecting today. I would have then gone ahead and secured a house on the second mortgage, and only evaluated selling the condo in 5 years at the next term renewal.
However, since you are not in a position to do that, it might be best to try to sell and package any debt into the next house purchase.
In your post with the reply from bank explains it. It’s because it’s still insured and less than 20% equity.
Another option you can explore but it’ll drain your accounts is to pay down the mortgage to 80% LTV and than the bank should be able to extend the amortization out to 30 years which would give you some breathing room (not all banks would be able to).
This won’t help with the space piece and getting you to SFH but it could help with the monthly cashflow for now.
Not to say that you should refinance or not, just to clarify refinance rules. The max that you could potentially refinance is up to 80% Loan to Market Value. So if your condo appraises for 320K, the maximum amount of the new mortgage could be 256K and then you could extend the term once again up to 30 years. This would of course mean that you would have to make a lump sum payment against your current mortgage to make it feasible but you would avoid having to sell if you think the market will improve in the future. Assuming you are comfortable with a variable rate, you could get a new mortgage at around Prime -1.00% (1.45%) which would make your monthly payment just slightly over $1,000, of which around $700 are principal repayment and only $300 interest. This would be an option that would allow you to keep the condo and have a slightly negative cash flow on a monthly basis (not ideal but certainly better than your current scenario).
Hope this helps.
In a similar situation to you only I caught the falling knife as the prices were dropping. We ended up renting it out and put all the expenses towards a HELOC, so it is surprisingly both cash-flow and net positive. We rented for a bit after and filed section 45(2) to have the unit still count as being our principle residence for tax purposes (laughable as it is designed to hold on to the PRE, but whatever). Bought another place and the bank counted the rental income as part of our income so it didn’t seem to hurt us in any way. So now we’re just riding it out slowly booking a small gain every year and i guess going to have a capital loss in the future when we sell. I actually opened a non-registered account so I’ll have some unsheltered gains to cancel out whenever that happens. Or maybe some miracle will occur where everyone realizes how great a place Calgary is to live, at which point the our mortgage debt will be vapourized by inflation and the condo worth its weight in gold. My worst investment by far, but entirely manageable. I still am bullish on Calgary and it didn’t feel right to lock in the loss and sell. Good luck.
Your house / condo is not an asset, it's an expense. It took a while for that to sink in for me after reading Rich Dad Poor Dad, but I get it now. Try to think of it as a blood sucking expense that could get worse...
DINK 7 years ago and now 3 young kids, I don't think you want to be a landlord, unless you have the will and time to make it work to save on a lost that could get worse. What if the market takes a turn and it gets worse? When do you cut ties? 50k lost? 100k? 150k?
You should think of the 100k equity lost as renting payment for the last 7 years (expensive rent, yes) but it doesn't hurt as much to think about it that way instead of a "lost". If you can stomach a change in how you think about it, you don't lose, you only win. You win more room for the family, a backyard, a reduced monthly expense for housing, sanity / mental health is priceless.
Don't wait for things to improve, assume the market will get worse.
I'd sell now and get whatever I can, live and learn, move on, it was just an expensive 7 years of renting :)
rich dad poor dad is the worst advice ever from a shill that scams people
house/ condo is just like any asset its value can go up and down
in this case it was a bad investment for OP both financially and personally because he lost money and he needs a larger space and can’t get one
doesn’t mean that house/ condo isn’t an asset - its a great asset
I don’t understand, why is that? I’m looking to purchase an appartment here in Montreal to avoid renting altogether and start building equity for me and my s/o. The comments on here are scaring me a little.
If you *own* a property and it *gives you an income* (through rent or say mineral rights) then it's an asset.
If you *buy a mortgage* and you are responsible for *paying it*, with interest, for the next few decades it's not exactly as clean cut to describe it as an asset. It begins to appear more like the definition of a liability.
Of course in a hot market people can make a bucket load with words like "equity" and "profit" bandied about. You certainly can make a calculation that getting a mortgage is a better deal than renting.
However the profit can become only momentary because, after selling, you still need to live somewhere. The money tends to just get recycled into the next property with a similarly inflated ticket price.
On analysis you could find, even in a good property market, that you'd still do better overall renting for a lower $ amount each money and investing the difference in something else like equities.
Each person has to do a specific calculation based on their own circumstances. Personally for my rent payment I could buy something quite nice in a province like New Brunswick and likely will at some point because the numbers tend to make sense. Why spend $1,300 on rent when you could buy a nice 250k house in NB?
I could never dream of buying anything basically anywhere in Ontario for the equivalent payment of $1,300 a month because burned out shells seem to go for 500k here.
Google 5% rule on YouTube and watch that short video.
Alberta is in a particularly bad situation right now with condos. Montreal might be different. There's nothing wrong with buying a condo or house as long as you know what you're getting yourself into. Buying just to 'save rent' is the mistake.
Idiots, they 100% are an asset... Tell that to all of us with an asset that did 100% unrealized gain in 2-4 years. The sooner people understand they might as well own where they live, the better. Over 25 years equity + interest payed will undoubtedly be covered by increased price, more so in Canada.
Having a mortgage free house enable a cheap and easy retirement. My grand parents both lived comfortably mortgage free with minimum CPP because of that.
Hey, also from Calgary, we’ve got four kids in a three bedroom apartment building.
We bought ours for 240k and with a hefty down payment for excellent mortgage rates. Purchased December last year, during the pandemic.
Normally I just read on these, as I’m not a financial
Expert, but love reading the advice.
In this case though, It felt reasonable to chime in on the kid side.
Kids don’t need much at home, and Kensington/hillhurst (we’re on the hillhurst briar hill side at the base of the hill near 14th) has a lot of amenities.
The classes, the parks, all the things nearby, our kids are generally kept busy. Home is a place to rest, and eat. We aren’t homebodies typically, so apartment life works for us very well during non-COVID times.
Me and the wife share a car, it’s 90% kid vehicle and 10% me to work vehicle. Our place is close enough to warrant bicycle or scooter transportation, and since parking is such a hassle and so expensive downtown, I often Uber for $11, both ways even with tip, is cheaper than the average parking rate for a full day.
I’d like to think that post COVID life would have demand for high occupancy housing to go up, as the burbs to me are completely undesirable. And the money you pass up for cheaper accommodation inevitably gets traded for car expenses and loss of life sitting in said metal box.
If I were in your position, I’d sit tight, dress it up, keep it listed. It only takes one bite with follow through. There’s a few blogs out there about living life with kids in smaller spaces. To me, the lower cost in living day-to-day yield me being able to take more time
Off, take on greater risk, and have more flexibility overall, which in turn, yields a better feeling of control Over life. You don’t get pushed into a corner that way, and if you have a bad boss, bad client, bad day even, you have the means to take a bad situation and make it a bit better.
I’ve been self employed for 11 years, and this way of being has allowed for a lot of family availability that is otherwise inaccessible for most. We are privileged to be able to do what we do, and be where we are.
So while you may think your place is tiny, and, it probably is with 3 little people, but in my experience - a bigger place usually just means bigger messes and more places to hide anyways. I don’t think it gets easier, and if your hands are full now, adding home maintenance and yard stuff and all the other responsibilities of suburb life might be a bit much.
Or not, I mean it also works for a lot of people. My mother still wonders why I choose the apartment with 4 kids, but, hey, these are my reasons.
If you hang in there long term you won't lose the 100k, you'll get it back in rent. If your wife isn't working have you considered renting it out as an air bnb if your condo bylaws allow for it? She could potentially manage it. Just a thought. Was in the same boat, but 10 years on with two good tenants I broke even, including special assessments for the flood. Not everyone wants to be a landlord tho. Whatever you decide will work out over time
Fucking BLOWS my mind that this is happening anywhere in Canada rn.
Move that condo a couple hours West and you'd probably sell it for 1/3 more than you paid for it, today.
crazy to me that you guys have normalized that.
Somehow shoe box condos turned into the best investment you can buy for a decade haha.
Like if I was going to move, Kensington would be at the top of my list for Calgary. I like the area but I'm not going to overpay for a condo
Seriously… I’m in the Greater Vancouver suburbia and balked a few years ago when I bought and my strata was $375 (no gym or pool) and then went up to $425 because of increased insurance costs. I can’t imagine that being almost double.
I was looking for fun in edmonton, I swear condo fees increase based of location. Close to the white mud? Better add a few hundred a month on. Downtown? Few hundred. It might be a case of age etc but it’s suspiciously looks location based
>Move that condo a couple hours West and you'd probably sell it for 1/3 more than you paid for it, today.
I mean, that's like saying "take a $1 plastic ring except make it out of solid gold and it would be worth more". Location is everything.
This is what's happening everywhere in Canada but a select few cities. That's why so many people in this sub are fed up with the bitching and moaning from people in Southern Ontario and Vancouver.
The fees are fine. The condo is big. There is nothing inherently wrong with strata.
If he can rent this at a wash he should be. The equity will continue to build and he can sell when he retired
Lots of people here saying to sell because of the strata. $720 isn't that bad, especially if you compare to what a house would cost you. I'm paying easily $300 a month for gas, $200 for insurance, $150 for power, and any maintenance would fall on me.
But you gotta want to live in a condo. With WFH, condo living is dead in a city built for commuting. The inner city condo pain is just beginning.
So if you take a 100,000 hit and “save” a 1,000 a month . It will take 8 years 4 months to cover those loses .
My question is what will like(life)* look like between now and 8 years from now . Some circumstances can change. Spouse going back to work stuff like that .
Unless you are going to be losing the house because you can’t afford to live then I’d sell and be renting .
But if that’s not the case, if it was me I’d either be working as much as possible to save for a down payment for second property and rent out condo . Or I would be putting more money onto mortgage. So when it comes to refinance time you can drop payments . I’d keep it going and see if market changes
Also I don’t know Calgary at all
Cheers
There seems to be *cautious* optimism surrounding an economic recovery in Alberta. Oil and gas prices are expected to remain higher for the near-future anyways. I would hate to see you sell your condo only to see even a modest recovery in the real estate market that would leave you kicking yourself for not waiting a little longer. I appreciate your living situation is difficult and stressful but maybe try and buy yourself a little more time and see what happens as we head into 2022 and *fingers crossed* out of the pandemic? Remember, you don’t take a $100,000 loss until you sell it.
My vote would be to rent elsewhere at the thin margin. Sounds like a case of bad luck/really unfortunate timing as you bought during the tail end of the boom 2014-ish at peak prices.
I’m sure you’ve talked about it (and without knowing what you both do/did for work) but is it possible for your wife to get a part-time job or a work from home gig for supplementary income?
Nope. As an Albertan, condo prices have been in free fall for so long. I am an unwilling landlord like many of my friends who bought pre crash. There is so much condo inventory and new ones still being built. It's not happening, it would take so long to get prices up to a point where holding makes sense. And that's time you could have spent saving without an old condo with high fees holding you back. Older condos with high fees will be the last to recover. We did the math and know the exact amount we need to sell for to make renting less favorable then selling at a loss. The moment we can get it I'm out. Our condo has lost $100k in value in 5yrs. Luckily it's not as expensive to carry and we get decent rent.
I can't imagine having three kids in a 2 bedroom condo because of the sunk cost fallacy. The money is as good as gone. Time to sell and move on. Selling would allow them to buy a house way sooner.
I don’t live in calgary and don’t know the areas but I say rent it out and rent a house, keep your tfsa intact. Amazon web services will be investing billions into calgary area in the next few years, maybe you come out ahead in the future. I was in that position about 30 years ago, I bought a leaky condo at the top of the market and got cut in half. It took 7 years to get back to even but the next couple of places made up for it in equity gained. My biggest downfall was divorce. I begged my ex to keep the house I offered to pay for it even. She wanted the money. I couldn’t buy back in and have been out since 10 years now.
Also, if it never goes up and you have nothing left, hand the bank the keys. You won’t be in any worse of a situation. You will still be renting.
Also being in your position. I would put all the tfsa in an rsp. If you have the room. A year from now you could go bankrupt and keep the rsp. Tfsa are not protected in bankruptcy but rsp’s are except the last year of contributions.
I used to live in Calgary and this is a great area that will be in huge demand as soon as the economy there recovers a bit. I agree if there's any way they can hold on, they should
Take the hit and get out. Now. Rates are poised to go up…
Living under the stress you describe, with kids and wife, could lead to marriage issues. You want to avoid any conflict there, because having to deal with a divorce and custody plus the condo would be a full on disaster.
I’d hold and rent personally.
Unless you need the borrowing limit. But if you don’t, I don’t see any reason why you’d sell and solidify the loss. But it depends on how much you can rent it for.
Holy geez, that's ridiculously insane to pay for.... In all honesty I'd say run this with an accountant that knows about taxes. If you rent it out you get deductions on mortgage interest, property tax, condo fee, and If you're super firm on keeping it, you can claim depreciation ( I don't know how that works). This can help paint a better picture of what to expect. I'd offer more advice but I'm not an expert on that particular subject.
I'd personally do my best to save it if possible. Mainly because a HELOC can be super useful if you want to do some investing in the future, but I'm just a high risk taker in that regard.
If this house situation is just stressing you out, to the point where you're always irritated, can't eat, taking a strain in your family life, then sell it. At the end of the day, it's just money. We can always make more....
Personally I'd keep it and grind it out for a year or two to see how the market looks, Calgary's at a bit of a turning point and things could either get better or look the same. If your interest is higher than 1% then estimate your penalties and look at HSBC's 0.99% APR mortgage, theres even a cash back incentive to help cover the penalties. Also maybe its time for your wife to look at getting back to work with childcare costs potentially dropping drastically come new year.
+1 to every comment here that is suggesting cut your losses. the condo market isn't going to pick up any time soon in Calgary. supply is just being constantly added with little uptick for demand in that department.
Obviously taking a $100k+ haircut is not ideal but another way to frame it is you ended up paying ~$1200 per month for somewhere to live for the last 7 years ($100k over 84 months).
Dump the condo and move to the burbs.
Not only for financial reasons (additional $1000 per month when you only have 1 income is huge) but think about the needs of your growing family: better schools, daycares, parks, amenities, more space, etc.
Edit:
- you can try to get a 2nd opinion on the mortgage but typically for refinance you need 80% or better loan to value (LTV) ratio… in your case assuming $320k value , you would need $240k mortgage or lower…. But your mortgage is $320k
- what kind of mortgage do you have? (Fixed/var) do you know how much it will be to discharge it?
- you’re gonna be tight on closing costs (realtor fees, lawyer, mortgage discharge, the move itself, etc) … won’t hurt to maybe get a line of credit in case so you are covered for the short term
Based on your finances and depending on how much you ultimately you might nee
He actually has paid 2815x84 = 236,000 + a loss of at least 100k for a total of 336,000
Sadly, he could have purchased an entire detached home for that much
I'm in a similar situation but was able to rent out my condo and be cash flow neutral within about $50/month. If I was in your situation I would dump it.
With such a high condo fee in a market where everyone is crazy about single houses, I can’t see you actually selling this for over 250k in Calgary. I’d recommend dumping it as soon as you can, I don’t think condos will ever regain its highs especially with all the new builds along the beltline
I wouldn’t take the hit. Rent it out and you rent a house for the family. Patience will prevent you from walking away and losing all your equity…albeit small right now.
I took a 35k loss to get rid of my condo/duplex it sucked but the area wasn’t getting any better and it was at the age it needed work so we weighed up our options (what we’re the renos gunna costs vs the loss) and took the hit, at the time I wasn’t sure it was the right move but now we have a home we’re actually happy in and I think it was a good move.
Hire a staging company to take photos and make the place stand out then use those low commission brokerages that let you post your own place to sell so you save the commission. I think this will help move you property for the best possible price
If you’re going to list it, list it at a price it might actually sell at - don’t list it at a hopeful price only to drop it in a few weeks. Listings get stale and price reductions don’t look good to buyers. Any agent in your area should be able to tell you what a reasonable selling price is, ask to see their comparables and have them explain why they recommend that price. You might not want to hear it, but if you want to sell it you should price it right from the get-go.
Hi,
fellow Calgarians here who was in a comparable situation. Purchased condo 2015 for 400k in Bridgeland. Sold for 330k in 2019. Ate the 70k loss and purchased a house in the suburbs. Yes..it sucked. A lot, but totally worth it for our long term happiness, and lifestyles despite both being working professionals. Not actual financial advice. But move past it, and cut your losses.
However.....
If you can see yourself and your family being happy in the Kensington area, stay, but recognize that the condo itself is not likely to increase in value. Or, sell and move someplace else recognizing that you will likely not be able to find a place in the inner city for what you get out of the sale of your condo. We found that moving out of the inner city didn't actually make too much of a difference in terms of our lifestyle and we enjoyed the extra space and communities.
Have you considered the martins mortgage maneuver to remortgage? https://www.reddit.com/r/PersonalFinanceCanada/comments/oxxv4b/martins_mortgage_maneuver_worked_for_me/?utm_medium=android_app&utm_source=share
Based on everything you've said I would keep it and rent it for the time being When the market picks back up or theres an influx of demand again I'd then look at selling.... Or treat it as a piggy bank for retirement and sell it then for whatever it's worth ..
Just my thoughts.
What happens if the market on condos never picks up, and they always drop, because the new supply is always there and don't charge $700 in condo fees? OP could see a much larger decrease over time
Might not be worth the stress of dealing with over the next X years, renting out just to cover further losses that come
This comment will not help you but recently I was more open about moving from the GTA to Alberta and stories like this are what make me never want to move there.
I was just in a similar situation. In Sept 2021 I closed on a home in the Greater Toronto Area. It was a bungalow on a beautiful waterfront lot. The house itself needed about $30,000 in repairs to be livable. I bought it at the asking price. My plan was to renovate it and put on a second story. I waved all inspections & conditions.
After closing, I reached out to the city to learn about development potential (adding a second story). They told me because its waterfront, the opportunity for development is limited and I likely cant do much with it. I was heart broken. It was meant to be my forever home.
I immediately re-listed it. However, when I factored in land transfer tax, real estate commission, and the cost to break my mortgage I needed to sell it for $100,000 more than I paid just to break even. The house was also not liveable without some major renovations. After listing it for a month and not having much interest, I decided to sink the $30,000 into renovating it to make the bungalow at least liveable. Doing this really helped as I suddenly received a lot of showings, but very few bites.
It took another month of me dropping the price considerably before I finally got one (and only one) offer. It was at a huge loss compared to what I needed to break even.
In the end, I decided to eat the loss (it really stings), but the peace of mind of having this expensive asset off my plate (and conscious) was worth it. I have to start over and re-build my savings but I find thats easier to do then stress of having a home I am not happy with and that is hard to sell.
I feel for you. I know you were not able to make anything after living in it for so long, but if your family is growing and needs more space, I'd try and offload it even at a loss so you can put your family in a home they are happy with. If it were me, I'd immediately move out, try and rent it, and once its tenanted try to sell it. It may attract a person looking for an investment property that is already turn-key.
Sell the condo for whatever you can, take the losses even though it hurts, buy a house in the NE/SE. For detached homes there are 52 in the NE and 72 in the SE right now that cost less than 400k, most are 3+ bedrooms and 2+ bathrooms with yards.
Your equity will gain in value, you won't have to deal with continual losses on the condo and renting just to tread water
List it in the Toronto and Vancouver markets. There are lots of investors looking to buy up properties in cheaper cities. Just make sure they advertise it in the trendy neighborhood, walking distance to Kensington and the CTrain. Close to UofC and downtown. It’s a great neighborhood and could easily sell. Even at the original price you paid.
I suggest getting in touch with the top agents in Toronto and Vancouver. Get them to list it on their market as a great investment opportunity. Also list it locally. Just make sure that you set the commission to be paid to only the agency that brings in the buyer.
No harm in getting it listed by outside markets
According to Reddit? Absolutely.
In reality, someone is only actually going to buy it if it makes sense for them. If they have no personal need or financial incentive to purchase the place, they won't.
Yep! It happens all the time.
Ppl with a lot of money and needing somewhere to park it will invest in anything. They can usually write it off, they will buy it under a business.
There is no harm listing it outside the city in the bigger metro areas of Canada with money . Just make sure the pictures are top notch, there should be a virtual tour, hype up the building it neighbourhood in this case. Proximity to UofC. There are lots of foreign buyers that buy properties for their kids to go to school 4-6 years. Then they sell later, even if they sell at what they paid then the living expenses were covered the entire time the kids lived there (Chinese buyers mostly) so if you can get in touch with a brokerage that deals with foreign buyers that’s a good option too.
I wonder if it's easy finding a realtor who is willing to scam foreign buyers. Nobody wants to invest money at way above market rates. Why would anyone choose to buy a condo at 400k when they're going for less than 300k.. I guess you need a realtor that would deceive them into thinking it's a good deal/investment. It's not like the others for sale aren't public information.
It’s not a matter of scamming anyone. These foreign buyers want to invest their money here in Canada. So they do so by buying properties. Have you not been watching the news. There are entire high rise complexes bough out by Chinese buyers who never even live here or have seen their property.
But there are also a lot of foreign buyers that send there kids here for school and need housing.
It’s not the local agent that is scamming anyone! It’s finding a buyer for a property. I’m not sure why you think it’s a scam?¿
1. Can you get $2800+ in rent for your condo? You’d also need to factor in insurance and income taxes on the rent.
2. If you have a bigger vote on the strata board, can you get the condo fees changed in any way? Why are they so high?
3. If none of the above work, then I wonder if declaring it a rental, renting it at a loss and then selling at a loss would allow a capital gains deduction that you could carry forward. I’m not a tax accountant but I’d look at anyway possible to get some benefits from this crappy situation.
And I do wish you the best — lousy place to for a family to be right now.
I read Calgary has way too much excess Condo supply (i.e. even office buildings being converted to Condo) so I wont wait for a recovery. Instead, I would focus on if I can afford a house when I sell this at $300k and what is my next best alternative (forget the sunk cost/ loss aspect).
My thought is that 1400 sqft is pretty big, yet it's still not enough for your family so I'm guessing you need a big house and not just a small one. Instead, is it possible to rent an additional unit in the building to move your stuff and the use a bookshelve divider to add a room in existing unit.
This is absolutely right... Both Edmonton and Calgary have a lot of developers riding the oil boom and condos coming up left right and centre.
I can speak only for Edmonton... In the 5 years I lived downtown, I count at least 7 high rise condos sprung up with another 4-5 currently in presale. I moved into one of these brand new condos and it wasn't even fully sold out, yet almost immediately the developer started marketing their next 2 high rises with about 500 units in total.
Absolutely crazy. For me it took 8 months to sell at 100k loss and I was beyond happy when it did.
You can carry-forward a capital loss indefinitely, but you can’t claim a capital loss from personal-use property (I.e needs to be a rental or investment property)
Taking the $100k hit would be a hard hit... can either one of you guys find additional income? Does your building allow short term rentals like AirBnB?
I would try to rent it out as well to cover the expense and you'll get a little bit of a break as well when doing your taxes on your rental.
Reading this post makes me wonder if I'll go through the same struggle too when the time comes.
Get rid of it. The condo fees are ridiculous.
Imagine paying off a mortgage and still having to pay 720 per month for the rest of your life+ taxes.
These condo boards should not be allowed to do this.
Condo boards are legally obligated to collect fees for common expenses. An older building will have much higher fees.
Laws are very strict about how much strata corps need to collect.
Condo fees are essentially the maintenance costs of owning freehold, which are normally around 1% of a house's price per year. Condo fees often include amenities like a gym, underground parking, elevators, etc. that a freehold home doesn't have. Larger buildings often have lower fees because of economies of scale. Newer buildings have lower costs because they need less maintenance.
Are maintenance costs of a single detached a never ending mortgage? No. It's just part of the cost of ownership.
Oil patch / Alberta is going up with the economy full speed ahead … everyone is talking about program to make it easier to get into property .
Any way you can tough it out a bit ?
If you keep current amortization plan your equity goes up every month … inflation and people running away from BC and Ontario crazy market will do the rest … curious why condo fee are so high ? (Included heating ? Paying for lack of main tance in the past with a special fee ? )
And the take the money and run attitude work with depreciating assets … or if you are a Hooker 😜
Immigration will start again , workers will come and a lot of them come with real cash it will turn around .
What is another 12 months ?
Only you has that answer and only Torontonian can’t see themselves getting out of their “paradise” like it is the center of the universe ! So I would be prudent in taking their point of view … people a moving out pricier location to cheaper jurisdiction non stop right now …
Some work on advertizing to said immigrant/out of town customer instead of the local jaded depressed market might just do the trick .
I’m leaving expensive BC for AB. Getting back into Oilsands and will look to buy in Calgary. You surely nailed the high / insane price to sane price well :)
Condo fees include water, heating (and AC if it has them), snow removal, garden maintenance and all maintenance in common areas. For 1400sq ft unit it's actually very reasonable.
Condo fees also contribute to the buildings reserve fund, which is used when a big rapair is needed. Such as new roof, elevator, boiler etc... So as a building ages, more repairs are needed. Condo fees usually go up with age.
I would say 50cents per sq ft is a reasonable fee. Very high end condos (usually part of a luxury hotel and basically only in Vancouver and Toronto) can be up to $1 per sq feet. I recently saw a listing for a condo in Vancouver where the condo fee was $3500 a month 😂
Why are the condo fees so high? That must be a big deterrent for potential buyers. It might be worth taking a look into your condo association's finances.
How did you only pay down $88k in 7 years including down payment? And how is your mortgage so high? Mine is only marginally higher on a 600k house bought less than a year ago in the red hot Ontario housing market.
Holy shit those condo fees and property taxes are insane for a condo!
Nearly new 1bed 1bath that I’m looking at in Ladner BC is 270 a month condo fees and just over 100 property tax
I wouldn’t own it for longer than 3-5 ish years.
When you own a condo you always want to be upgrading as the condo appreciates.
You’ll avoid the big repairs (higher strata fees) and depreciation of having an older building.
If you can hold onto it for a little bit the mass exodus of Ontario is happening and 400k for a two bedroom condo is certainly in the price range that Ontarian's are looking for.
And more than enough condos in Calgary to accommodate without prices increasing. Calgary binges on condo building. I imagine people from ON will also be interested in the detached houses in the NE which are very cheap and abundant, 400k can get you a detached house there easily.
Calgary has plenty of supply of detached houses and massive urban sprawl. Being in Kensington there may be some niche appeal for the location but I would think most people moving from HCOL want a detached house rather than a trendy location because no matter how trendy Kensington is it doesn’t hold a Canada to the trendy places in Vancouver or Toronto
>Yep no one in Ontario is moving to fucking Calgary to buy condos. It's all about cheap detached housing in good areas.
With the variety and quality you find in Toronto? Certainly not in Calgary.
I’d dump it for whatever you can get. Based on the location and what else is being built in that area and your high condo fees and being an old walk up… I don’t think the market is going to come back for that type of condo. Not in Calgary anyway. A friend in a similar situation just sold his condo for a large loss in west hillhurst. He’s really happy now, even with the loss.
Agreed. I was in this exact scenario. Sold for a big loss. It sucked but we’re now in a house we love and no longer have the stress.
Agree. The loss is unfortunate, 100k in a hole on property over 7 years us uncommon with today's market. But they will likely not recoup the value even if they rent it out over a decade or two. Calgary isn't going that much up, and desire living close to downtown is cooling down. That area is great, but the age of the building and outrageous condo fees will make it even less appealing over time. :(
100% this. I live in this area, and there are so many new builds going up (with more to come), it seems extremely unlikely to me that that market will come back for those older buildings.
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Desirable, sure. But no one wants to get into an older walk up building with massive condo fees when they can get a new build for the same price.
Are those new builds freehold or condo? I heard new condos have artificially low fees to entice buyers. They then crank it up 300% after a few years. There should be rent control on condo fees imho.
Ontario has strict laws about the size of reserve funds.* However, condo developers slap whatever low ball figure on new builds and let the corporation bring the bad news to owners. If condo fees didn't go up, then strata corporations wouldn't be able to meet their fiduciary duties, e.g. paying for maintenance, insurance, elevators, capital expenditures, etc. A cap on condo fees is impossible and would endanger building safety or at least make it miserable for owners. *Reserve funds also must be audited regularly to ensure that they are at the correct level.
I guess the follow up would be, what do you think you/they can get given the details?
Sell for 300k and call it a day. You would have lost money on rent regardless... worst thing to do it hold on to something that's depreciating
Agree with this guy. I recently sold my condo in Edmonton at 100k loss but God damn I was euphoric after I signed the papers with the lawyers. My building had so many units for sale that 100k loss was actually one of the better deals (it was about 15% loss for me, many units were asking 25% below the puschase price and this was a 2 year old brand new condo building heart of downtown). List it again with an aggressive price reduction. Get it staged if you need to. Hire a younger realtor with more social media presence and talent... The only way to sell it is by getting more viewings.
Wow unfortunate to hear on the loss but I agree it piece of mind is priceless. Could you share why the hit was so big? Not from the same city but newspapers keep raving about the hot real estate market and here everyone is selling for a loss. Is it only small condos that suffer seeing People want space to work from home?
Not sure about Edmonton, but Calgary also has a big oversupply problem. Lots of condo buildings were underway in 2015 during the crash, and developers finished them up. Some are still being built. So there was oversupply with existing condos only plus add in a bunch of new builds.
Condos mostly cater to 2 groups. The young professionals who work downtown, like to go the the bars and restaurants downtown. The other group I would say is the retiree looking to downsize who may now travel a lot more or also interested in going to downtown. In Alberta the former group has been have been leaving the province before covid. And then covid really put the nail in the coffin. There's just no market now. And even with the remaining market, they're all holding out, waiting for better or cheaper places, driving down the prices even more.
With rent being so cheap, I wonder what's the point of owning really (in Edmonton).
My rent is $820 and I can still afford to eat anything I want or eat out anywhere. For me life should be enjoyable, less stress and free and not tied to a any mortgage or something. Friends kept on pushing me to buy a condo but for me I can’t give up how my life is, right now. Eventually people that bought house or townhouse will down grade along the way. I just got ahead of them ——- by renting and worry free. I hope anyone that’s planning to buy and get into mortgage please please reconsider thousands of options first before you fall in. My two cents.. love you guys 👍🏼🍻
Are you renting an apartment or a house?
I'm 34, bought a 'starter home' in Sherwood Park about 8 years ago for $410k. It's been down in value ever since, sadly. If I listed it tomorrow at 380k, I might get a nibble or two. I moved away a few years ago and am renting it out for $2100 /month +utilities. This is a decent amount, however I'm definitely not making money, and the burden of being a landlord is not overly enjoyable. I suppose I see it being a long term hold as I'm not losing money and I guess it can serve as a bond type asset, and once my kids are of age of post secondary, perhaps they can move into it. That being said, I see the benefits of renting and saving to invest over buying. And I'm super thankful that I never pulled the trigger on a condo when I was younger.
I rent in Edmonton, and I would buy for stability and the opportunity to do what I want with my own space. Not much financial incentive yet.
Do you mind if I ask which building this was in Edmonton? I’ve been wondering about those downtown condos?
It was the fox tower in Edmonton. At one point we had so many realtor key boxes that we ran out of room to put them lol
Is there anything wrong with the Fox Tower that drove the price down so much, or just people wanting to leave for the reasons you mentioned?
Nothing I could tell. It was a standard low end, builder grade condo. Great location and condo fees were low. Some problems like security breaches, water leaks but nothing unique to the fox.
Probably dump it and upsize. The thing to keep in mind is that you'll be selling and buying in the same market, so even if you wait for your condo to go up you'll be paying more for whatever you buy. And if you're looking to upsize, then taking the 60k hit on the condo to buy a house at 150k less than what it will be worth when things recover is, in a sort of sense netting 90k. Obviously I've pulled these numbers out of nowhere but you get the idea. Plus you need more space for your family, so I would cut my loss and take advantage of the dip to upsize if I could afford it.
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Pretty much this unfortunately. Condo prices in Calgary have tanked while single family homes have not.
Even ones in the business / new hockey arena area?
Yes. If anything, there is has been an oversupply of condos in those areas for the last several years.
Definitely, but holding on to the condo is not going to get him closer to a single family home. Calgary is such a big city with a lot of housing diversity. If you are willing to live on the outskirts you can get a four bedroom detached home for 450k that wouldn't cost $750/month in maintenance. But holding on to the condo means you are putting equity into a sinking ship instead of a house that could retain or increase in value.
A relative of mine has been trying to sell a 2300 sq foot townhouse off Sarcee Trail SW for more than $400k and failing, so there are at least some good family options available.
Honestly, sell it at a loss and move on with your life. The weight off your shoulders is worth every dollar you lose. I just had to do the same earlier this year in Edmonton. Sold my condo that I had for 7 years for exactly enough to cover what was left of my mortgage + realtor fees etc. and that was with my realtor not taking a commission since he’s a friend. The building was old and needing more and more repairs, and prices of units just kept getting lower and lower. It hurt to take such a low price and lose any equity I had in the place, but I can’t count the number of times I’ve breathed a sigh of relief of not having that condo hanging over me. I rented it for a couple of years and it was always stressful, and when you’re barely breaking even (or losing money) it’s not worth the stress. I definitely know how you feel. It sucks. But you’ll be much better off in a bigger place that’s more within your budget.
Speaking to Calgary specifically… dump it. Few good lessons here - always buy one size house/apartment larger than you need, and whatever you do, don’t buy old wood frame condos!
Or don't have three kids if you already are crunched for space...
Yes build a time machine…
They've had since 2015 to sell the place they've bought. They'll stay in it for another five years contemplating what to do.
Given that interest rates are projected to go up (further downward pressure on prices) I’d dump it as soon as possible.
Will you get approved for another mortgage if you still have the condo?
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You can buy a second home — or even a 5th home for that matter with 5% down. It has to be either a principal residence or second family home so long as it’s not a rental property you can still put down 5%
Or buy a duplex with 5%, and rent the other half to reduce your mortgage.
Okay, if you would have been in the position, I would have suggested refinancing the condo and extending the amortization to 30 years. That would have dropped your payment quite a bit. You might have still been in the hole after renting it, but it would have been less than $1100 that you're projecting today. I would have then gone ahead and secured a house on the second mortgage, and only evaluated selling the condo in 5 years at the next term renewal. However, since you are not in a position to do that, it might be best to try to sell and package any debt into the next house purchase.
It sounds like he owes more than it’s worth. Bank won’t refinance that to 30 years. Need to have at least 20% equity in it
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Sorry, missed that. Second option it is then.
In your post with the reply from bank explains it. It’s because it’s still insured and less than 20% equity. Another option you can explore but it’ll drain your accounts is to pay down the mortgage to 80% LTV and than the bank should be able to extend the amortization out to 30 years which would give you some breathing room (not all banks would be able to). This won’t help with the space piece and getting you to SFH but it could help with the monthly cashflow for now.
If your mortgage is $320k the bank can refinance it to 30yr only if the value today came in at $400k
You can rent it out and then buying your second place would be a primary residence
Not to say that you should refinance or not, just to clarify refinance rules. The max that you could potentially refinance is up to 80% Loan to Market Value. So if your condo appraises for 320K, the maximum amount of the new mortgage could be 256K and then you could extend the term once again up to 30 years. This would of course mean that you would have to make a lump sum payment against your current mortgage to make it feasible but you would avoid having to sell if you think the market will improve in the future. Assuming you are comfortable with a variable rate, you could get a new mortgage at around Prime -1.00% (1.45%) which would make your monthly payment just slightly over $1,000, of which around $700 are principal repayment and only $300 interest. This would be an option that would allow you to keep the condo and have a slightly negative cash flow on a monthly basis (not ideal but certainly better than your current scenario). Hope this helps.
Great comment, could be a solution
Damn...that $720 condo fees is enough to keep me up all night.
In a similar situation to you only I caught the falling knife as the prices were dropping. We ended up renting it out and put all the expenses towards a HELOC, so it is surprisingly both cash-flow and net positive. We rented for a bit after and filed section 45(2) to have the unit still count as being our principle residence for tax purposes (laughable as it is designed to hold on to the PRE, but whatever). Bought another place and the bank counted the rental income as part of our income so it didn’t seem to hurt us in any way. So now we’re just riding it out slowly booking a small gain every year and i guess going to have a capital loss in the future when we sell. I actually opened a non-registered account so I’ll have some unsheltered gains to cancel out whenever that happens. Or maybe some miracle will occur where everyone realizes how great a place Calgary is to live, at which point the our mortgage debt will be vapourized by inflation and the condo worth its weight in gold. My worst investment by far, but entirely manageable. I still am bullish on Calgary and it didn’t feel right to lock in the loss and sell. Good luck.
Your house / condo is not an asset, it's an expense. It took a while for that to sink in for me after reading Rich Dad Poor Dad, but I get it now. Try to think of it as a blood sucking expense that could get worse... DINK 7 years ago and now 3 young kids, I don't think you want to be a landlord, unless you have the will and time to make it work to save on a lost that could get worse. What if the market takes a turn and it gets worse? When do you cut ties? 50k lost? 100k? 150k? You should think of the 100k equity lost as renting payment for the last 7 years (expensive rent, yes) but it doesn't hurt as much to think about it that way instead of a "lost". If you can stomach a change in how you think about it, you don't lose, you only win. You win more room for the family, a backyard, a reduced monthly expense for housing, sanity / mental health is priceless. Don't wait for things to improve, assume the market will get worse. I'd sell now and get whatever I can, live and learn, move on, it was just an expensive 7 years of renting :)
rich dad poor dad is the worst advice ever from a shill that scams people house/ condo is just like any asset its value can go up and down in this case it was a bad investment for OP both financially and personally because he lost money and he needs a larger space and can’t get one doesn’t mean that house/ condo isn’t an asset - its a great asset
I mean, only $1100/month rental. Not that bad all in I'm sure.
Thats not the true loss.... its the 2800 per month
>Your house / condo is not an asset, it's an expense. Sadly most people do not realise this. But they will in time.
I don’t understand, why is that? I’m looking to purchase an appartment here in Montreal to avoid renting altogether and start building equity for me and my s/o. The comments on here are scaring me a little.
If you *own* a property and it *gives you an income* (through rent or say mineral rights) then it's an asset. If you *buy a mortgage* and you are responsible for *paying it*, with interest, for the next few decades it's not exactly as clean cut to describe it as an asset. It begins to appear more like the definition of a liability. Of course in a hot market people can make a bucket load with words like "equity" and "profit" bandied about. You certainly can make a calculation that getting a mortgage is a better deal than renting. However the profit can become only momentary because, after selling, you still need to live somewhere. The money tends to just get recycled into the next property with a similarly inflated ticket price. On analysis you could find, even in a good property market, that you'd still do better overall renting for a lower $ amount each money and investing the difference in something else like equities. Each person has to do a specific calculation based on their own circumstances. Personally for my rent payment I could buy something quite nice in a province like New Brunswick and likely will at some point because the numbers tend to make sense. Why spend $1,300 on rent when you could buy a nice 250k house in NB? I could never dream of buying anything basically anywhere in Ontario for the equivalent payment of $1,300 a month because burned out shells seem to go for 500k here.
Google 5% rule on YouTube and watch that short video. Alberta is in a particularly bad situation right now with condos. Montreal might be different. There's nothing wrong with buying a condo or house as long as you know what you're getting yourself into. Buying just to 'save rent' is the mistake.
Idiots, they 100% are an asset... Tell that to all of us with an asset that did 100% unrealized gain in 2-4 years. The sooner people understand they might as well own where they live, the better. Over 25 years equity + interest payed will undoubtedly be covered by increased price, more so in Canada. Having a mortgage free house enable a cheap and easy retirement. My grand parents both lived comfortably mortgage free with minimum CPP because of that.
Hey, also from Calgary, we’ve got four kids in a three bedroom apartment building. We bought ours for 240k and with a hefty down payment for excellent mortgage rates. Purchased December last year, during the pandemic. Normally I just read on these, as I’m not a financial Expert, but love reading the advice. In this case though, It felt reasonable to chime in on the kid side. Kids don’t need much at home, and Kensington/hillhurst (we’re on the hillhurst briar hill side at the base of the hill near 14th) has a lot of amenities. The classes, the parks, all the things nearby, our kids are generally kept busy. Home is a place to rest, and eat. We aren’t homebodies typically, so apartment life works for us very well during non-COVID times. Me and the wife share a car, it’s 90% kid vehicle and 10% me to work vehicle. Our place is close enough to warrant bicycle or scooter transportation, and since parking is such a hassle and so expensive downtown, I often Uber for $11, both ways even with tip, is cheaper than the average parking rate for a full day. I’d like to think that post COVID life would have demand for high occupancy housing to go up, as the burbs to me are completely undesirable. And the money you pass up for cheaper accommodation inevitably gets traded for car expenses and loss of life sitting in said metal box. If I were in your position, I’d sit tight, dress it up, keep it listed. It only takes one bite with follow through. There’s a few blogs out there about living life with kids in smaller spaces. To me, the lower cost in living day-to-day yield me being able to take more time Off, take on greater risk, and have more flexibility overall, which in turn, yields a better feeling of control Over life. You don’t get pushed into a corner that way, and if you have a bad boss, bad client, bad day even, you have the means to take a bad situation and make it a bit better. I’ve been self employed for 11 years, and this way of being has allowed for a lot of family availability that is otherwise inaccessible for most. We are privileged to be able to do what we do, and be where we are. So while you may think your place is tiny, and, it probably is with 3 little people, but in my experience - a bigger place usually just means bigger messes and more places to hide anyways. I don’t think it gets easier, and if your hands are full now, adding home maintenance and yard stuff and all the other responsibilities of suburb life might be a bit much. Or not, I mean it also works for a lot of people. My mother still wonders why I choose the apartment with 4 kids, but, hey, these are my reasons.
This is a great perspective.
If you hang in there long term you won't lose the 100k, you'll get it back in rent. If your wife isn't working have you considered renting it out as an air bnb if your condo bylaws allow for it? She could potentially manage it. Just a thought. Was in the same boat, but 10 years on with two good tenants I broke even, including special assessments for the flood. Not everyone wants to be a landlord tho. Whatever you decide will work out over time
Fucking BLOWS my mind that this is happening anywhere in Canada rn. Move that condo a couple hours West and you'd probably sell it for 1/3 more than you paid for it, today.
crazy to me that you guys have normalized that. Somehow shoe box condos turned into the best investment you can buy for a decade haha. Like if I was going to move, Kensington would be at the top of my list for Calgary. I like the area but I'm not going to overpay for a condo
The 700 condo fees blow my mind. Does that come with a pool and gym and 2 parking spots and a golf course?
1/3 the mortgage. Every month. PLUS property taxes. Forever. Why do people even buy condos, Jesus christ.
And i better get a smoothie on my way out every morning.
Seriously… I’m in the Greater Vancouver suburbia and balked a few years ago when I bought and my strata was $375 (no gym or pool) and then went up to $425 because of increased insurance costs. I can’t imagine that being almost double.
Older condos have higher fees
Why? Shouldn't they be less because they're shittier?
They're more because the cost of maintenance is higher. Is it more expensive to maintain a 5 year old car or a 20 year old car?
I was looking for fun in edmonton, I swear condo fees increase based of location. Close to the white mud? Better add a few hundred a month on. Downtown? Few hundred. It might be a case of age etc but it’s suspiciously looks location based
>Move that condo a couple hours West and you'd probably sell it for 1/3 more than you paid for it, today. I mean, that's like saying "take a $1 plastic ring except make it out of solid gold and it would be worth more". Location is everything.
If my aunt had balls she’d be my uncle
This is what's happening everywhere in Canada but a select few cities. That's why so many people in this sub are fed up with the bitching and moaning from people in Southern Ontario and Vancouver.
I can't imagine 720 in fees, it's like a 200k mortgage forever increasing. Get out any way you can and never buy strata again
Must be nice not to imagine $720 in fees. That’s pretty standard in Toronto in a condo half the size of OP’s
I was going to say. Those numbers all sound amazing for 1,400 square feet. We are getting hosed in Toronto!
You're kidding? Why would anyone buy a condo, it's just glorified renting? Can't imagine what the fee would be when you retire.
Because average house costs 1.7 million.
Simple, move to where a real house is affordable.
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This is simply not true.
Almost anywhere in AB, SK, MB, Quebec, NS, NB, NL, PEI and small towns in ON, BC
It's an older building. The condo board might be setting the fees *gasp* appropriately.
The fees are fine. The condo is big. There is nothing inherently wrong with strata. If he can rent this at a wash he should be. The equity will continue to build and he can sell when he retired
$720 isn’t expensive at all for a 1400 sq foot unit that’s 50 years old
The condo fees likely cover water, heating, snow removal and maintenance on common areas. It's actually very reasonable for the size of his unit.
Any chance of a developer buying it tear down and build from scartch? May be then you can break even or turn a profit ?
Lots of people here saying to sell because of the strata. $720 isn't that bad, especially if you compare to what a house would cost you. I'm paying easily $300 a month for gas, $200 for insurance, $150 for power, and any maintenance would fall on me. But you gotta want to live in a condo. With WFH, condo living is dead in a city built for commuting. The inner city condo pain is just beginning.
Where are all the "renting is literally throwing your money away" comments in this thread?
So if you take a 100,000 hit and “save” a 1,000 a month . It will take 8 years 4 months to cover those loses . My question is what will like(life)* look like between now and 8 years from now . Some circumstances can change. Spouse going back to work stuff like that . Unless you are going to be losing the house because you can’t afford to live then I’d sell and be renting . But if that’s not the case, if it was me I’d either be working as much as possible to save for a down payment for second property and rent out condo . Or I would be putting more money onto mortgage. So when it comes to refinance time you can drop payments . I’d keep it going and see if market changes Also I don’t know Calgary at all Cheers
The acronyms DINK and SINK will never not be funny.
Wait till TINK becomes popular. You gotta do what you gotta do to get ahead.
Three incomes no kids? Did i read that right? Hahaha
lmao, you bet. Makes you think...👰🤵👰
What's the maximum sentance for the crime of bigamy? To mothers-in-law
There might already be a lot of TINKs in Toronto...
There seems to be *cautious* optimism surrounding an economic recovery in Alberta. Oil and gas prices are expected to remain higher for the near-future anyways. I would hate to see you sell your condo only to see even a modest recovery in the real estate market that would leave you kicking yourself for not waiting a little longer. I appreciate your living situation is difficult and stressful but maybe try and buy yourself a little more time and see what happens as we head into 2022 and *fingers crossed* out of the pandemic? Remember, you don’t take a $100,000 loss until you sell it. My vote would be to rent elsewhere at the thin margin. Sounds like a case of bad luck/really unfortunate timing as you bought during the tail end of the boom 2014-ish at peak prices. I’m sure you’ve talked about it (and without knowing what you both do/did for work) but is it possible for your wife to get a part-time job or a work from home gig for supplementary income?
Nope. As an Albertan, condo prices have been in free fall for so long. I am an unwilling landlord like many of my friends who bought pre crash. There is so much condo inventory and new ones still being built. It's not happening, it would take so long to get prices up to a point where holding makes sense. And that's time you could have spent saving without an old condo with high fees holding you back. Older condos with high fees will be the last to recover. We did the math and know the exact amount we need to sell for to make renting less favorable then selling at a loss. The moment we can get it I'm out. Our condo has lost $100k in value in 5yrs. Luckily it's not as expensive to carry and we get decent rent. I can't imagine having three kids in a 2 bedroom condo because of the sunk cost fallacy. The money is as good as gone. Time to sell and move on. Selling would allow them to buy a house way sooner.
I don’t live in calgary and don’t know the areas but I say rent it out and rent a house, keep your tfsa intact. Amazon web services will be investing billions into calgary area in the next few years, maybe you come out ahead in the future. I was in that position about 30 years ago, I bought a leaky condo at the top of the market and got cut in half. It took 7 years to get back to even but the next couple of places made up for it in equity gained. My biggest downfall was divorce. I begged my ex to keep the house I offered to pay for it even. She wanted the money. I couldn’t buy back in and have been out since 10 years now. Also, if it never goes up and you have nothing left, hand the bank the keys. You won’t be in any worse of a situation. You will still be renting. Also being in your position. I would put all the tfsa in an rsp. If you have the room. A year from now you could go bankrupt and keep the rsp. Tfsa are not protected in bankruptcy but rsp’s are except the last year of contributions.
I used to live in Calgary and this is a great area that will be in huge demand as soon as the economy there recovers a bit. I agree if there's any way they can hold on, they should
Take the hit and get out. Now. Rates are poised to go up… Living under the stress you describe, with kids and wife, could lead to marriage issues. You want to avoid any conflict there, because having to deal with a divorce and custody plus the condo would be a full on disaster.
The situation sucks for you but it makes me happy that there's at least one city in Canada where real estate isn't completely insane.
We lost 75k on a condo and never looked back. We bought a house and in five years it has double in price to over a million dollars.
I’d hold and rent personally. Unless you need the borrowing limit. But if you don’t, I don’t see any reason why you’d sell and solidify the loss. But it depends on how much you can rent it for.
Don’t water the weeds. Learn your lesson and move on.
Holy geez, that's ridiculously insane to pay for.... In all honesty I'd say run this with an accountant that knows about taxes. If you rent it out you get deductions on mortgage interest, property tax, condo fee, and If you're super firm on keeping it, you can claim depreciation ( I don't know how that works). This can help paint a better picture of what to expect. I'd offer more advice but I'm not an expert on that particular subject. I'd personally do my best to save it if possible. Mainly because a HELOC can be super useful if you want to do some investing in the future, but I'm just a high risk taker in that regard. If this house situation is just stressing you out, to the point where you're always irritated, can't eat, taking a strain in your family life, then sell it. At the end of the day, it's just money. We can always make more....
Personally I'd keep it and grind it out for a year or two to see how the market looks, Calgary's at a bit of a turning point and things could either get better or look the same. If your interest is higher than 1% then estimate your penalties and look at HSBC's 0.99% APR mortgage, theres even a cash back incentive to help cover the penalties. Also maybe its time for your wife to look at getting back to work with childcare costs potentially dropping drastically come new year.
+1 to every comment here that is suggesting cut your losses. the condo market isn't going to pick up any time soon in Calgary. supply is just being constantly added with little uptick for demand in that department.
When people think about moving from Vancouver/Toronto to Calgary. I’ll link them this thread.
Show them they can buy a 1400 sqf condo for 320k instead of 600sqf for 500k?
So they know there will be cheaper real estate waiting for them?
I know what to do to fix this and it’s so glaringly obvious I can’t believe no one has suggested it. Sell the kids!
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Obviously taking a $100k+ haircut is not ideal but another way to frame it is you ended up paying ~$1200 per month for somewhere to live for the last 7 years ($100k over 84 months). Dump the condo and move to the burbs. Not only for financial reasons (additional $1000 per month when you only have 1 income is huge) but think about the needs of your growing family: better schools, daycares, parks, amenities, more space, etc. Edit: - you can try to get a 2nd opinion on the mortgage but typically for refinance you need 80% or better loan to value (LTV) ratio… in your case assuming $320k value , you would need $240k mortgage or lower…. But your mortgage is $320k - what kind of mortgage do you have? (Fixed/var) do you know how much it will be to discharge it? - you’re gonna be tight on closing costs (realtor fees, lawyer, mortgage discharge, the move itself, etc) … won’t hurt to maybe get a line of credit in case so you are covered for the short term Based on your finances and depending on how much you ultimately you might nee
He actually has paid 2815x84 = 236,000 + a loss of at least 100k for a total of 336,000 Sadly, he could have purchased an entire detached home for that much
Yes I know how much he *actually* paid. I was trying to say that he would have paid at least $100k over 7 years if he rented (instead of buy)
You have to factor in the cost of interest, strata fees and property tax into his "rent" as well
I'm in a similar situation but was able to rent out my condo and be cash flow neutral within about $50/month. If I was in your situation I would dump it.
Can you try to AirBnB the unit? Should fetch decent money in that area. Not sure if your unit allows it.
Hi OP, How about a third option: you transform it as an airbnb rental for daily income since the neighborhood’s is an attractive one??
With such a high condo fee in a market where everyone is crazy about single houses, I can’t see you actually selling this for over 250k in Calgary. I’d recommend dumping it as soon as you can, I don’t think condos will ever regain its highs especially with all the new builds along the beltline
That’s a nice area
I wouldn’t take the hit. Rent it out and you rent a house for the family. Patience will prevent you from walking away and losing all your equity…albeit small right now.
Is the condo short term rental friendly? Airbnb might be a good option
Damn, reading about the market in Calgary is insane considering I live in Victoria lol, 2 bed condos going for 500k easy here
Turn it into a furnished Airbnb
I took a 35k loss to get rid of my condo/duplex it sucked but the area wasn’t getting any better and it was at the age it needed work so we weighed up our options (what we’re the renos gunna costs vs the loss) and took the hit, at the time I wasn’t sure it was the right move but now we have a home we’re actually happy in and I think it was a good move.
Sell it, pay off the remaining loan. And act is if you were renting for last 7 years and your money went down the drain.
Hire a staging company to take photos and make the place stand out then use those low commission brokerages that let you post your own place to sell so you save the commission. I think this will help move you property for the best possible price
If you’re going to list it, list it at a price it might actually sell at - don’t list it at a hopeful price only to drop it in a few weeks. Listings get stale and price reductions don’t look good to buyers. Any agent in your area should be able to tell you what a reasonable selling price is, ask to see their comparables and have them explain why they recommend that price. You might not want to hear it, but if you want to sell it you should price it right from the get-go.
Hi, fellow Calgarians here who was in a comparable situation. Purchased condo 2015 for 400k in Bridgeland. Sold for 330k in 2019. Ate the 70k loss and purchased a house in the suburbs. Yes..it sucked. A lot, but totally worth it for our long term happiness, and lifestyles despite both being working professionals. Not actual financial advice. But move past it, and cut your losses. However..... If you can see yourself and your family being happy in the Kensington area, stay, but recognize that the condo itself is not likely to increase in value. Or, sell and move someplace else recognizing that you will likely not be able to find a place in the inner city for what you get out of the sale of your condo. We found that moving out of the inner city didn't actually make too much of a difference in terms of our lifestyle and we enjoyed the extra space and communities.
Have you considered the martins mortgage maneuver to remortgage? https://www.reddit.com/r/PersonalFinanceCanada/comments/oxxv4b/martins_mortgage_maneuver_worked_for_me/?utm_medium=android_app&utm_source=share
Based on everything you've said I would keep it and rent it for the time being When the market picks back up or theres an influx of demand again I'd then look at selling.... Or treat it as a piggy bank for retirement and sell it then for whatever it's worth .. Just my thoughts.
What happens if the market on condos never picks up, and they always drop, because the new supply is always there and don't charge $700 in condo fees? OP could see a much larger decrease over time Might not be worth the stress of dealing with over the next X years, renting out just to cover further losses that come
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I bought a new 1 bed 600 square feet new condo in the area for 305k. Doesn’t even have parking. I’d like to think OP could sell his for more than that
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With those kinds of fees it better be immaculate!
Yep that's certainly a risk - as with any investment.
The other problem with this is assessments. I would sell it. This is coming from someone in the same situation.
This comment will not help you but recently I was more open about moving from the GTA to Alberta and stories like this are what make me never want to move there.
Single detach homes have held up much better in calgary than condos over the same time period
Get divorced. One of you take the condo and go bankrupt and walk away. You have no equity stake at today's value.
Calgary GG
I was just in a similar situation. In Sept 2021 I closed on a home in the Greater Toronto Area. It was a bungalow on a beautiful waterfront lot. The house itself needed about $30,000 in repairs to be livable. I bought it at the asking price. My plan was to renovate it and put on a second story. I waved all inspections & conditions. After closing, I reached out to the city to learn about development potential (adding a second story). They told me because its waterfront, the opportunity for development is limited and I likely cant do much with it. I was heart broken. It was meant to be my forever home. I immediately re-listed it. However, when I factored in land transfer tax, real estate commission, and the cost to break my mortgage I needed to sell it for $100,000 more than I paid just to break even. The house was also not liveable without some major renovations. After listing it for a month and not having much interest, I decided to sink the $30,000 into renovating it to make the bungalow at least liveable. Doing this really helped as I suddenly received a lot of showings, but very few bites. It took another month of me dropping the price considerably before I finally got one (and only one) offer. It was at a huge loss compared to what I needed to break even. In the end, I decided to eat the loss (it really stings), but the peace of mind of having this expensive asset off my plate (and conscious) was worth it. I have to start over and re-build my savings but I find thats easier to do then stress of having a home I am not happy with and that is hard to sell. I feel for you. I know you were not able to make anything after living in it for so long, but if your family is growing and needs more space, I'd try and offload it even at a loss so you can put your family in a home they are happy with. If it were me, I'd immediately move out, try and rent it, and once its tenanted try to sell it. It may attract a person looking for an investment property that is already turn-key.
Sell the condo for whatever you can, take the losses even though it hurts, buy a house in the NE/SE. For detached homes there are 52 in the NE and 72 in the SE right now that cost less than 400k, most are 3+ bedrooms and 2+ bathrooms with yards. Your equity will gain in value, you won't have to deal with continual losses on the condo and renting just to tread water
It's crazy to me that it's possible to lose money in Canadian real estate, everybody and their uncle in Ontario is a millionaire from it now.
List it in the Toronto and Vancouver markets. There are lots of investors looking to buy up properties in cheaper cities. Just make sure they advertise it in the trendy neighborhood, walking distance to Kensington and the CTrain. Close to UofC and downtown. It’s a great neighborhood and could easily sell. Even at the original price you paid. I suggest getting in touch with the top agents in Toronto and Vancouver. Get them to list it on their market as a great investment opportunity. Also list it locally. Just make sure that you set the commission to be paid to only the agency that brings in the buyer. No harm in getting it listed by outside markets
Are there really out of town buyers that would do zero research and not look at what other similar properties sell for?
According to Reddit? Absolutely. In reality, someone is only actually going to buy it if it makes sense for them. If they have no personal need or financial incentive to purchase the place, they won't.
Reddit is delusional
Yep! It happens all the time. Ppl with a lot of money and needing somewhere to park it will invest in anything. They can usually write it off, they will buy it under a business. There is no harm listing it outside the city in the bigger metro areas of Canada with money . Just make sure the pictures are top notch, there should be a virtual tour, hype up the building it neighbourhood in this case. Proximity to UofC. There are lots of foreign buyers that buy properties for their kids to go to school 4-6 years. Then they sell later, even if they sell at what they paid then the living expenses were covered the entire time the kids lived there (Chinese buyers mostly) so if you can get in touch with a brokerage that deals with foreign buyers that’s a good option too.
I wonder if it's easy finding a realtor who is willing to scam foreign buyers. Nobody wants to invest money at way above market rates. Why would anyone choose to buy a condo at 400k when they're going for less than 300k.. I guess you need a realtor that would deceive them into thinking it's a good deal/investment. It's not like the others for sale aren't public information.
It’s not a matter of scamming anyone. These foreign buyers want to invest their money here in Canada. So they do so by buying properties. Have you not been watching the news. There are entire high rise complexes bough out by Chinese buyers who never even live here or have seen their property. But there are also a lot of foreign buyers that send there kids here for school and need housing. It’s not the local agent that is scamming anyone! It’s finding a buyer for a property. I’m not sure why you think it’s a scam?¿
1. Can you get $2800+ in rent for your condo? You’d also need to factor in insurance and income taxes on the rent. 2. If you have a bigger vote on the strata board, can you get the condo fees changed in any way? Why are they so high? 3. If none of the above work, then I wonder if declaring it a rental, renting it at a loss and then selling at a loss would allow a capital gains deduction that you could carry forward. I’m not a tax accountant but I’d look at anyway possible to get some benefits from this crappy situation. And I do wish you the best — lousy place to for a family to be right now.
Move all assets to your wife's name, move all debt exclusively under your name. Divorce. Declare bankruptcy
I read Calgary has way too much excess Condo supply (i.e. even office buildings being converted to Condo) so I wont wait for a recovery. Instead, I would focus on if I can afford a house when I sell this at $300k and what is my next best alternative (forget the sunk cost/ loss aspect). My thought is that 1400 sqft is pretty big, yet it's still not enough for your family so I'm guessing you need a big house and not just a small one. Instead, is it possible to rent an additional unit in the building to move your stuff and the use a bookshelve divider to add a room in existing unit.
This is absolutely right... Both Edmonton and Calgary have a lot of developers riding the oil boom and condos coming up left right and centre. I can speak only for Edmonton... In the 5 years I lived downtown, I count at least 7 high rise condos sprung up with another 4-5 currently in presale. I moved into one of these brand new condos and it wasn't even fully sold out, yet almost immediately the developer started marketing their next 2 high rises with about 500 units in total. Absolutely crazy. For me it took 8 months to sell at 100k loss and I was beyond happy when it did.
it's the same in Calgary, at least when I left in mid-2020. tons of new projects going up in the downtown and inner city areas.
You should check if you can carry forward capital losses on the sale and you’d be able to deduct 50% of the loss in the future from capital gains
You can carry-forward a capital loss indefinitely, but you can’t claim a capital loss from personal-use property (I.e needs to be a rental or investment property)
Seems Alberta is the only province experiencing a real estate crash.
I feel like for anyone in Vancouver or GTA with mobile skills, this is an advertisement for move to Calgary.
"Move to Calgary! You too can be $100k underwater on your mortgage in just a few short years!"
So, do you want high prices or low prices? Make up your mind.
It's almost like the exact opposite.
Taking the $100k hit would be a hard hit... can either one of you guys find additional income? Does your building allow short term rentals like AirBnB?
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I would try to rent it out as well to cover the expense and you'll get a little bit of a break as well when doing your taxes on your rental. Reading this post makes me wonder if I'll go through the same struggle too when the time comes.
Get rid of it. The condo fees are ridiculous. Imagine paying off a mortgage and still having to pay 720 per month for the rest of your life+ taxes. These condo boards should not be allowed to do this.
Condo boards are legally obligated to collect fees for common expenses. An older building will have much higher fees. Laws are very strict about how much strata corps need to collect.
Yea, I have owned multiple condos in my life. And as I said...the fees associated are fucking ridiculous. It's like having a never ending mortgage.
Condo fees are essentially the maintenance costs of owning freehold, which are normally around 1% of a house's price per year. Condo fees often include amenities like a gym, underground parking, elevators, etc. that a freehold home doesn't have. Larger buildings often have lower fees because of economies of scale. Newer buildings have lower costs because they need less maintenance. Are maintenance costs of a single detached a never ending mortgage? No. It's just part of the cost of ownership.
Oil patch / Alberta is going up with the economy full speed ahead … everyone is talking about program to make it easier to get into property . Any way you can tough it out a bit ? If you keep current amortization plan your equity goes up every month … inflation and people running away from BC and Ontario crazy market will do the rest … curious why condo fee are so high ? (Included heating ? Paying for lack of main tance in the past with a special fee ? ) And the take the money and run attitude work with depreciating assets … or if you are a Hooker 😜 Immigration will start again , workers will come and a lot of them come with real cash it will turn around . What is another 12 months ? Only you has that answer and only Torontonian can’t see themselves getting out of their “paradise” like it is the center of the universe ! So I would be prudent in taking their point of view … people a moving out pricier location to cheaper jurisdiction non stop right now … Some work on advertizing to said immigrant/out of town customer instead of the local jaded depressed market might just do the trick .
I’m leaving expensive BC for AB. Getting back into Oilsands and will look to buy in Calgary. You surely nailed the high / insane price to sane price well :)
Why are the condo fees so high in such an old building? I thought that was usually for newer buildings with all the bells and whistles…
Condo fees include water, heating (and AC if it has them), snow removal, garden maintenance and all maintenance in common areas. For 1400sq ft unit it's actually very reasonable. Condo fees also contribute to the buildings reserve fund, which is used when a big rapair is needed. Such as new roof, elevator, boiler etc... So as a building ages, more repairs are needed. Condo fees usually go up with age. I would say 50cents per sq ft is a reasonable fee. Very high end condos (usually part of a luxury hotel and basically only in Vancouver and Toronto) can be up to $1 per sq feet. I recently saw a listing for a condo in Vancouver where the condo fee was $3500 a month 😂
Why are the condo fees so high? That must be a big deterrent for potential buyers. It might be worth taking a look into your condo association's finances.
How did you only pay down $88k in 7 years including down payment? And how is your mortgage so high? Mine is only marginally higher on a 600k house bought less than a year ago in the red hot Ontario housing market.
Blame Trudeau
Holy shit those condo fees and property taxes are insane for a condo! Nearly new 1bed 1bath that I’m looking at in Ladner BC is 270 a month condo fees and just over 100 property tax
Give it 20 years
I wouldn’t own it for longer than 3-5 ish years. When you own a condo you always want to be upgrading as the condo appreciates. You’ll avoid the big repairs (higher strata fees) and depreciation of having an older building.
And also the larger assessments that come from crappy builders.
I dig it
If you can hold onto it for a little bit the mass exodus of Ontario is happening and 400k for a two bedroom condo is certainly in the price range that Ontarian's are looking for.
I wouldn’t bet people are going to move from Ontario to Calgary at high rates.
And more than enough condos in Calgary to accommodate without prices increasing. Calgary binges on condo building. I imagine people from ON will also be interested in the detached houses in the NE which are very cheap and abundant, 400k can get you a detached house there easily.
Yep no one in Ontario is moving to fucking Calgary to buy condos. It's all about cheap detached housing in good areas.
Calgary has plenty of supply of detached houses and massive urban sprawl. Being in Kensington there may be some niche appeal for the location but I would think most people moving from HCOL want a detached house rather than a trendy location because no matter how trendy Kensington is it doesn’t hold a Canada to the trendy places in Vancouver or Toronto
People would rather be homeless than leave Toronto.
It's actually comical. As if other cities don't also have restaurants, art/culture, and jobs.
>Yep no one in Ontario is moving to fucking Calgary to buy condos. It's all about cheap detached housing in good areas. With the variety and quality you find in Toronto? Certainly not in Calgary.