Author Topic: Garth Turner - Real Estate in Canada  (Read 488730 times)

Viking

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Re: Garth Turner - Real Estate in Canada
« Reply #240 on: November 29, 2014, 11:35:17 PM »
My guess is interest rates are the key. As long as rates stay low the machine will continue to roll. Once mortgage rates move up a couple of percent things will get interesting.


Liberty

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"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen



Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #244 on: January 09, 2015, 09:31:32 AM »
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

enoch01

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Re: Garth Turner - Real Estate in Canada
« Reply #245 on: January 09, 2015, 10:07:38 AM »
Hilariously, Mr Market is still pricing Canadian banks at about 2xBV.

LongHaul

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Re: Garth Turner - Real Estate in Canada
« Reply #246 on: January 21, 2015, 08:14:04 AM »
I may agree that Canada is in a bubble - I need some more data.

Just curious - if I buy an average home or condo in Canada what is the unlevered cap rate for the owner?
This should basically be rent minus taxes, home insurance, maintenance, hoa fees if any and other misc.  I would exclude leasing fees, vacancy, utilities (pd by owner I assume if he rented it to a tenant).   For maintenance I would assume $1 a SFT for a home which is probably roughly right.

This helps me quantify the unlevered return (excluding appreciation/depreciation) of buying a home.

For example - in Southern California the cap rate for average places went to ~2% in 2006.  That is a P/E of 50 unlevered and makes no fundamental sense. 

My area in Texas is ~ 5%   15k on 300k home which is nothing great but not so horrible either.

Thank You

no_free_lunch

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Re: Garth Turner - Real Estate in Canada
« Reply #247 on: January 21, 2015, 08:40:36 AM »
Where I am, ballpark, 3-5%.  5% would be a multi-tenant building and would assume 100% occupancy and minimal problems from tenants, e.g. not realistic long-term.  That is also after property tax/insurance/maintenance/etc but before income tax.

EDIT: Also that is based on current rental prices which have risen substantially (roughly 100%) over the past decade.
« Last Edit: January 21, 2015, 08:42:11 AM by no_free_lunch »

moody202

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Re: Garth Turner - Real Estate in Canada
« Reply #248 on: January 21, 2015, 09:04:11 AM »
I may agree that Canada is in a bubble - I need some more data.

Just curious - if I buy an average home or condo in Canada what is the unlevered cap rate for the owner?
This should basically be rent minus taxes, home insurance, maintenance, hoa fees if any and other misc.  I would exclude leasing fees, vacancy, utilities (pd by owner I assume if he rented it to a tenant).   For maintenance I would assume $1 a SFT for a home which is probably roughly right.

This helps me quantify the unlevered return (excluding appreciation/depreciation) of buying a home.

For example - in Southern California the cap rate for average places went to ~2% in 2006.  That is a P/E of 50 unlevered and makes no fundamental sense. 

My area in Texas is ~ 5%   15k on 300k home which is nothing great but not so horrible either.

Thank You

The cap rates also vary by type of property. As an example the lower priced properties have a higher cap rate....the slums have the best cap rate!!!

Also -- In my area I have found single family homes have higher cap rates than condos but also come we more headaches.
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mcliu

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Re: Garth Turner - Real Estate in Canada
« Reply #249 on: January 21, 2015, 09:17:21 AM »