Oddball mortgages make their own fundamentals.
Things aren’t quite looking up state-side yet: Countrywide Financial is starting to layoff employees and Capitol One is closing its mortgage unit, but things are certainly different up here.
The Canadian Real Estate Association has just announced that its product will sell very well this year predicting record home sales for 2007.
Klump said the home-financing market in the U.S. and in Canada are completely different.
“(Canadians) have to pass tighter credit standards in order to get home-mortgage financing,” Klump said. “So, there’s no unwinding in Canada as there has been in the States.”
Its good to know that here in Canada we’ve got higher standards for our No-Doc zero-down Neg-am 40 year specu-vestor mortgages.
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August 22nd, 2007 at 9:16 pm
Your liability is not limited to the damage deposit but I doubt that would stop someone from using the subletting scheme I described. Understand I’m not saying I’d rush out and do it just that I can’t believe people arn’t doing it if the profit is as high as people are claiming.
August 22nd, 2007 at 7:46 pm
But the thing is you only risking your damage deposit when you sublet so you worst case scenario is not so bad.
Since when are potential damage liability limited to the size of the damage deposit?
August 22nd, 2007 at 7:44 pm
hey freako, how much does elopinp cost?
$43.78
August 22nd, 2007 at 4:35 pm
freako,
I think foreigner buyers and out of station buyers just hand over their units on lease to real estate agents or rental agencies on current market price,and I beleive they have to pay almost 15% of total rents to agents,but owners get satisfaction that some one taking good care of their units.
so anything else like increase or decrease in rents is depend on demand and supply,thats the area where agents can make or break their profit, but because of lease agreement rental rates does not effect the then market,when owner pass their units to agents.
August 22nd, 2007 at 3:42 pm
hey freako, how much does elopinp cost?
August 22nd, 2007 at 3:41 pm
I don’t know if its widespread or not, but I know personally of many people that have some iffy loans – I’ve worked with two freelancers that don’t have work lined up beyond the month that just bought based on the premise that their current income is permanent. I know of two others who’ve gotten letters stating that their income is higher than it actually is and been offered the same by my employer. I’ve told them I’d rather have the actual money than a letter pretending I do.
August 22nd, 2007 at 3:36 pm
Could it be that there are hidden costs associated with foreign students
But the thing is you only risking your damage deposit when you sublet so you worst case scenario is not so bad. Imagine this I rent out a place at 1250$/month paying one months rent as a damage deposit. I then rent it at 2500$/month. I’m making pure profit after 1 month even if I lose my damage deposit and I was so foolish as to not require a deposit from the people I subletted to. In short that sort of situation just does not exist for long if at all.
August 22nd, 2007 at 3:15 pm
thats already in action since decade.
Then why does it persist? Wouldn’t competition cut the profit until it was barely worthwhile? Could it be that there are hidden costs associated with foreign students (turnover, damage, elopinp).
August 22nd, 2007 at 2:47 pm
Well, if it wasn’t, why bother owning real estate? Just rent a place, then sublet it to foreigners for double the rent.
8/22/07 2:07 PM
thats already in action since decade.
August 22nd, 2007 at 1:51 pm
Yes, but it represents an average.
I agree. The thing is that the deviation from the average can’t possibly get too high or arbitrage as freako suggests becomes a very real possibility. If the difference is even 600$/month I would have a hard time believing it isn’t being done already. Since arbitrage has the effect of increasing market effeciency we can expect that any ineffeciency (what low rents are still available) will disappear shortly and rents would trend toward the mean very quickly as all the low rent units are locked in by those intending to sublet.
August 22nd, 2007 at 1:07 pm
” First isn’t the market rent what you can get for the place? “
Well, if it wasn’t, why bother owning real estate? Just rent a place, then sublet it to foreigners for double the rent.