Flipping houses in Dunbar

Many Franks pointed out this article over at BiV about house flipping in Dunbar. and points out how the math might not always be as appealing as it first sounds:

“A well-backed investor leveraging 20% down financing [around $400,000] would yield over 100% [on their cash investment],” said Derek Tinney, Landcor Data operations manager.Vancouver realtor Ken Leong, who admits to a brief – and heady – history of flipping condominiums for himself and clients, said it takes more nerve and cash to speculate on Vancouver’s detached-house market than during the exuberant days of condo flips a decade ago.

Leong said that if house price increases go soft – as in the current condo market – investors could find themselves financially under water fast.

Buried below the big numbers and cherry-picked examples are some important details:

[I]f an investor bought a house for $1 million and flipped it a few months later for $1.1 million, he or she would have to pay $18,000 in B.C.’s property purchase tax. Realtor commissions to sell the house would total around $33,500. The capital gains tax, likely at the highest tax bracket, would be roughly $30,000.“So now your $100,000 gain is down to less than $20,000, and you still have to add in the carrying costs of financing of around $4,000 per month while the house is for sale,” he said.

“It would be hard to make a big profit on such a flip,” Leong said. “Actually the government would make more than the investor.”

The last sentence is key.

Read the original article here.

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Shlomo
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Shlomo

#110

I would be very leery of a “survey” conducted by the Sun.

How shocking, home ownership and wealth accretion thereby is touted as a prime foundation of happiness. So for all those miserable malcontents who bitch and moan about how Vancouver is being ruined, the solution is starkly simple: buy a house and join the happy herd.

Sheesh, so transparent a baby could see through it. That rag isn’t fit to be used to wipe your bum with.

trackback

[…] –Don’t mess with the market –‘They’ve earned it’ –pointing fingers –poverty in a $3 mil house –may as well get welfare –ready to give up? –so who’s happy? –time to buy? –Fed says watch out Canada – […]

southseacompany
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southseacompany
“Will a Fed hike trigger a bond meltdown this fall?”, Financial Post http://business.financialpost.com/investing/will-a-fed-hike-trigger-a-bond-meltdown-this-fall?__lsa=ec41-06e7 “A new report from Citigroup warns that no matter how the U.S. Federal Reserve raises interest rates this year, it will result in bond market panic” “Bond yields always tend to rise in response to rate hikes by central banks, but the bond market today is much different than during past rate hikes, Citi said. In particular, liquidity has slumped to worrying levels.” “A bond-market meltdown in response to a rate hike could also derail plans by the Fed to normalize its monetary policy.Fed Chairwoman Janet Yellen has not committed to a timeline on raising rates, but most economists now expect the first hike to occur in September, with a possible second hike happening in December.” “But a second hike could go out the door completely if… Read more »
mls watch
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mls watch

@116
I will surely be voted down for saying this, but the Canadian housing market has local variations. Study a local market carefully and make a bet. Might work, might not. The only sure thing is that I would never buy in Vancouver or Toronto. I prefer a market that has been going down for many years. I could be totally wrong. In the end, I do not really care… because I will buy where I want to enjoy life for a little while. Carpe Diem 🙂

Best place on meth
Member
Best place on meth

@103

Great bumper sticker.

Anyone who thinks “Say no to China crap” is a racist slogan is a ……. Garth.

We need more anti-China sentiment.

They’re the enemy of every democratic country in the world and need to be destroyed.

w
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w

@107

looks like metrotown when they released iphone 6

southseacompany
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southseacompany
Best piece I’ve read in quite a while: “Bruce Yaccato: You’d have to be crazy to buy real estate”, National Post http://news.nationalpost.com/full-comment/bruce-yaccato-youd-have-to-be-crazy-to-buy-real-estate “According to data from the TD Bank, housing prices in Canada from 1980 to 2012 increased at an annual rate of 5.4 per cent, Toronto and Vancouver a full point higher. TD concurs, forecasting that over the next couple of decades, real estate should grow three per cent annually, while stocks will grow seven per cent. “What should you invest in? Duh. THE END” “That should be enough, but come to think of it, 10 lines of common sense arithmetic is not likely to come close to dispelling the most indestructible urban myth of all time.” “Robert Shiller, Nobel Laureate and author of the classic analysis of behavioural economics, Irrational Exuberance, has determined that going back to 1890,… Read more »
Westside Realtor
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Westside Realtor

Today’s sales numbers are more indicative of the slowdown we are seeing in our office.

Market remains tight, but…if sales drop off prices will shit the bed.

WSR

paulb
Member

New Listings 200
Price Changes 60
Sold Listings 118
TI:13304

http://www.paulboenisch.com

joe
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joe

Chinese take lead among foreign buyers of US homes

With the Chinese economy and real estate market slowing dramatically and a vociferous anti-corruption campaign in full swing at home, Chinese buyers have been scrambling in the past few years to buy real estate abroad.

http://www.ft.com/cms/s/0/351606a8-159b-11e5-be54-00144feabdc0.html#ixzz3dSxdoQy8

BCKrustyLiberals
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BCKrustyLiberals

@space889
I heard the interview of the Angus Reid pollster. 2/3 majority of all political stripes believe that foreigners are to blame, we need the data, and government has a role to play in controlling runaway RE prices. The Liberals aren’t listening to pollsters I guess though. They were supposed to lose the May 2013 election by up to 10 points. Now we’re still stuck with them for 2 more years and the Van RE insanity is getting progressively worse. Vote them out in 2017.

Westside Realtor
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Westside Realtor

Rumble and bumble, this gasbag of a market is set to crumble.

space889
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space889

Poll of Metro Vancouverites, surprise, surprise, the happiest are also the older generation with the largest amount of wealth, while the unhappiest are the university educated young professionals straddled with debt, debt, taxes, and high cost of living.

http://www.vancouversun.com/business/Vancouverites+feel+priced+town/11146479/story.html

@#103
Guest
@#103

The cab owner is of Vietnamese heritage and his wife of “chinese”. He posed for his interviewer in front of his SDF in Richmond.
http://tinyurl.com/pctg6w6

@#81
Guest
@#81

It is very frightening when they shamelessly borrow historical “head-tax” to argue their many cases and agendas.

@#57
Guest
@#57

vangirl,
China is working to join IMF’s SDR basket. If they succeed to make RMB a more freely usable currency, for the layman, it may lead to impending real estate bust and stock market crash, plus an orchestrated Yuan devaluation. So dump the overpriced stuff at home, and pick up cheap investments abroad.

The chinese government has to appease their masses by directing their energy overseas, and wisely avoid ugly scenes at home ….
https://www.youtube.com/watch?v=GJPdxRnkGng

Mortgageslave
Member
Mortgageslave

@79 – George
“Vancity report said average SFH home price in Vancouver will hit $2.1 million by 2030”

Classic realtor dribble. will NEVER happen but good luck with that!

UBC in crisis mode
Guest
UBC in crisis mode

Two correction to posts above.

1. Property tax on your $5 million property is $15,000 in Vancouver, not $50,000

2. Mortgage rate going up will not affect most $2 million properties in Vancouver. They DO NOT have mortgages.

So stop talking about rate change would affect housing.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

“Wait until current overextended owners find out what the inability to sell feels like.”

i’ve been waiting for that day for 15 years. overextended owners already have half their mortgage paid off.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
Son of Ponzi
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Son of Ponzi

Imagine, the Germans who came over after the Second World War, forming a German centric political party.
We’d sent them packing in a second.

Best place on meth
Member
Best place on meth

@69

“As far as the Conservative Party is concerned, they were not supposed to amend immigrant policy without communication with Chinese Canadians”.

What the fuck?

Our government doesn’t have to consult with any ethnic group about immigration policy.

In fact, pandering to any ethnic group is racist and any ethnic group who demands special treatment is also racist.

This “Chinese-Canadian” CCCICI group can go fuck off and die.

You’re either Canadian or you’re not.

southseacompany
Member
southseacompany

“Memo to Bond Market From Fed: You Were Right on Interest Rates” Bloomberg Business

http://www.bloomberg.com/news/articles/2015-06-18/memo-to-bond-market-from-fed-you-were-right-on-interest-rates

“Federal Reserve policymakers are coming around to the bond market’s wisdom about where interest rates are headed.”

space889
Guest
space889

@fanaticallybroke – quite a few of my former coworkers went the independent contractor route doing IT work with mostly Crown corp at $70+/hr. At one gathering where the topic of to incorporate or not came up, one said that he worked full time flat out last year and paid less than $10K combine corp and personal income tax for that year.

so $70/hr * 40hr/week * 52 weeks = $145,600/yr. If you a regular joe making that much in wage income, you would pay at least $40K in income tax and another $8K(??) in CPP and EI.

By comparison, the owner of that $5M mansion pays at least $50K in property tax alone, even with 0 income tax paid.

Seems like the IT contractor is the bigger tax cheat here.

southseacompany
Member
southseacompany
“Fed chair Yellen tells Canadian homeowners to watch out: Don Pittis”, CBC News http://www.cbc.ca/news/business/fed-chair-yellen-tells-canadian-homeowners-to-watch-out-don-pittis-1.3117599 “After listening to U.S. Federal Reserve chair Janet Yellen’s speech and her wily answers to questions from reporters, the consensus seems to be that a rate rise is coming later this year — the first one probably in September.” “While that date is of crucial interest to market wheeler-dealers, for Canadian mortgage-holders Yellen had a far more important message. It is especially important in a week when Manulife warned that for many home owners, a rate hike could be trouble.” “And while the data is uncertain and the date of the first increase will depend on how the economy develops, Yellen had some very useful, and surprisingly exact, information for Canadians who have made the long-term commitment of a mortgage. It is also useful for anyone… Read more »