Buying a place with your LOC

[Hopeful Med]

Plus sometimes developers add extras or closing costs etc. so it really is not 310K anymore. They are a tricky bunch.

 

If I were to buy I would wait till the late fall because the spring market is always strong. I truly believe the experts and think the market will fall later this year. There are just too many problems in the market.

[Wolvenstar]

In hard economic times, people always say "we've reached the bottom." I have heard it said over and over again through the past few months and things have continued to decline. My father is a stock market analyst and has been predicting this economic slump for 2-3 years. His advice to me has always been correct and currently he thinks we are still on the down slope. So...just a word of caution on assuming we have "reached a low."

 

Regarding owning a property at the end of medical school: Since the end of medical school and start of residency is scheduled, you will have minimal flexibility when it comes to the timing of selling. If the RE market is difficult at the time, you will be forced to price cut in order to make a timely sale. Only a few months of carrying two properties while waiting to close on your medical school house sale can eat into your budget big time. While renting it out may sound like a good option at this point, you must consider a couple of things. First, residency is unbelievably busy, so being a landlord during this time would be difficult at best. Not to mention that it is not uncommon to end up doing residency in a different city/province from medical school. Being a landlord during residency from a different city would be next to impossible. Thus, you would have to consider hiring a person or company to manage this property for you - another expense eating into your rental income. The other thing to consider about renting out a property is the tenants. No matter how nice a tenant seems, you can never be guaranteed they will care for your property as you would like. When house shopping last year, my husband and I saw several condos/homes which were a mess as a result of poor tenants.

 

Finally, do not under-estimate the huge costs and debt associated with medical training. I know many of my resident colleagues who are barely staying afloat on their residents' salary because the interest payments for all of the student debts are so high. As physicians we will certainly make more than a reasonable income in the future, but in the meantime, it can be quite difficult to get by from a financial point of view.

 

 

 

I really don't see how owning a home in a city different that the one you live in is really hard? Before the economic slump, many people from the kootenay's (mostly east) were buying alot of property out in the alberta region. Lethbridge was a hotspot for buying, and many people from the region i grew up in bought property out there and saw it work wonderously. They came in and checked on the places two or three times a year unless a problem of some sort came up in the house. You make it sound alot harder than it is to be a landlord. You also have to think about who you lease the place out to. Your are going to get more trouble if you lease the house to a bunch of party-going university students. Not to put down university students, but the truth is one of the safest renters are young families who haven't yet decided to go on and buy their own chunk of land.

 

Even growing up, when i first moved outta my parents house (at 16) i only saw my landlords a handful of times. Really as long as the place you bought was well-maintained previously, and the renters you get don't trash it, you do not need to make monthly visits to the property.

 

Your other points were very well stated but I feel that you were just a little unfairly pessimistic about the time and effort one needs to put into being a landlord.

 

Jochi, I would not assume that any place you bought and rented out would be able to pay for the mortgage off the bat, which i why i said if you are lucky. It also depends on where you buy and what type of property you buy. You will make alot more money in rent on a house (specially with a seperate basement suite) than a condo obviously, and it will be harder to have the rent cover your mortgage if you buy property in a really good location where house prices tend to be higher.

 

My plan, assuming i get into a 4year med school with summer's off, is to buy a house in a cheaper up-and-comming area, put in a basement suite (i would only look at houses with separate basement entrances to help offset the costs of renovating a basement into a basement suite) and rent it out while going to med school. Then once in residency if i am out of town, I would rent out the upstairs as well. This may come rather close to pay the mortgage for me depending on the city and such. I know i make it sound simple but I know it is an overly ambitious plan, one I would not normally undertake if it wasn't for the combined knowledge of house building, renovation, and landlording in my family, and friends. However i do believe that if you have the chance (and ability) to do so, it would be a rewarding experience.

[justletmein]

It's a matter of personal experience.

 

My family has bought, sold, and rented a few dozen properties over the past decade. They had great success for some time, but all it took was one horrible set of tenants to absolutely sour them against ever being landlords again.

 

It's not that being a landlord is so terribly hard, it's just that if it goes wrong, it goes very very wrong, and the laws are stacked against you. The legal costs of evicting someone and the damage they can do to your property in the meantime can end up costing more than the rent they paid (if they paid it at all that is).

 

My mom once lost over 15K in a tenant dispute, and that's not including the fact that the tenants clearcut half the property's trees and sold them as firewood.

 

That said, it's much more likely that it won't happen, but each person needs to assess the risks they're willing to take.

 

I am personally not willing to risk that kind of stress no matter how unlikely.

 

 

Agreed. My dad bought and sold a building within a year because of a steady flow of bad tenants.

 

People say that real estate is a solid investment but these days, there are just so many variables.

 

 

It still is a good investment... I think people just tend to ignore the negative possibilities.

[The_B]

Agreed. My dad bought and sold a building within a year because of a steady flow of bad tenants.

 

People say that real estate is a solid investment but these days, there are just so many variables.

 

 

It still is a good investment... I think people just tend to ignore the negative possibilities.

 

And this is one of the reasons why I caution people when they are thinking of buying when entering medicine. When you are in medicine, the goal is to minimize stress when not working, not add to it. Personally, I wouldn't buy unless I was sure I was staying in that city for residency as well. Then I can be pretty confident that I will have done more than pay off interest + upkeep + insurance + legal fees + future listing when I go to sell.

 

Owning is great, but when you don't even have time to really dent the mortgage, it is a dangerous investment.

[JewelLeigh]

I really don't see how owning a home in a city different that the one you live in is really hard? Before the economic slump, many people from the kootenay's (mostly east) were buying alot of property out in the alberta region. Lethbridge was a hotspot for buying, and many people from the region i grew up in bought property out there and saw it work wonderously. They came in and checked on the places two or three times a year unless a problem of some sort came up in the house. You make it sound alot harder than it is to be a landlord. You also have to think about who you lease the place out to. Your are going to get more trouble if you lease the house to a bunch of party-going university students. Not to put down university students, but the truth is one of the safest renters are young families who haven't yet decided to go on and buy their own chunk of land.

 

Even growing up, when i first moved outta my parents house (at 16) i only saw my landlords a handful of times. Really as long as the place you bought was well-maintained previously, and the renters you get don't trash it, you do not need to make monthly visits to the property.

 

Your other points were very well stated but I feel that you were just a little unfairly pessimistic about the time and effort one needs to put into being a landlord.

 

Jochi, I would not assume that any place you bought and rented out would be able to pay for the mortgage off the bat, which i why i said if you are lucky. It also depends on where you buy and what type of property you buy. You will make alot more money in rent on a house (specially with a seperate basement suite) than a condo obviously, and it will be harder to have the rent cover your mortgage if you buy property in a really good location where house prices tend to be higher.

 

My plan, assuming i get into a 4year med school with summer's off, is to buy a house in a cheaper up-and-comming area, put in a basement suite (i would only look at houses with separate basement entrances to help offset the costs of renovating a basement into a basement suite) and rent it out while going to med school. Then once in residency if i am out of town, I would rent out the upstairs as well. This may come rather close to pay the mortgage for me depending on the city and such. I know i make it sound simple but I know it is an overly ambitious plan, one I would not normally undertake if it wasn't for the combined knowledge of house building, renovation, and landlording in my family, and friends. However i do believe that if you have the chance (and ability) to do so, it would be a rewarding experience.

I agree that with a good and long-term tenant, landlording would be easy. But I do not think it would be easy when it comes to finding a new tenant if you are out of town, nor dealing with any issues that arise if you are away and on 1 in 4 call.

 

As an example, one of my classmates bought a house in medical school and matched 1/2 way across the country for residency. This person was unable to sell the house (and this a year ago when the market was much better!) Since match day is in March and residency starts in July, there is not a lot of time to figure this kind of thing out. This person used up a couple of months trying to sell and then another month or so trying to find a reasonable tenant. In the end, the individual had to hire a company to find a tenant for the house and manage it for them. So, it was a lot of stress for the couple of months between med school and residency but later wasn't that stressful once he had moved and the management company took over. However, the company's cost is eating into his rental income.

 

So, depends on your situation...buying in med school and staying in the same place for residency would make for a perfect situation. Leaving for residency and renting it out to great, long-term tenants with the help of friends/family in the area would work out well also. But a situation like my friend's is not as easy...

[Jochi1543]

Plus sometimes developers add extras or closing costs etc. so it really is not 310K anymore. They are a tricky bunch.

 

If I were to buy I would wait till the late fall because the spring market is always strong. I truly believe the experts and think the market will fall later this year. There are just too many problems in the market.

 

I definitely can't wait till late fall (won't have a FT job anymore). Plus I'll have more luck getting approved for a mortgage BEFORE I get my LOC.

[Wolvenstar]

It's a matter of personal experience.

 

My family has bought, sold, and rented a few dozen properties over the past decade. They had great success for some time, but all it took was one horrible set of tenants to absolutely sour them against ever being landlords again.

 

It's not that being a landlord is so terribly hard, it's just that if it goes wrong, it goes very very wrong, and the laws are stacked against you. The legal costs of evicting someone and the damage they can do to your property in the meantime can end up costing more than the rent they paid (if they paid it at all that is).

 

My mom once lost over 15K in a tenant dispute, and that's not including the fact that the tenants clearcut half the property's trees and sold them as firewood.

 

That said, it's much more likely that it won't happen, but each person needs to assess the risks they're willing to take.

 

I am personally not willing to risk that kind of stress no matter how unlikely.

 

Sold for firewood? Were you renting out an acreage?

 

 

 

Another big thing is if you do rent to them or lease. I have found that dealing with bad tenants to be much easier when dealing with rental agreements rather than leases. As well the rules on what rights landlords and tenants have tend to vary from province to province.

 

While you can not guarentee that every tenant you get will be good, if you are a good judge of character and know what type/groups of people tend to have the best personalities for tenants that can help. (that sounds bad but it is true). I am not saying that owning real estate is always easy, or that it is for everyone, but it isn't impossible.

 

 

One thing that bewilders me is when landlords actually expect that after a lease has expired and the tenant has moved out that the house will be in pristine order, and it will the same as it did before people moved into it (especially landlords with new(ish) homes). I found that if you keep your feet on the ground and realize people are actually living in the house, that it will keep your stress down. My family always expects to do some cleaning after a tenant leaves, (and possibly minor repair work) and if we are going to sell the house, then we do much of the renovations after the tenants are out right before selling the house.

 

While I can not point out the trouble for why a house of a friends wouldn't sell when the market was still good, there are alot of considerations when it comes to selling a house. I have met some people who think that all they have to is buy the house, and leave it for a couple years and then should be able to sell it for more. This really doesn't work that well in what I have seen. Some renovations, even minor ones at least are needed. You don't go out and buy a home that is someone turned into paradise and expect to sell it for more. If you plan on selling the house in the future, make sure their are some minor things you can do to spruce it up yourself. Looking for a house with some minor lackings of beauty can be quite useful for someone who isn't good at finding ways to make already functional houses better. Sometimes just repainting the house can do the trick. Other simpler ideas for making a house look for attractive and hopefully easier to sell; replacing carpet with laminate, changing cabinet doors in the kitchen, replacing the old carpet with new carpet, upgrading lighting fixtures.

 

Also some people will turn a shanty into a mansion located on a poor street, or just plain expect too much money for their house. My point is that with a good head and motivation real estate is doable, not impossible.

[Jochi1543]

 

 

Another big thing is if you do rent to them or lease. I have found that dealing with bad tenants to be much easier when dealing with rental agreements rather than leases. As well the rules on what rights landlords and tenants have tend to vary from province to province.

 

Can you elaborate on the difference between rental agreement/lease? I wasn't aware that these were 2 different things.

[Wolvenstar]

Can you elaborate on the difference between rental agreement/lease? I wasn't aware that these were 2 different things.

 

 

Now i don't know the full legal bindings of this, but many landlords will have you sign a "rental agreement", in which you agree to X number of terms (usually no pets, no parties, clean, make every available effort to get along with your roommaates, the amount of rent due per month, damage deposit, utilities info, etc) and then pay for every month you stay. In this manner if after a couple months you find something better, or jsut don't like it, all you have to give is a 30day notice that you are moving out. Whereas a lease states that you will be living in that place for X number of months/years, and if you decide to up and move out before the lease has ended the landlord can take you to court for the amount of rent due for months you didn't pay for.

 

I have prefer to use rental agreements over leases because of the fact that if my tenant(or tenants) is behaving poorly I can give them a 30-day notice of eviction and they are out the next month. With a rental agreement, there is no set amount of time that the person is staying in the house and you can give them notice at any time. Especially living in a university town, I found this easiest because students don't want to stick around for the summer anyways and so not having a lease saying they have to pay for the summer months entices them to move in here, and take off at the end of april. Some will pay a small fee to reserve the room for september again (somewhat larger if they want to leave stuff in the room). Then i can rent out the room (unless they paid to leave stuff) for the 4 summer months until my steady renters return.

 

 

 

Before becoming acting landlord of one of my family's houses, I usually rented out places in this fashion. I didn't want to be stuck into a lease where I would have to pay for X number of months.

[Jochi1543]

Now i don't know the full legal bindings of this, but many landlords will have you sign a "rental agreement", in which you agree to X number of terms (usually no pets, no parties, clean, make every available effort to get along with your roommaates, the amount of rent due per month, damage deposit, utilities info, etc) and then pay for every month you stay. In this manner if after a couple months you find something better, or jsut don't like it, all you have to give is a 30day notice that you are moving out. Whereas a lease states that you will be living in that place for X number of months/years, and if you decide to up and move out before the lease has ended the landlord can take you to court for the amount of rent due for months you didn't pay for.

 

Sounds like a month-to-month lease to me...that's how I've lived the last 3 years.

[Wolvenstar]

Not exactly, she was renting out the house she currently lives in where the property includes a 30 acre forested hill. There used to be a lot more maples, but it's not so bad because now there's a better view of the water...silver lining I suppose.

 

hmmm that is interesting, although I must admit I would never rent out a place that includes a large chunk of land for this very exact reason, lol.

 

 

Jochi:

 

I guess you could call it a month-to-month lease, but the legal forms used in signing a lease aren't used. Instead many landlords will make their own "rental contract" it may not be as flashy but because it is an agreement between two people for an exchange of goods in which both the landlord and the renter have signed it is legally binding.

[ClassicD]

Thought I'd bring this thread back up. If anyone who previously bought can share their experience, I think we'd all appreciate it.

 

Also, what'd ya think....smart time to buy now?????

[Renoir]

I have a "friend" that just bought a 1 br highrise on whyte ave. Applied for a heloc(home equity loc) while still employed, and forgot to mention that he was planning to begin school...

 

Market is low, but consider the price of oil right now and the demand for oil workers in Edmonton that will always exist. The friend is comfortable with having purchased. Minimum intrest pmts are prime + 0.25, so it is flexible how much principal to pay each month. Condo fees 350 per month. Taxes 110 per month. No utils except phone and Internet. Good deal for living 8 mins walk from u of a...