News   Nov 07, 2024
Vineyard Getaway
 81     0 
News   Nov 06, 2024
Exterior Coming Together as 88 Queen Approaches Occupancy
 1K     1 
News   Nov 06, 2024
More Focus on Family-Sized Units for Proposal near St Clair Station
 1.5K     3 

Baby, we got a bubble!?

^^^ I can't answer that question but I believe you are probably correct.

Interestingly and perhaps equally relevant to Canadians is purchasing investment real estate in the US.
If you rent out, there is a 30% withholding tax on gross rent. You can circumvent it by advising the IRS in advance and base it upon an anticipated net return. So what Johnzz is referring to sounds quite similar to what in fact exists for foreigners in the US.
 
This is quite an interesting thread. A lot of stats and numbers. Personally looking at what is going on in the Condo market in Toronto, I think the correction will happen in 2012 (started happening already). This year alone we have $2 Billion+ worth of high end luxury hotel units going up for sale/ resale (Trump, 4 Seasons, Shangri La). No way in hell Toronoto can support that for many reasons. Even with foreign buyers and investors, this cant be supported.Ritz Carlton still has 60 units for sale at a million each from developer when resale is way lower. Banks will not lend mortgages on hotel/ condo units as they are restricted by the OSFI and Canadian government. So now you will see large price drops, limited buyers, and it will affect the overall market. Why buy a unit at 800k that is say 1200-1400 square feet when you can get a 5 star property unit for same price, but smaller in size. THis is just the start of the fiasco that will be happening over next few months. I hope i am wrong, but I dont think so.
 
^^^
A couple of points Saint:
I believe Ritz is 90% sold from developer so the 60 units you quote I believe may be more than actually what is up for sale. I believe there are 30 or so for resale (though 11 for rent which may represent people who plan to sell in the future and just chose not to list it as such for the time being with all the competition from the other 30) and another 16 or sof rom developer. I could be wrong. I am just basing it on the Post homes section today which says Ritz is 90% sold and that there are 159 condo units. This would imply 46 units or perhaps 57 units total but not 60 from developer.

Banks not lending mortgages to hotel condo units will affect Trump hotel units. I do not believe but I could be wrong it will in any way affect 4S; Ritz; SL, nor for that matter the straight condo units at Trump. Trump is a different animal in which investors bought hotel units to allow them to be rented as such. That is not the case for the other condo units. The hotels run the hotel. In fact, I can say that at SL according to condo documents, rentals must be for a 1 year minimum period, just like most regular condos in the city. They will not be assessed as hotel units with higher taxes (as trump condo units will be presumably) and will be viewed differently by bankers. That said, perhaps a banker with more knowledge or other person with knowledge could comment and correct me if I am wrong.

I wholeheartedly agree that if the 5Star market drops, likely it will affect the food chain all the way down. That said, we see SL downsizing some of their Private Estates to make them more affordable, albeit smaller in size. My point is that I think there is a market at $1 mill but it quickly gets thinner when at 2 million. I think there probably is too much $2.5 million and up product on the market. This will likely come down and in so doing, will affect the rest. However, I personally would rather be in a building where the average price is $1.5 million and own a $1 million property, than in a building with an average price of $600K and own a Million dollar unit. I just believe this offers more protection. Again, this is just my personal perspective. As well, referring to the article by the Sotheby's CEO(which admittedly is self serving and I don't agree with some of it as above when you look at my posts); one thing is correct. The people in Rosedale and maybe some of those very wealthy with those mansions in the sky may stop buying but probably won't be forced to unload quickly and under duress either. I agree with the point I would worry more about the mid-upper range condos....since I fear they may be more likely to be more stretched than the $3 million condo purchaser.

We have wondered as the thread suggests if the problems at Ritz are Ritz-specific; or whether it will extend to all the condo/hotel projects. I believe it will engulf Trump for the hotel units. I hope it does not engulf SL but would not be surprised if it did. I have a vested interest in SL to hope that it does not and freely admit this conflict in the interest of full disclosure.
 
interested said:
^^^
A couple of points Saint:
I believe Ritz is 90% sold from developer so the 60 units you quote I believe may be more than actually what is up for sale. I believe there are 30 or so for resale (though 11 for rent which may represent people who plan to sell in the future and just chose not to list it as such for the time being with all the competition from the other 30) and another 16 or sof rom developer. I could be wrong. I am just basing it on the Post homes section today which says Ritz is 90% sold and that there are 159 condo units. This would imply 46 units or perhaps 57 units total but not 60 from developer.

Banks not lending mortgages to hotel condo units will affect Trump hotel units. I do not believe but I could be wrong it will in any way affect 4S; Ritz; SL, nor for that matter the straight condo units at Trump. Trump is a different animal in which investors bought hotel units to allow them to be rented as such. That is not the case for the other condo units. The hotels run the hotel. In fact, I can say that at SL according to condo documents, rentals must be for a 1 year minimum period, just like most regular condos in the city. They will not be assessed as hotel units with higher taxes (as trump condo units will be presumably) and will be viewed differently by bankers. That said, perhaps a banker with more knowledge or other person with knowledge could comment and correct me if I am wrong.

I wholeheartedly agree that if the 5Star market drops, likely it will affect the food chain all the way down. That said, we see SL downsizing some of their Private Estates to make them more affordable, albeit smaller in size. My point is that I think there is a market at $1 mill but it quickly gets thinner when at 2 million. I think there probably is too much $2.5 million and up product on the market. This will likely come down and in so doing, will affect the rest. However, I personally would rather be in a building where the average price is $1.5 million and own a $1 million property, than in a building with an average price of $600K and own a Million dollar unit. I just believe this offers more protection. Again, this is just my personal perspective. As well, referring to the article by the Sotheby's CEO(which admittedly is self serving and I don't agree with some of it as above when you look at my posts); one thing is correct. The people in Rosedale and maybe some of those very wealthy with those mansions in the sky may stop buying but probably won't be forced to unload quickly and under duress either. I agree with the point I would worry more about the mid-upper range condos....since I fear they may be more likely to be more stretched than the $3 million condo purchaser.

We have wondered as the thread suggests if the problems at Ritz are Ritz-specific; or whether it will extend to all the condo/hotel projects. I believe it will engulf Trump for the hotel units. I hope it does not engulf SL but would not be surprised if it did. I have a vested interest in SL to hope that it does not and freely admit this conflict in the interest of full disclosure.
Click to expand...

Can you re-write your post in English.

Please.
 
Saint2844 said:
This is quite an interesting thread. A lot of stats and numbers. Personally looking at what is going on in the Condo market in Toronto, I think the correction will happen in 2012 (started happening already). This year alone we have $2 Billion+ worth of high end luxury hotel units going up for sale/ resale (Trump, 4 Seasons, Shangri La). No way in hell Toronoto can support that for many reasons. Even with foreign buyers and investors, this cant be supported.Ritz Carlton still has 60 units for sale at a million each from developer when resale is way lower. Banks will not lend mortgages on hotel/ condo units as they are restricted by the OSFI and Canadian government. So now you will see large price drops, limited buyers, and it will affect the overall market. Why buy a unit at 800k that is say 1200-1400 square feet when you can get a 5 star property unit for same price, but smaller in size. THis is just the start of the fiasco that will be happening over next few months. I hope i am wrong, but I dont think so.
Click to expand...

An ideal opportunity for the vultures to 'scroop in'?
 
KA1 said:
Can you re-write your post in English.

Please.
Click to expand...

If i may....

Translation of Interested's nervous rant:

1. Trump is a chump and the buyers got dumped
2. Ritz is on the fritz and the buyers are going ti*ts up
3. SL may be SOL but the buyers are LOL because thr building looks gorgeous
4. Sotheby's......they're just plain full of shit. I don't believe a word they say.

Happy Hunting Vultures!
 
best translation E V E R !

CN Tower said:
If i may....

Translation of Interested's nervous rant:

1. Trump is a chump and the buyers got dumped
2. Ritz is on the fritz and the buyers are going ti*ts up
3. SL may be SOL but the buyers are LOL because thr building looks gorgeous
4. Sotheby's......they're just plain full of shit. I don't believe a word they say.

Happy Hunting Vultures!
Click to expand...
 
CN Tower said:
If i may....

Translation of Interested's nervous rant:

1. Trump is a chump and the buyers got dumped
2. Ritz is on the fritz and the buyers are going ti*ts up
3. SL may be SOL but the buyers are LOL because thr building looks gorgeous
4. Sotheby's......they're just plain full of shit. I don't believe a word they say.

Happy Hunting Vultures!
Click to expand...

Thanks CN Tower.
Very concise and basically says what I meant to say.
I have reread my post. I think I understand it but I apologize to Ka1 and others for my "nervous" rant.
Only thing is, I am not in the least bit nervous about this investment.
As far as I am concerned, if one is investing one has to be prepared to accept losses. If one is not, then
one should not invest. I am a big boy. It won't be my first "bad" investment if it turns out so and I am sure
probably won't be the last. Fortunately to date at least, the good has edged out the bad (I believe by about 51% vs.
49%).
One last question CN: What does SOL stand for?
Thanks.
 
James said:
the withholding tax is 25-50% of the gross sale price, however you can submit a certificate of compliance to the CRA, indicating you've paid all your Canadian taxes to date, thereby reducing the withholding tax to 25% of net capital gain instead. Is my interpretation accurate?
Click to expand...

Referring to the sale of a property by a non-resident, the CRA would withhold 25% of the sale price (your lawyer is obliged to send them a cheque from sale proceeds). You would then provide documentary proof of purchase price, less expenses and calculate the capital gain tax owed (same tax rate as residents). The CRA would then send you the balance withheld.

Example:

-Original purchase price: $300k
-Sale price: $400k
-Total transaction expenses: $10k
-Top marginal tax rate: 40%
-Capital gain tax: 50% (50% of your gain is taxed)

So CRA initially withholds $100k ($400k X 25%)

Actual capital gain tax charged is $18k ($400k-$300k-$10k=$90k, $90k X 50%=$45k, $45k X 40%=$18k)

So the CRA would then refund $82k ($100k-$18k)

Hope this clarifies. :)
 
Johnzz said:
Referring to the sale of a property by a non-resident, the CRA would withhold 25% of the sale price (your lawyer is obliged to send them a cheque from sale proceeds). You would then provide documentary proof of purchase price, less expenses and calculate the capital gain tax owed (same tax rate as residents). The CRA would then send you the balance withheld.

Example:

-Original purchase price: $300k
-Sale price: $400k
-Total transaction expenses: $10k
-Top marginal tax rate: 40%
-Capital gain tax: 50% (50% of your gain is taxed)

So CRA initially withholds $100k ($400k X 25%)

Actual capital gain tax charged is $18k ($400k-$300k-$10k=$90k, $90k X 50%=$45k, $45k X 40%=$18k)

So the CRA would then refund $82k ($100k-$18k)

Hope this clarifies. :)
Click to expand...

I just wanted to to say thank you Johnzz for offering your perspective on this topic. :)
 
Johnzz,
am I correct to say that you're using the "power of leverage" to the max?
My understanding from your posts is that you're holding $10+million worth of r/e in downtown TO, of which 75% is leveraged?
Are you happy with your return / rental income? Or is your main goal here price increase?
 
You must log in or register to post here.

Back
Top