Thoughts on Buying Real Estate?
Been on this board for years without posting, and I keep coming back because there's some seriously good insight (and some serious bullshittery) on this board that I'd like to tap into. I'm in the market for a condo and wanted to get everyone's insight, thoughts, and insults on buying real estate with all the crazy shit happening in the world today.
Bit of background:
I'm a 3rd year associate at a MM firm that invests globally and I'm currently based in Canada. I've been interested in buying a condo in a city that many have been calling a real estate bubble for years - Toronto. First and foremost the goal is to find a comfortable place to live while I grind away, but ultimately I want it to be a rental property producing some cashflow. I'm fine from a budgetary perspective and am pre-approved for the bite size I want, I'm not over-levering myself (looking to buy at 50% - 60% of my theoretical max pre-approved mortgage amount) and I am painfully aware of the "hidden" costs of purchasing real estate in Canada. I've got no debt and a healthy investing acct balance to put towards a down payment with a fair bit of change to leave in equities.. but every time I find myself convinced I'm ready to buy, there's some new "what if" that I come up with that keeps me apprehensive. I've had a long term goal of owning several properties since I entered the industry and brushed shoulders with seniors who own property.
I know folks in both Toronto and Vancouver on both sides of this equation - those who purchased and saw their equity value re-rate 100% in 10 years, and those who stayed on the sidelines and are salty as fuck.
My macro thesis is basically that rates wont be this low for long (I'm quoted in the mid 1%'s for 5 year fixed on a 25-yr amort). The economy will turn back on and immigration will continue driving Canadian real estate higher in the long term. I think real asset inflation is unlikely to go away post-COVID, and BoC will want to keep the RE markets buoyant since the Canadian economy would be shit without them. Things are definitely softening - I've been dabbling in it for the last 4-5 months and have seen numerous price decreases and units sitting for weeks when they would have historically sold 20% over asking in a day. COVID-19 second wave lockdowns are fast approaching and the market sputtered pretty significantly in March, but that was fear of unknown unknowns and I don't think we'll see quite the same sharp, short term correction here.
My realtor is a guy who's only ever known the bull market and doesn't have great insight other than to say buying is the right call (probably cause it pays their bills).
I am not looking to flip, but my underwriting downside case is that shit hits the fan, I'm out of a job, and I have to sell <3 yrs from now. I think that my income level is above average for my role in Canadian finance and while I don't think I'd have any issues replacing a large portion of my income I still stress about the downside.
Questions for the group:
How many of you have been in my shoes and bought real estate? What do you wish you knew going in? Any regrets? Any resources that helped you make your decision?
Am I crazy for wanting to enter the market at a time of such uncertainty, at the end of an unprecedented bull market that has priced out the majority of young folks looking to buy a place? Should I stay liquid, wait for that sweet stimulus, and ride the equity bull market?
Even if you don't have any experience in buying or owning a condo/real estate, or your experience/insight only applies to other markets, I would still appreciate any and all thoughts. I want as much perspective as possible.
I realize I've written a novel here, so if you've gotten this far, cheers.