QUOTE (GarthChapman @ Sep 14 2010, 11:04 PM)
I think Thomas is saying there is not a Canadian Real Estate market, but rather there are many individual markets, some of which are performing very well and have good economic fundamentals.
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indeed .. what has changed is that you need more money down (i.e. less leverage) AND the upside is not as fast (likely not 5-6%/year on average .. but around 3% in healthy cities)
See analysis of an average 14% expected return with 30% down, no cash-flow and an average 3% annual appreciation:
http://myreinspace.com/rein_members_only/Members-Only_Discussion/81-17992-91637-3_Rule.html#91637
Specifically, what is a healthy city ? One with
a) in-migration
b) job diversity
c) job growth
d) low taxes
e) improvements for transportation and life style
f) plus a few others such as "growth atmosphere, average income growth, affordability, etc. .."
REIN has their 'Goldmine Scorecard" .. so check out that list of 10 criteria here:
http://myreinspace.com/downloads/critical_forms/m/due_diligence_forms/55.aspx
REIN has published the Top 10 report for BC, ON and AB .. so take any 3 cities .. or the Top 3 per province and there you have nine healthy cities to chose from.
Will every townhouse you buy in any of these 9 cities perform well ? No, because some are too expensive and some are in neighborhoods with less growth appeal. But if you do your neighborhood and specific asset due diligence you can find a large number of assets that make sense to own 5-6 (or more) years and you will say 5 years from now: to buy this property was a wise decision !!
On the flip side, what I was saying is that the "old norm" of 20% down (or less), in any city with little research will NOT make you money unless you get lucky. The easy money in real estate is gone for a while. Too many folks (some REIN members included) want an easy, fast, no headache, no work, quick buck .. this is not real estate investing. It is called gambling. Some get lucky .. but on average you lose !