I was chatting with my financial adviser the other day and the subject of interest rates and mortgages came up. The numbers are ugly.
Two years ago if you were paying 3% on a $750K loan your monthly payments were $3500. If you didn’t lock in, today at the posted rate of 6.3% your monthly payments are $4928.
On top of that you’ve got condo fees of $500 a month, plus cleaning $75 per AirBnB stay and now you’re up to $6000 a month.
If you buy in Vancouver you are not permitted to do short-term rentals if it is not your principal residence and the unit can be rented monthly. Plus you have to deal with managing unruly AirBNB party people damaging your property. And dealing with the strata council, which can be a shit show.
Unless it’s a long game why bother with all that grief. Find a stable/aggressive mutual fund and get 8-10% compounded without the grief.
My 2 cents
Your numbers are pretty much correct on a hypothetical loan amount of 750K w/ 6.3% mortgage rate and yes some condos are $500 p/mnth when purchasing a place that is 950K with 20% down to make the 750K loan amount. Right now in the down town core there are forty five 1 bdrm listings under 600K with strata fees 330-450 p/mnth. 600K purchase w/ 20% down is 480K loan amount at 6.3% is $3,100 +400 strata fee+ avrg $100 taxes p/month you are at $3500. The cleaning fee is usually paid by the Air BnB guest.
As an investor myself I keep a close tab on the 29 buildings in Vancouvers Downtown that are Air BnB "Friendly". A lot of these have a majority investor members on the council, so the rules are still followed yet relaxed.
Right now the going STR rate for a 1 bdrm is $280-400 p/ night so even if your rented it for 20 nights per month for $300 thats $6,000. During the summer months the price goes up but you will have some slower parts of the rest of the year so $300 is a good average. The other 10days your are a resident stopping in, picking up mail. in and out of your place, hobbies/pleasure...
There is some genuine opportunity buying investments in a high rate environment that is creating alot of downward pressure on prices. In a couple of years we anticipate to see rates start to ease and come back to something a bit more comfortable in the high 3's and 4's. And when that happens prices will really take off again. Whoever decided to invest now will realize a definite upswing in value appreciation then.
I have two passions, Real Estate and this Hobby. It's an amazing thing when you can get both to start working for you.
