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Discussion Starter · #1 ·
Real estate "investors" (those who buy up multiple properties and rent them out) are -- in my personal opinion -- engaging in an activity that is harmful to the country, and which has been directly harming fellow Canadians. Here I am talking about people who own more than 2 properties when it's not used by their own family.

Yes I know that all of you have become filthy rich off this practice in the last ~ 30 years. It's been a great time for property investors. Extreme leverage into a never ending bull market, in a declining rate environment, will produce riches.

But I ask you to consider the harm you're causing Canadians. All those mortgages you've been getting end up putting artificial buying demand into the market. You are bidding against people like me (and all my friends) who actually need houses to live in.

~ ~ My suggestion ~ ~

You've gotten rich enough. Cash out and walk away.

Sell your properties now. Liquidate them. Even if you've built up a long term portfolio. You have an opportunity here to sell at record high prices. In case you haven't heard, the Bank of Canada is in a rate hiking cycle. It really hasn't even started yet, so you still have an opportunity to sell your properties now. And how many years do you think a RE bull market is going to last? It's already been 30 years. Or do you think it's going to last 50 years?

If you're leveraged in several properties, and if this whole thing goes tits-up, nobody will shed any tears for you. There is VERY little sympathy in this country for property investors who have driven prices sky high.

Again: sell your properties now and walk away. You have a great exit opportunity here, before interest rates really get crazy.
 

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Discussion Starter · #3 ·
And if that appeal doesn't work for you, here's a more numerical argument:

Starting from today's market value of your properties (important... today's prices) what do you think your net rental yield will be? How much will you make, net of all the maintenance costs, hassles, unoccupied periods?

Do you realize that if you put that same $ value into risk-free GICs, that you can make close to 4% yield today? That's with no risk, no troublesome tenants, no manual labour.

I'm not talking stocks which fluctuate. I mean a rock solid, guaranteed 3.5% to 4% yield. That's what's available today. Using a discount brokerage, you can spread among enough CDIC issuers to easily cover $1.5 to $2.0 million of these.
 

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Discussion Starter · #4 ·
Seriously ... you're asking people to walk away from making money?
No, I'm asking them to lock in their riches before it blows up in their faces. Both interest rates and public sentiment is against them.

But if they want to roll the dice, and take their chances being highly leveraged in a real estate bubble, as interest rates rise... go for it!
 

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So am I on the bad boy list for owning residential rental REIT's?
On the other hand I know of a couple of south asian pals who along with their extended families who each collectively own 5-6 residential properties. Now, they live in parts of two or three of the properties.

Their parents, first gen imms have zero trust in the stock market.
In India their experience with that stock market has found a rather corrupt stock investment environment in the past.

Plus they have met realtors marketing through their mosque/ temple locally to put together buying syndicates.
 

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Discussion Starter · #7 ·
That's just like asking people to cash out of the stock market because you think it's going to crash.

Their money, their risk but I'm sure they are aware of the numbers change due to interest rates.
But owning stocks doesn't deprive other people of owning a home. There's an ethical side to this as well.

I also think many property investors haven't thought about this yet. People tend to become complacent when things go very well for them, for a long time. We've had 40 years of declining interest rates. People have trouble wrapping their heads around a rising interest rate environment.

Nobody has seen a rising interest rate environment for 40 years!

@Ponderling I have no problem with families who use properties for their own extended family use.
 

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Discussion Starter · #10 ·
Not that I own 3 homes, but say I do and live in one of them, and rent out the other 2, who is being deprived of a home to live in?
I'm talking about owning. I want to own a home, and I'm not alone.

In this scenario, you're 1 person owning 3 homes. Yes I realize you consider yourself a humanitarian and will generously allow me to rent from you, but if you own 3 homes and I own 0 homes, clearly there's an imbalance.

You have deprived 2 other people of being able to own a home.

The property investors buy up and hoard these homes. In the market, they compete against others who own zero homes.
 

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I tend to agree with James to extent. I have a friend who owns a property management business in town. He’s done very well for himself. Owns a couple properties in Edmonton and rents them out through AirBnB. I’ve given him the same speech as James just did. Went in one ear and out the other. However, this guy doesn’t even know what a TFSA is. Saves his money in HISA’s and just buys more property.

The problem with the point we try and make is your literally asking them to stop making money and walk away. Potentially to something they know little or nothing about. It’s just never going to happen.

Cost of housing is the single biggest issue(imho) in this country. No one wants to be the reason the first toothpick breaks and the house of cards falls.
 

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J4B, I'm afraid such investors got too much shot up in their veins that they can't quit. The low interest rates, use of OPM and dream of riches at the end of the rainbow are far too lucrative. Ethics (and what's that when it comes down to making money) not counting.
 

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Discussion Starter · #14 ·
The people doing this who are leveraged, are just asking for it.

I'm just trying to be helpful and communicating the warning. Mr. Market can educate them better than I can.

Property investors: at least do yourselves a favour and deleverage before higher interest rates arrive.
 

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Can I get everyone to sell their blue chip stocks? Hopefully the price will fall 20% and I can buy more.
The people doing this who are leveraged, are just asking for it.

I'm just trying to be helpful and communicating the warning. Mr. Market can educate them better than I can.
I would suspect most rental properties are leveraged to 65%. Plenty of equity to withstand a market drop. when rates rise, so will rents.
 

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Discussion Starter · #16 ·
Can I get everyone to sell their blue chip stocks? Hopefully the price will fall 20% and I can buy more.
Nobody is deprived of home ownership when you buy stocks.

Nobody has to push off their plans of building a family when you buy stocks.

Nobody suffers from housing instability (lack of permanent living arrangements) when you buy stocks.

I want property investors to understand that your RE investment portfolio actually causes some harm to society. No question you are making money... but you ARE harming others.
 

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Nobody has to push off their plans of building a family when you buy stocks.

Nobody suffers from housing instability (lack of permanent living arrangements) when you buy stocks.
I know families who rent. You don't have to push off your plans because you don't own. Female hormones might say otherwise but that does not make it fact.

I also know some who have been renting the same place for over a decade. What instability do you speak of? A house is hardly permanent anyway. People change jobs, divorce, etc and still need to move even if they own their place. Then they have the extra trouble of selling the place.
 

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I'm talking about owning. I want to own a home, and I'm not alone.

In this scenario, you're 1 person owning 3 homes. Yes I realize you consider yourself a humanitarian and will generously allow me to rent from you, but if you own 3 homes and I own 0 homes, clearly there's an imbalance.

You have deprived 2 other people of being able to own a home.

The property investors buy up and hoard these homes. In the market, they compete against others who own zero homes.
I haven't deprived anyone of anything. They are free to purchase those theoretical homes from me at market value. They are expensive, and much more so than in the past. But it doesn't mean you can't buy one today. Or three, if you choose.

I don't own any homes in reality, but what you are worried about comes to pass, then I am likely going to be in a position to buy properties from those who are underwater on their mortgage. And maybe 3 of them.
 
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