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qhat
Jul 6, 2015


Rich people with high incomes can claim half of that interest back on their taxes because they are purchasing the property as an investment.

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Subjunctive
Sep 12, 2006

✨sparkle and shine✨

They can claim all of the interest as a deduction, I think.

Aramis
Sep 22, 2009



Subjunctive posted:

They can claim all of the interest as a deduction, I think.

Even if you claim all of it as a deduction, you are only going to get half-ish of it back, assuming you have that much income in the top bracket.

Subjunctive
Sep 12, 2006

✨sparkle and shine✨

Oh, I see, OP means at the 53% marginal or whatever. Yeah, makes sense.

qhat
Jul 6, 2015


Subjunctive posted:

They can claim all of the interest as a deduction, I think.

Yeah, what I meant is that it's a deduction from their total income, which in practical terms means they get a refund of (marginal rate)*(interest paid) which for these people is roughly half.

Aramis
Sep 22, 2009



But even then, it's still much more preferable to get a lower rate in the first place. You really have to be leveraged up to your eyeballs if the best/only loan you can get is prime +10 in this day and age. I'm not discounting the existence of these people, just that it's very surprising that there's enough of them to build a cottage industry around them.

However, femto's short-term bridge loan explanation does pass the smell test for me. But even then, that would mean a quickly rotating portfolio, which would be very seasonal and unstable, erk.

Aramis fucked around with this message at 23:35 on Feb 16, 2021

qhat
Jul 6, 2015


I mean 100% if I was that rich (lol) I would be staying the gently caress away from 7% net interest unless it was short term. Was just pointing out that often looking at what rich people pay nominally is not particular helpful in getting a clear picture of the situation since they are probably knee deep in tax fuckery and other money saving schemes that make the finances more tenable.

Sassafras
Dec 24, 2004

by Athanatos

Lead out in cuffs posted:

Here's what happened when I dug into the mortgage history of a place where a friend was renting, to figure out who the actual landlord was so she could deal with some change in ownership fuckery. Apparently rich people are taking out maxed-out on-demand HELOCs at obscene interest rates for ~reasons~. Probably money laundering, really.

Collateral charge mortgage, that's how they get registered on the title which doesn't reflect the actual contract at all - and it's high so that people can renegotiate terms & whatnot indefinitely without bothering with title changes unless property prices really zoom up massively and you want to push the HELOC beyond the limit.


My previous mortgage (Scotia):
5-year fixed @ 2.14%, HELOC at Prime + 1. Registered on title as payable on demand, 100% of purchase price at Prime + 10% (Peak amount borrowed: 72%).

My current mortgage (CIBC):
4-year fixed @ 1.49%, HELOC at Prime. Registered on title as payable on demand, at December appraised value (+14% from pandemic purchase) at Prime + 6%. Initial LTV: 62%, but now somewhere mid 70s since I hit the HELOC up for investments.

Femtosecond
Aug 2, 2003

Aramis posted:

But even then, it's still much more preferable to get a lower rate in the first place. You really have to be leveraged up to your eyeballs if the best/only loan you can get is prime +10 in this day and age. I'm not discounting the existence of these people, just that it's very surprising that there's enough of them to build a cottage industry around them.

However, femto's short-term bridge loan explanation does pass the smell test for me. But even then, that would mean a quickly rotating portfolio, which would be very seasonal and unstable, erk.

It does seem surprising, but maybe not so if the construction industry really does use these sort of loans a lot. Could be that your typical home flipper is using these sort of high interest loans to pay for the construction costs, which of course are repaid on the sale of the house, and so are only for a few months. With a construction loan you don't need to draw the full amount at once too, which can further limit high interest exposure.

The other interesting number to take from that PDF that was posted was that the average loan there was only $94k. So that really goes to show that these loans are bridge loans to paste over some short term minor difficulties.

I've been told another main source for these loans are entrepreneurs without steady cashflow who get rejected by the banks. Banks understand the simple case of someone who has a wage and makes $X per year. If you're a successful self employed business owner that can afford a property, but your cashflow is weird and not easily parseable by bank people, sometimes the banks nope out because it's too weird for them.

Sometimes I wonder tho if the banks are actually being the reasonable ones here and the self employed people in this case are simply being waaaay too optimistic for the banks.

The funny thing of course is that as soon as you own the property suddenly everything changes and banks are all too happy to loan against it and give you money.

So yeah the trick is to get some short term financing from a MIC, buy the property that the bank would never lend you the money to buy, then immediately turn around and get a low interest mortgage from the bank on this property to repay the MIC.

Femtosecond fucked around with this message at 01:18 on Feb 17, 2021

Professor Shark
May 22, 2012

That doesn't sound like a great system

qhat
Jul 6, 2015


That sounds a lot like zero equity down lol

Cold on a Cob
Feb 6, 2006

i've seen so much, i'm going blind
and i'm brain dead virtually

College Slice
https://twitter.com/globeandmail/status/1362027654791065600?s=20

quote:

In Oshawa, Ont., and other parts of Durham Region, Shawn Lackie, a real estate agent with Coldwell Banker R.M.R. Real Estate, says buyers have been paying eye-popping premiums even for modest houses.

“These places that are selling are little shacks,” he says.

Mr. Lackie sees worrying signs in the bedroom communities east of Toronto: Even during the frothy days of 2016, buyers typically only entered competition for the most desirable houses, he points out.

“They were bidding on properties that were worthy of insanity,” Mr. Lackie says. Now, “it’s right across all areas and all sizes. We’re back to full-on madness.”

He points to one recent example on Olive Street in Oshawa where a 1,100-square-foot house was listed with an asking price of $650,000 and sold for $802,000 after five bullies submitted bids ahead of the date scheduled for reviewing offers.

Mr. Lackie notes the house last changed hands in 2018 for $200,000.

Another bungalow of about the same size was listed with an asking price of $499,000 and sold for $713,000 in Oshawa.

In the small town of Orono a little farther east, a house listed with an asking price of $499,000 sold for $731,000.

In Mr. Lackie’s opinion, the growth in prices is not sustainable.

Cool, this is fine right?

Edit: No problems here:

https://twitter.com/rcarrick/status/1361802114205425665?s=20

Cold on a Cob fucked around with this message at 21:50 on Feb 17, 2021

Slotducks
Oct 16, 2008

Nobody puts Phil in a corner.


everything is hilariously fine nothing can go wrong

Sassafras
Dec 24, 2004

by Athanatos

Cold on a Cob posted:

quote:

In Mr. Lackie’s opinion, the growth in prices is not sustainable.

That phrasing is hilarious but also entirely the reporter's fault.

Q: "Is this sustainable?"
A: "Of course not"

Although... what if 10% monthly appreciation was permanently sustainable / accelerated with ongoing currency debasement?

How would we keep the underclass from actually revolting?


(Nice cheap legal drugs?)

qhat
Jul 6, 2015


In other news, the Bank of Canada announces that inflation is below target at 1%

Slotducks
Oct 16, 2008

Nobody puts Phil in a corner.


qhat posted:

In other news, the Bank of Canada announces that inflation is below target at 1%

lmfao

Sassafras
Dec 24, 2004

by Athanatos
I don't have it handy but I saw a good tweet early this morning, basically to the effect of:

"US average house price is now 330k, was 308k in 2008. However, due to interest rates back then, the payment on that average house was 1900/mo, is now 1200/mo."

Especially in the US with their 30-year fixed rate mortgages, one could argue that prices have a hell of a lot of room to run, but HIGH interest rates simply aren't coming back without the sort of price and wage inflation that inflates away debts even faster.

Sassafras
Dec 24, 2004

by Athanatos
Also: Trying to get wife's mother's place listed since she's roughly 80 and lives hours away from everybody else in the family (used to be other relatives there, but they've left/died, as have most elderly friends).

Just on the rumour that she's selling it with a ballpark figure in mind 10% higher than an October comparable in the same gated community, three interested bidders have presented themselves.


The question is whether to just take a quick offer before she can change her mind or to actually go open market.


One big big problem is that she's frickin' nuts (dementia, most likely) and liable to sign nearly anything she's presented with which, coincidentally, is how her father (wife's grandfather) sold a house for 100k below market to flippers going door to door a couple decades ago before anyone else knew what had happened.

mila kunis
Jun 10, 2011

My conclusion:


https://www.youtube.com/watch?v=t6gcxNFc1I0

linoleum floors
Mar 25, 2012

Please. Let me tell you all about how you're all idiots. I am of superior intellect here. Go suck some dicks. You have all fucking stupid opinions. This is my fucking opinion.

Sassafras posted:

Also: Trying to get wife's mother's place listed since she's roughly 80 and lives hours away from everybody else in the family (used to be other relatives there, but they've left/died, as have most elderly friends).

Just on the rumour that she's selling it with a ballpark figure in mind 10% higher than an October comparable in the same gated community, three interested bidders have presented themselves.


The question is whether to just take a quick offer before she can change her mind or to actually go open market.


One big big problem is that s he's frickin' nuts (dementia, most likely) and liable to sign nearly anything she's presented with which, coincidentally, is how her father (wife's grandfather) sold a house for 100k below market to flippers going door to door a couple decades ago before anyone else knew what had happened.

Someone should have power of attorney over her affairs.

Aramis
Sep 22, 2009



qhat posted:

In other news, the Bank of Canada announces that inflation is below target at 1%

You'd think that this would be a sign that there's plenty of inflationary margin for US-style direct pandemic payments...

Sassafras
Dec 24, 2004

by Athanatos

linoleum floors posted:

Someone should have power of attorney over her affairs.

Of course, but that's one of the things she won't sign and her rarely visited doctor (75km away for 20+ years and she's never been willing to drive herself... or switch) was unwilling to get involved 7-8 years ago when that angle was tried.

It's quite hard to do much in these circumstances, the courts say things like (paraphrasing) "While the children might not like it, their parents are entitled to make terrible decisions unless declared financially incompetent and the bar for that is quite high."

Cold on a Cob
Feb 6, 2006

i've seen so much, i'm going blind
and i'm brain dead virtually

College Slice
The sick irony is we're responsible for caring for elderly parents if they go broke in a lot of places too. Check your local laws, ymmv.

Edit: Filial responsibility laws, if you want to google for more info

sbaldrick
Jul 19, 2006
Driven by Hate
I’ve figured out the solution to Canada’s housing problems.

We finally strike that deal to annex Turks and Caicos, build a bunch of micro condos on it for investors to get Canadian citizenship and leave everyone else alone.

Claes Oldenburger
Apr 23, 2010

Metal magician!
:black101:

Sassafras posted:

Of course, but that's one of the things she won't sign and her rarely visited doctor (75km away for 20+ years and she's never been willing to drive herself... or switch) was unwilling to get involved 7-8 years ago when that angle was tried.

It's quite hard to do much in these circumstances, the courts say things like (paraphrasing) "While the children might not like it, their parents are entitled to make terrible decisions unless declared financially incompetent and the bar for that is quite high."

As someone who's father just went through this a year or so ago because his mother is of unsound mind and his father passed away without signing anything over, my condolences. It's a long process, even with my grandmother who was more or less on board with the whole thing. Going through the motions to officially declare her of unsound mind to lose control of their estate is full of hurdles.

Chillyrabbit
Oct 24, 2012

The only sword wielding rabbit on the internet



Ultra Carp
Somehow Calgary has gotten the Vancouver/Toronto housing bug, FOMO strikes again in Calgary?

quote:

The urgency has really been seen in Calgary’s detached home segment. According to CREB, as of Feb. 17, detached sales totaled 596 units, compared to 335 the year before — a hike of almost 78 per cent.
....

Calgary homeowner Artemis Immel hasn’t been as fortunate with either her home selling or buying experience.

“It’s been crazy. The houses that we found, they’ve sold within days,” she said.

Unlike the Branns, she’s can’t afford to buy a new home without selling her old one. So, she said, she’s a bit stuck.

“Most places are selling immediately, and probably with no conditions, because someone is ready to buy it right away,” she added. “We have to sell and buy at the same time.”

I kind of joked with my parents about buying a place in Calgary to flip since you can't really buy a place in Vancouver and maybe they could get in the ground floor of something. But like all investment plans by the time I thought or figured it out it's already through the roof and about to pop a bubble.

half cocaine
Jul 22, 2019


Chillyrabbit posted:

Somehow Calgary has gotten the Vancouver/Toronto housing bug, FOMO strikes again in Calgary?


I kind of joked with my parents about buying a place in Calgary to flip since you can't really buy a place in Vancouver and maybe they could get in the ground floor of something. But like all investment plans by the time I thought or figured it out it's already through the roof and about to pop a bubble.

I'm sure Calgary will be able to ramp up demand with their burgeoning tech sector filled with millionaire Amazon employees like Vancouver.

Sassafras
Dec 24, 2004

by Athanatos

half cocaine posted:

I'm sure Calgary will be able to ramp up demand with their burgeoning tech sector filled with millionaire Amazon employees like Vancouver.

You can buy a house in Calgary with 5% down (20k), less than 2k in closing costs (just lawyer/notary, basically), and a 1500/mo payment.

That's practically affordable on dual walmart clerk incomes.

Cold on a Cob
Feb 6, 2006

i've seen so much, i'm going blind
and i'm brain dead virtually

College Slice


I think I'll pass on this one. I'm sure they put "ensuring the building is a great place to live" topmost in their priority list. :rolleye:

Less Fat Luke
May 23, 2003

Exciting Lemon
LOL

Less Fat Luke
May 23, 2003

Exciting Lemon
Cold on a Cob, you seeing any places this weekend?

McGavin
Sep 18, 2012

Every place I have put in an offer on in the GTA has gone for at least $300,000 over asking.

Cold on a Cob
Feb 6, 2006

i've seen so much, i'm going blind
and i'm brain dead virtually

College Slice

Less Fat Luke posted:

Cold on a Cob, you seeing any places this weekend?

Saw two places today. Both were fine, but neither ticked all the boxes. Might see more this weekend, haven’t decided yet.

Lots of condos in our area hit mls today. Hope it keeps up.

Less Fat Luke
May 23, 2003

Exciting Lemon
Nice, good luck! Condos seem way less hosed than anything else right now.

Cold on a Cob
Feb 6, 2006

i've seen so much, i'm going blind
and i'm brain dead virtually

College Slice

Less Fat Luke posted:

Nice, good luck! Condos seem way less hosed than anything else right now.

One of the two condos we were going to look at tomorrow just sold for 115k over ask ie 715k. HouseSigma had estimated it would go for ~630k. The other one we were going to see is priced at 589k and just down the street from the one that sold; HouseSigma estimating 616k for it but I bet it hits 675k at least.

Seriously might just give up at this point. I can't justify jumping into a market this hot when rents (even 2BR rents) are still dropping.

We should have pulled the trigger on something in September/October but I wanted to wait until we had access to more down payment funds on Jan 1.

I'll keep an eye on things and see if we get another 2018, but I'm not keeping my hopes up.

half cocaine
Jul 22, 2019


Cold on a Cob posted:

One of the two condos we were going to look at tomorrow just sold for 115k over ask ie 715k. HouseSigma had estimated it would go for ~630k. The other one we were going to see is priced at 589k and just down the street from the one that sold; HouseSigma estimating 616k for it but I bet it hits 675k at least.

Seriously might just give up at this point. I can't justify jumping into a market this hot when rents (even 2BR rents) are still dropping.

We should have pulled the trigger on something in September/October but I wanted to wait until we had access to more down payment funds on Jan 1.

I'll keep an eye on things and see if we get another 2018, but I'm not keeping my hopes up.

It is your patriotic duty to increase capital gains of all Canadians my friend. Don't delay your purchase now.

qhat
Jul 6, 2015


My citizenship comes through at the end of this year and I'm going to celebrate by getting the largest possible mortgage that my income can afford and will almost certainly bankrupt me a few percentage points increase down the line.

half cocaine
Jul 22, 2019


qhat posted:

My citizenship comes through at the end of this year and I'm going to celebrate by getting the largest possible mortgage that my income can afford and will almost certainly bankrupt me a few percentage points increase down the line.

Thank you for your service.

Albino Squirrel
Apr 25, 2003

Miosis more like meiosis
Looking forward to having to bail on Alberta and paying twice what my current house is worth in the Okanagan or the island.

I basically can't even fathom the lower mainland.

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Sassafras
Dec 24, 2004

by Athanatos

Sassafras posted:

I don't have it handy but I saw a good tweet early this morning, basically to the effect of:

"US average house price is now 330k, was 308k in 2008. However, due to interest rates back then, the payment on that average house was 1900/mo, is now 1200/mo."

Especially in the US with their 30-year fixed rate mortgages, one could argue that prices have a hell of a lot of room to run, but HIGH interest rates simply aren't coming back without the sort of price and wage inflation that inflates away debts even faster.

Haven't seen anything terribly interesting in Canada last few days, so here's a different USA chart-tweet along the same lines:

https://twitter.com/SolidusMax/status/1363297444927266820

I guess Canadian interest rates have upticked a bit, "best possible" mortgage rates allegedly up 0.15%.

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