I think a lot of it happened simply because they knew how many people had no savings or way to pay their bills and it would be a disaster and collapse the economy. If let's say 30% of the country was totally broke, it's going to trickle down to so many businesses loosing revenue causing more layoffs, etc. I don't like the government stepping in, but you have to blame the broke people, not the government for it.
Negative interest rates ?
- Thread starter pfi572
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I think a lot of it happened simply because they knew how many people had no savings or way to pay their bills and it would be a disaster and collapse the economy. If let's say 30% of the country was totally broke, it's going to trickle down to so many businesses loosing revenue causing more layoffs, etc. I don't like the government stepping in, but you have to blame the broke people, not the government for it.
Cdnfireman
Active VIP Member
Define good debt.....your rentals are “good debt” until they sit vacant because of the economy.....that good debt turns into bad debt in a hurry...and someone with the discipline to hit their mortgage hard won’t be buying a ton of toys etc...they’ll be aware that they can get them on a low interest HELOC once they get the mortgage taken care of. Your philosophy can work well if everything goes your way, but it can also destroy you financially too if things go south. Lots of people that have leveraged one rental against the others have lost their ass.....
Cdnfireman
Active VIP Member
This propping up of people will only be short term....the government will eventually run out of money and have to raise interest rates to attract bond holders. That will start the vicious cycle of borrowing and interest increases....and the interest increases will slaughter the people holding big debt....always has...
Frosty19
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The more I read this thread, the more it basically just sums up no one can really predict the future especially right now. Most people seem to be locking in 5 years on their mortgage (some trying for 10) at the historically low rates
Easy to say what's good and bad after it's already happened. Buying and investing is a risk regardless, theres still "good" risk imo
As long as the ratio of what you bought versus what you owe is a safe amount you should be ok barring any uncontrollable circumstance and you still have a life to live
Easy to say what's good and bad after it's already happened. Buying and investing is a risk regardless, theres still "good" risk imo
As long as the ratio of what you bought versus what you owe is a safe amount you should be ok barring any uncontrollable circumstance and you still have a life to live
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Why would they ever be vacant because of the economy? People always need a place to live, and in uncertain economic times more people want to rent rather then buy. Rental rates will go down sure, but there will always be renters for starter homes. In 6 years i've never had one vacant more then a month looking for a tenant, and most tenants stay a long time. If you have rentals, you need to have the funds available to carry them in the event they are vacant for a bit. But if one is vacant more then 2 months, you are asking too much for it. Some people are foolish and let them sit instead of just lowering the price. To me, $100 even $200 a month isn't worth it. Get a decent tenant in there and you're still making money even if not as much. If you own 3 rentals for 25 years and pay them off, that's an extremely good retirement fund all on it's own.
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JayT
Active VIP Member
So if interest rates go to 20% again where would you be at? Right now they're printing an enormous amount of money and inflation is going to be a problem within the next two years. So I'm just curious if you have a plan for that scenario. I cant imagine you could raise rent enough to cover that kind of interest rate hike. Would you still be able to break even at the end of the day? Obviously people are going to want to rent if interest rates go that high so you wouldn't have a problem with vacancy.
If rates go that high, rent prices will follow, and you're right rent demand would skyrocket. There is no way rates could ever get that high, I bet like 5% of the population at most could afford their mortgage at that rate, and probably even less in terms of rent high enough pay for that kind of mortgage. If rates did somehow go that high, i'd just sell 1 rental that was nearest or at renewal maybe, and pay off all the other mortgages as they came up to renewal if rates were still insane. So other then maybe selling 1 at a low price, having cheap money while rent skyrockets would be good profit for a bit as all my renewals are spread out.
Frosty19
Active VIP Member
I wouldnt be worried about a rental property if rates went up 18% of where they are now in the course of even 10 years. The entire economy would come into question and the "dollar" would hold no true value in society if it was that volatile IMO
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JayT
Active VIP Member
So basically what you're saying is everybody is up schitt creek. In that scenario what would be the best position to be in? I feel like having no debt and money in the Bank to take advantage of interest rates would be the best-case scenario. And maybe some precious metals, something that holds intrinsic value.
JayT
Active VIP Member
Would you actually be able to sell a property? There would not be a lot of people buying at that point, and there would be a lot of people selling their rental properties all at the same time. Prices of property would drop so fast it would make your head spin. I am honestly curious about how to handle that scenario the best because I feel like this is coming in our near future. It took Venezuela 10 years to go from an economic Powerhouse to a socialist sh°thole, Trudeau has been in power for 5. I truly hope it doesn't happen but I think we are headed for some seriously bad times
Pedaling pete
Active VIP Member
Having off shore bank accounts and having some gold bars in a vault in Switzerland never hurt. But most y'all are just going to have to tough it out lol
Pedaling pete
Active VIP Member
I dont think you have to worry about 20% rates any time soon . No country would be able to afford that. At some point this system will collapse and we'll come up with a new one. Just a matter of when.
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Bnorth
Active VIP Member
Bunch of different viewpoints in here but the fact that everyone is even talking about it and managing their debt in some form is proof you're on the right track.
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Bogger
Bogger of the GBCA
I'm envious of Cycles position, to be holding multiple rentals even with partial debt and an uncertain economic future is a decent place to be. If we were to get to the point where we are looking at double digit interest rates a lot of folks would be unable to maintain thier principal residence let lone worry about additional properties, in that scenario Cyle would end up less profitable but I doubt he'd end up taking a loss, maybe on one property but that would enable him to maintain and leverage the other two.
I want to be in the "debt-free" position ASAP, but that's my preference does not mean that Cyle's logic is flawed, it's just personal choice. If interest rates took off into double digit territory I'd be able to manage that comfortably at the end of my most current mortgage, I will owe less than 1/4 of my current property value and if need be could enter into an interest only type structure until rates settled down. I'm not relying on the sale of my property to finance my retirement, the wife and I have a decent savings and investment plan which we will ramp up when the house is paid off and she will collect a very livable pension. I also plan to continue part time consultant work after I retire from the rat race..... I wish I had of invested in properties back in the late 90's & early 2000's instead of toys & booze (In 1999 a nice 1400 sq/ft house in Edmonton could be had for $110K) but I didn't so now I'm planning to do what is most comfortable for me given the current times. They are not making anymore lakes in Alberta so I want my property paid off with zero liens
I want to be in the "debt-free" position ASAP, but that's my preference does not mean that Cyle's logic is flawed, it's just personal choice. If interest rates took off into double digit territory I'd be able to manage that comfortably at the end of my most current mortgage, I will owe less than 1/4 of my current property value and if need be could enter into an interest only type structure until rates settled down. I'm not relying on the sale of my property to finance my retirement, the wife and I have a decent savings and investment plan which we will ramp up when the house is paid off and she will collect a very livable pension. I also plan to continue part time consultant work after I retire from the rat race..... I wish I had of invested in properties back in the late 90's & early 2000's instead of toys & booze (In 1999 a nice 1400 sq/ft house in Edmonton could be had for $110K) but I didn't so now I'm planning to do what is most comfortable for me given the current times. They are not making anymore lakes in Alberta so I want my property paid off with zero liens
rsaruk
Active VIP Member
Just a follow up, I was able to negotiate a bit more off and ended up signing for 1.8 locked in for 5 years.
Cableguy
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hevy_chevy67
Active VIP Member
HSBC now offering .99% on 5 year variable. Apparently it has to be a new purchase though.
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- #218
pfi572
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Bnorth
Active VIP Member
I signed my renewal last week. 1.79 for a fixed 5er. I switched from a monoline lender to a bank so I could have the option of securing a line of credit against up to 80% of my equity. We will only do this if we pickup another property and need more down payment. Either a bigger property for us or a rental.
Frosty19
Active VIP Member
Saw an article title stating today certain banks were offering 0.99% 5 year variable rate mortgages and that was a first in Canadian history.
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