Where to put $18,000 in Savings? - Buy Investment Condo or Invest in Stock Market?

[trickychicken]

Here is my dilemma...
I have $18,000 sitting in my ING savings account.
I have no debt and make 50,000/ yr.

I do not own my own property but currently am in a comfortable one-two year situation where I am house sitting (so I pay no rent):

Do I buy a Rentable Condo in the Vancouver Real Estate Market? I was pre-approved for a 170,000 loan - that means I could afford a one or two bedroom condo in an older building in Coquitlam/Port Moody/New Westminster/Burnaby area which I could rent out for probably 800 a month or a bit more. (That should almost cover the mortagage payment).
Or should I invest my 18,000 in the Financial Market, an index fund/mutual fund?

Which makes more sense given the current Real Estate Market and Financial Market conditions?

Also - I am in my late 20's and have just finished paying off my student loan. I have 10,000 or so in RRSP but will not touch those. Other than that I do not have any investments. I will one day want to own my own home but can not afford the price of actual house (350,000 plus in my local area) yet.

I would really appreciate advice from anyone who feels they could shed some insight...:)

[motorcycleguy]

Condos are never a good investment. One of my buddies is proud that his condo is going up in price. Telling everyone how he can make $10,000 anytime. Well, he pays $450 for property taxes a month plus more in taxes!! How much are you REALLY going to get?

[bionicbadger]

Buy some stocks. CUX is still a good choice, just don't put it all in one stock.

[re:load]

a condo will make you money if you rent it out. Living in it is even better. Paying rent and making 5% interest in stocks is not a smart investment. by buying a condo, the money you put into your "rent" will come back to you when you sell the place.

[grant]

Condos are never a good investment.

You are never correct.

Woops, looks like we both made silly generalizations from 1 incident! :D

[robattoronto]

Ha! Amen ma brotha! You've become a regular evangelist for CUX. And I could'nt agree more. Closed $18 today. Looking at over $20 soon. Drill news expected anytime now and fourth quarter results expected in March.

So yep, I recommend it too. Buy me a PSP when you profit next month end.

Buy some stocks. CUX is still a good choice, just don't put it all in one stock.

[grant]

a condo will make you money if you rent it out.

Boy reload, you must be a real estate agent. "guaranteed profits! get rich in real estate!".

trickychicken, I recommend you not buy an investment condo in the lower mainland. Especially the scenario you describe.

Landlording is stressful, and you're going to cry during the months the place is empty. Rent will "almost" cover the mortgage?? So that means you'll pay $400/month on top of rent for strata/taxes/mortgage PLUS maintenance. That $5000+/yr will disapear forever never to be seen again.

The only possible justification for such a purchase is if you expect significant capital appreciation. Do you want to gamble on that? Just remember that we've experienced 2-3 years of record gains already, and condos appreciate the slowest of any type of real estate.

[bionicbadger]

Ha! Amen ma brotha! You've become a regular evangelist for CUX. And I could'nt agree more. Closed $18 today. Looking at over $20 soon. Drill news expected anytime now and fourth quarter results expected in March.

So yep, I recommend it too. Buy me a PSP when you profit next month end.

Yeah, I preach quite a bit about CUX, but its been soooooo good to me. I'm glad a few other people bought some and make a bunch of money. I rolled about a third of my RSP into CUX. It will go to $20 pretty soon and might fluctuate some, but in 2-3 years this stock will be $50 easy, maybe much sooner depending on their drilling results.

All you non believers, do some research on this company and see for yourself.

[trickychicken]

a condo will make you money if you rent it out. Living in it is even better. Paying rent and making 5% interest in stocks is not a smart investment. by buying a condo, the money you put into your "rent" will come back to you when you sell the place.

That was my thought too...

I would plan on renting the investment condo out to a tenant for at least two years. If I was able to rent it out for 800-900 a month that would cover the mortgage payment. Maintenance fee(approx 200/month) and taxes (Taxes are approx 1000/yr) I would cover from my own earned income. Plus since I am not paying rent I would still try to put extra on the mortgage from my own income.

As I mentioned earlier, I currently pay no rent where I live now (house-sitting) but I will only be in this rent-free situation for another year or two (after that I would need to rent something for myself or move into the investment condo myself). I do want to own my own home one day and thought buying the investment condo could be a good step towards that.


The Real Estate Market here in the Greater Vancouver Area still seems hot or at least very very warm, Real Estate prices are still climbing monthly.
Im worried if I do not get my foot in it I will never be able to afford an actual house. Houses start at 350k and that is for houses that are very small and in problem areas.

On the other hand, I don't want to miss out on the Stock Market when it does eventually rise again. Should I have some money in an index fund or mutual fund so I don't miss out there?

It is hard to find stratas here that will allow the individual condo owners to rent their condos out, so when such a unit comes up for sale it sells quickly, the same week it gets listed, sometimes even the same day.

[motorcycleguy]

by buying a condo, the money you put into your "rent" will come back to you when you sell the place.

Only on paper. Once you start counting,you'll see that it's not a good investment at all. House-yes,maybe.Condo-no.

I don't want to arque about it. Take a pen and paper,sit down and try to calculate your possible expenses then see if it's worth it. If it is-good for you. :)

[Degenerate]

Real estate is the way to go because land value pretty much only rises and never drops. Especially with the real estate economy right now. I purchased a new townhouse up by Yonge and Elgin Mills for $220k two years ago. 6 months later I had people offering me $300k for it but I didn't bite.

[manixc]

trickychicken: I'm just curious, If (I mean IF) you buy a condo, rent it out for a year or two, pay off the mortgage, would you live at the condo? You mention that you want to own your own house someday.

[Bob_123]

Give it to charity ....

HA HA HA HA HA Ha Ha Ha ha!

I made a funny.

[trickychicken]

trickychicken: I'm just curious, If (I mean IF) you buy a condo, rent it out for a year or two, pay off the mortgage, would you live at the condo? You mention that you want to own your own house someday.

My plan was to rent it out for at least a couple of years and then (when I am no longer housesitting and I need somewhere to live) I would live in it until I build up some equity in it. Once I had payed down half the mortgage (or so) I would use the equity I had built up in it(leverage I believe is the term) to buy a more expensive property, hopefully a house.

[MTL]

Neither. Both are bad ideas. If you're going to invest in real-estate, buy a house. It will appreciate in value much more, plus you will own the land.

[ddhaaron]

Give it to charity ....

HA HA HA HA HA Ha Ha Ha ha!

I made a funny.

Not a bad idea, Bob_123. I did this last two years through a charitable giving program. One charity received my financial gift and another was able to receive a gift in kind. Through the charitable giving receipt was able to recieve approximately 175% of my original donation back through tax filings! Not a bad return! :D

[manixc]

Neither. Both are bad ideas. If you're going to invest in real-estate, buy a house. It will appreciate in value much more, plus you will own the land.

Houses are expensive in Vancouver as trickychicken has already mentioned.

[TrevorK]

I skimmed through the thread, so I might have missed this.

But if you put all your money into the condo, you are putting all your eggs in one basket.

However, if you invest in the stock market/mutuals/etc... then you are diversifying your money (As you invest in various sectors). Which means you have a better chance of coming out ahead.

Let's face it - all these people who scream "buy a house" have never experienced a real estate drop. What happens if 2 years down the road there's a slight dip in the real estate market and you get 3000 less than what you paid for the condo? Anything's possible - I've seen it happen in Alberta, I think it was 10 years ago, and we have one of the best markets in the country.

It's really up to you - do you want to put ALL your money into one investment, or would you rather spread it out?

[ptxpress]

I skimmed through the thread, so I might have missed this.

But if you put all your money into the condo, you are putting all your eggs in one basket.

However, if you invest in the stock market/mutuals/etc... then you are diversifying your money (As you invest in various sectors). Which means you have a better chance of coming out ahead.

Let's face it - all these people who scream "buy a house" have never experienced a real estate drop. What happens if 2 years down the road there's a slight dip in the real estate market and you get 3000 less than what you paid for the condo? Anything's possible - I've seen it happen in Alberta, I think it was 10 years ago, and we have one of the best markets in the country.

It's really up to you - do you want to put ALL your money into one investment, or would you rather spread it out?

I agree...and one thing to all those who say "buy the condo", isn't the cardinal rule of investing, buy low, sell high? Why would you want to buy a condo for investment in a market that has been hot and thus, is likely overvalued? Usually, the hot market is also indicative of an increase in demand to own, or to invest in real estate. This means that either a) the market is or will slowly get flooded of too many people wanting to rent out properties (ie. be landlords), or 2) more people are willing to buy. In either case, you will have a harder time trying to rent out the place and may have to settle for less than optimal rent prices. I would say go see a financial advisor, and get a balanced portfolio, you will likely get a better return, and you can hope that real estate prices depreciate over the short run, when you will be ready to buy your own place.

[sumfunny]

Put it in your RRSP and invest it yourself if u feel comfortable or get some advice then when you want to buy a house you can always take out some money from your rrsp for the house.....

Condos = condo fees, rules, taxes, damage plus real estate has been hot for a while may be too hot.

[plucky duck]

If you invest it, pick a few items and go with it, set a stop loss. If it's up let it ride, if it's down at least you have a floor of how low it'll go.

[blackhawk]

I'd go for the condo or a small house, landlording is work though. In a few years you could maybe move into it yourself.

Never buy stocks recommended by strangers on the internet.

Realize that any capital gains from the market are taxed as income at a fairly high rate. You could get about 5% in dividends from a few different companies that are taxed a little less for you. Market is a gamble too and you should maybe take an investment course to help understand it.

If you have any debt, like credit card or car loan, pay that off first.

[lasallejai]

Trickychicken:


I think only 3 scenerios for you to choose from:

(1) Invest in the equities market whether in stocks or mutual funds, and based on a modest conservative gain of 7% a year you will have about $ 2,608 gained in two years. If you cash that in you get about $1,795 after tax based on your marginal bracket of about 31.15%.

(2) Buy an apt or condo and rent it out to offset the mortgage payments. A 170K mortgage based on current open variable rate is about $900 based on a 25 year amortization period so it seems like the rent may be able to cover the monthly mortgage payments, but then the property tax and the condo fees will be your mandate. The gains from this investment will come from the actual appreciation of the apt or condo when you sell it, and I do not see a very bright future for this one because your on going costs are the condo fees and the property taxes as carrying charge. Say you have to pay $350 a month for those combined and it will amount to $4200 a year or $8,400 for two years, and say after two years you sold the property and ripped a $4,000 gains(after lawyer fees, capital gains income taxes and commission) you would have actually lost about $4,000. Nonetheless, the mortgage outstanding at that time would be about $162K so you would have actually paid down $8,000 to offset the loss; therefore you would have made about $4,000. It seems a lot of work though.

(3) Based on $50K income you are able to put $9,000 into your RSP each year, and if you do that for the next two years you will get back about $5600 in total from the tax returns plus you will have another 18K in your RSP. Later on if you want to utilize the first time home buyer's plan to borrow $20K from your own RSP as down payment the fund is there. I favour this scenerio much more than the other two. : )

[frogger]

I would say put it into your RRSP, if you only have 10K in your RRSP currently, chances are you've got enough unused contribution room that you could put just about all of it in there. Then you would get a bunch back in your tax return, probably about a third. Do it monday if you want to get the tax refund in the next few months though.

[vr6man25]

Everyone in this thread needs to Read more.

Putting your money in Real Estate is a better option then in an RSP or mutual FUND.

I SUGGEST EVERYONE GO AND READ A BOOK CALLED

"RICH DAD'S PROPHECY" by ROBERT KIYOSAKI.

[lasallejai]

I have to disagree, because circumstances may vary and it really depends on personally situations. Although real estate seems to be the ultimate choice, but not necessarily so, especially in Canada when the real estate appreciation rate is rather slow comparing to may other places in the world due to the vast size of land we possess. Let me share with you a personal real case: my parents bought a very decent condo right on the lake in down town Toronto in 1982 for $140,000 and my mom sold it in 1998 for $255,000(245K after commission). You may say "wow" when you first look at the numbers, but then if you calculate the average compound annual rate of return on the property it turns out to be about 3.5%. Also, if you take inflation into consideration the 3.5% annual gain is wiped out completely. In the 80's the inflation rate was way up there in the 7 to 8% neighbourhood and gradually died down in the 90's to about 4 to 5%. What I am trying to say is that $140,000 in 1982 was probably worth more than $252,000 in 1998. Another thing is in 1982 when my parents bought the luxury condo unit the mortgage rate was outrageous: 1 year fixed term was 16.5% and they took a 5 year term for 23.5%! Of course the bank savings account rate was about 10% then as well.

I think it is inevitable if you mortgage a home for yourelf and your family to live in, but then if you borrow money to buy a property as investment you may only make money during boom time like the last 7 years in Canada, especially the 100K captial gains exemption was dropped in the 90's. Who knows much longer the real estate market will sustain this time. I have seen how the real easte in the 80's boomed and then just crumbled abruptly in 1991 for 5 years. I purchased my condo in 1992 during the midst of the recession and it cost me 161K, but just two years before that when it was brand new the previous owner had bought it for 249K! 90K difference in just two years, and that was a lot of money in 1990. Just my two cents.

[TrevorK]

Everyone in this thread needs to Read more.

Putting your money in Real Estate is a better option then in an RSP or mutual FUND.

I SUGGEST EVERYONE GO AND READ A BOOK CALLED

"RICH DAD'S PROPHECY" by ROBERT KIYOSAKI.

Dumbass.

Listen.

The first rule of SAFE investing is diversification.

Read that again.

DIVERSIFICATION.

You can't diversify if all your money is sunk into a condo.


Buying a condo to rent isn't a bad idea. Putting all your money into one investment is.

[turanuk]

ROFLMAO yeah my dad made me read that idiot's book. The guy is a complete ******, just goes on and on about he gets these "deals" with no specifics :p. completely useless.

[vr6man25]

thanks for your opinion TRevork
Firstly my name is not dumbass.
Secondly I never said to invest in a condo or dump all your money into just a condo. there
Thirdly DIVERSIFICATION is something that society, teaches everyone to do to feel safe and secure. But if u dont "mind your own Business" then DIVERSIFICATION is pointless.
Lastly thanks for your post, but all i am saying is to READ more and
u then will understand my point of view. I didnt mean to come off rude.

[ptxpress]

thanks for your opinion TRevork
Firstly my name is not dumbass.
Secondly I never said to invest in a condo or dump all your money into just a condo. there
Thirdly DIVERSIFICATION is something that society, teaches everyone to do to feel safe and secure. But if u dont "mind your own Business" then DIVERSIFICATION is pointless.
Lastly thanks for your post, but all i am saying is to READ more and
u then will understand my point of view. I didnt mean to come off rude.

I don't think that anyone said that real estate was a bad investment, all we were saying is that real estate may be a bad investment AT THIS TIME. Especially with his current situation. Did you read the thread carefully, because if you did, this should be blatantly obvious. Anyway...I'm not interested in starting a war here...just letting you know that you perhaps misinterpreted what we were saying.

[advantage21]

I would not recommend the Rich Dad series of books to any one interested in seriously investing. Kiyosaki makes it sound way too simplistic and some are just simply wrong:

http://www.johntreed.com/Kiyosaki.html

[lasallejai]

I have to agree, because I have read part of the book since a friend of mine asked me to do so, and I found so many flaws in his advices. Being a Chartered/Certified Financial Planner I feel sad knowing that the general public are being misinformed in so many areas in dealing with their financial matters. I really wonder how that book could become so popular. :mad:

[Thimble]

investing in a condo *might* make sense if you're paying thru the gills for rent already.

however, if you plan on buying and renting, you're getting yourself into a whole other can of worms...

eg. difficulties in finding a tenant (1 month vacant = $1000+ out of your pocket), having a crappy tenant (despite credit checks)...

plus, if you've got $18000 in savings, putting it into a condo leaves you with nuthin' for emergencies.

be careful out there: you're exactly the kind of target the weasels of the world like targetting - a person with a little extra cash who's got the "itch".

[blackhawk]

everyone wants to spend your money :lol: .................just like the commercials


people writing books on investing dont write for free, they are touting something...infomercial...or making money on the book


dont forget tax implications for someone in your earning/tax bracket

real estate can have some advantages taxwise as well and capital gains and dividend income are taxed less than interest income

preferred or high dividend shares are generally the safest investment as well

you might want to consider talking to an advisor, fee only, not a salesman

[TrevorK]

thanks for your opinion TRevork
Firstly my name is not dumbass.
Secondly I never said to invest in a condo or dump all your money into just a condo. there
Thirdly DIVERSIFICATION is something that society, teaches everyone to do to feel safe and secure. But if u dont "mind your own Business" then DIVERSIFICATION is pointless.
Lastly thanks for your post, but all i am saying is to READ more and
u then will understand my point of view. I didnt mean to come off rude.

You said that putting money into real estate vs RRSP is a better option for the poster.

Which is completely wrong.

[Singh_21]

I suggest you save a bit more for 2 yrs you will be living rent free and buy atleast a town house if not semi detached..Condas are cr!p.

[Singh_21]

Everyone in this thread needs to Read more.

Putting your money in Real Estate is a better option then in an RSP or mutual FUND.

I SUGGEST EVERYONE GO AND READ A BOOK CALLED

"RICH DAD'S PROPHECY" by ROBERT KIYOSAKI.

In most situations...Yes, I will agree with you.

[Singh_21]

Dumbass.

Listen.

The first rule of SAFE investing is diversification.

Read that again.

DIVERSIFICATION.

You can't diversify if all your money is sunk into a condo.


Buying a condo to rent isn't a bad idea. Putting all your money into one investment is.

Yes, diversification but 18,000 isnt a lot of money to put in real estate investment.People just jump the diversification bandwagon without properly understanding a persons scenraio. For some people, high risk investments are a no go when they just starting out and low risk investments prolly wont give a a better retun than the mortgage interest on the balance of the condo. With 18,000 he can get his foot in the real estate and then deicde whether he wants to diversify his investments or pay off mortgage a little bit more and see if his property appreciates in value

[sleepyguy]

Well, we invested in a downtown condo. We have a renter for the first 5 years minimum and a few others lined up. We figured that if we get the itch to live the 'downtown' lifestyle we could move in as well and forget the duties of 'house' living + we would be making some good $$$ on the house anyway.

If you have alot of $$$, house remodelling can make a KILLING! I would say the minimum to start off is around 400K though.

[utalking2me]

Bought a condo over 10 years ago o/s Vancouver. Rented it out. 5 tenants over that time - latest one now slow on the rent. I'll have to get a Notice to end tenancy this week.

Just joined the strata council last month. Lots of problems - leaks, vandalism, liability issues, etc - it's a huge hassle. Only now, after all these years, the appraised value is higher than the original cost.

[utalking2me]

Read 'Sleeping With The Devil' by Robert Baer. Baer's an ex-CIA agent in the Middle East and he describes the House of Sa'ud's vulnerabilities and links to Washington. (BTW, Baer's gonna be ultra famous in a few months - George Clooney will play him in 'Syriana', based on his other exploits.)

Oil can only go up.

Buy Oil stocks.

[basis]

Your cashflow analysis looks pretty sad: you put your down payment down and get a mortage. The rent covers the mortgage but not the maintenance fees and property taxes. As a rental property taxes are probably $1500 to $2000. So you buy this property and you have to pay $4,000 negative cash flow per year and you don't get a any earning on your initial down payment. Rental property should never be in a negative cash flow position, breakeven is highly desired. The problem you have negative cash flow is that the property price doesn't generate enough rental income unless you put in a huge downpayment (which subsequently doesn't earn any interest).

This strategy if you did it 4 years ago would be possible since the property price would be much lower than today. Could this indicate that the property is overpriced?

The gain or loss on any property is locked in when you buy it. If you buy in an overpriced market any gains would be limited or losses result. If you buy in a depressed market you have a better chance of a gain if the price goes up. In a depressed market your loss potential is muted but gains only happen in the near or far future.

Also, when buying property there should be two main reasons: personal shelter or rental property. If you are going to live in it then the "financial investment" changes status to a cost of living expense. The cost of personal shelter depends on each person and what they are willing to pay to live in the place. You have to live somewhere if you sell your house again. Rental property should be justified by the financial prospects.

For you just invest your money is the Canadian equity stock market and you might get a 5% to 10% return. Then after two years get a house which you wanted in the first place.

If you buy the condo don't forget to include at least 6% commission fees when you sell and when you buy another place property transfer tax. So if you sell a rental place that went up 5% you take a loss and at the same time lose the negative cash flow and the lost interest on the downpayment.



I would plan on renting the investment condo out to a tenant for at least two years. If I was able to rent it out for 800-900 a month that would cover the mortgage payment. Maintenance fee(approx 200/month) and taxes (Taxes are approx 1000/yr) I would cover from my own earned income. Plus since I am not paying rent I would still try to put extra on the mortgage from my own income.

The Real Estate Market here in the Greater Vancouver Area still seems hot or at least very very warm, Real Estate prices are still climbing monthly.

[grant]

Your cashflow analysis looks pretty sad:

And yet he still thinks it's a good idea to sink $400/mo into this albatross...

I guess some people don't want to listen to reason. Good luck with your condo.

[Evil Techie]

condos/apartments up on burnaby mountain, in UniverCity is sure to rocket up in a few years

makes great investment now
im gonna look into investing one of them soon

[TrevorK]

Yes, diversification but 18,000 isnt a lot of money to put in real estate investment.People just jump the diversification bandwagon without properly understanding a persons scenraio. For some people, high risk investments are a no go when they just starting out and low risk investments prolly wont give a a better retun than the mortgage interest on the balance of the condo. With 18,000 he can get his foot in the real estate and then deicde whether he wants to diversify his investments or pay off mortgage a little bit more and see if his property appreciates in value

He said he needs this money later on to purchase a property he wants - which shows he doesn't really want to risk it....Which is why I'd suggest not putting it into one investment...

[Singh_21]

He said he needs this money later on to purchase a property he wants - which shows he doesn't really want to risk it....Which is why I'd suggest not putting it into one investment...

K. I get it.

[hagbard]

Buy some stocks. CUX is still a good choice, just don't put it all in one stock.

Looks very risky to me.

[BoxsterS]

It all depends on what you want to do with your $18,000.

If you want to lose a considerable percentage then I would take stock market advice from people on this forum and compliment it with advice from the Yahoo message boards. This combination is definitely win-win.

If you want to buy property, I would look into trailers. Your principal will only buy you a small piece of equity and a large mortgage on a home. You should also consider putting it towards a condo with monthly fees that rival the rent for small apartments.

Or you could put it into a nice safe savings account and live large on the interest accrued from 2.5 % APR.

I would roll the dice on this one.

[guest10586]

Morgages you can lose money on as well. Just in taxes and stuff.

The return on investing is pretty good and a lot easier to take care of then a house or condo imo.

[grant]

condos/apartments up on burnaby mountain, in UniverCity is sure to rocket up in a few years

makes great investment now
im gonna look into investing one of them soon

what the... are you the promotor for that silly development??

a) it is LEASEHOLD... leasehold property never rockets
b) do you seriously want this guy to rent to STUDENTS?? good luck finding a WORSE class of tenant. Young, probably not working, prone to partying, and high turnover.

get real.

[bionicbadger]

Looks very risky to me.

Up 5% again this morning.
~$4/share to ~$18/share in the last 12 months.

Find me another investment like that please Hagbard.

[crazyboie]

Up 5% again this morning.
~$4/share to ~$18/share in the last 12 months.

Find me another investment like that please Hagbard.

Well jumping in at $4 seems a lot less riskier than jumping in at $18... I guess it depends on what you're comfortable with. Do you really believe it will continue to grow?

[bionicbadger]

Well jumping in at $4 seems a lot less riskier than jumping in at $18... I guess it depends on what you're comfortable with. Do you really believe it will continue to grow?

Yup. It will fluctuate some, but in 2-3 years it will be $50 easy, maybe sooner depending on their drill results. I'm comfortable enough with it that bought another 1000 shares of it in my RSP last week.

[crazyboie]

Yup. It will fluctuate some, but in 2-3 years it will be $50 easy, maybe sooner depending on their drill results. I'm comfortable enough with it that bought another 1000 shares of it in my RSP last week.


Dammit... now I have 'the itch' :rolleyes: Better start doing some research :razz:

[ctam]

It all depends on what you want to do with your $18,000.

If you want to lose a considerable percentage then I would take stock market advice from people on this forum and compliment it with advice from the Yahoo message boards. This combination is definitely win-win.

If you want to buy property, I would look into trailers. Your principal will only buy you a small piece of equity and a large mortgage on a home. You should also consider putting it towards a condo with monthly fees that rival the rent for small apartments.

Or you could put it into a nice safe savings account and live large on the interest accrued from 2.5 % APR.

I would roll the dice on this one.

Putting the money into a saving account? Do you know that the avg inflation is 2.7%. There is no growth at all. 2.5% of 18,000 is only 450 a month. I don't really consider that as living large.

Trailers?? Most of the property that holds trailers are low value and low demand. Unless is at tourist area, land takes a long time (10,20,30 years)to raise in prices.

Condo is good if u have good tenants. It really up to u to see what u want. If you love real estate, get into it. If u like stocks get into that. There is money to be made in either way. The most important is to do something u have an interested and do your homework.

I wouldn't suggest follow hot stock tips off the net. That is the same as going down the street and asking anyone for suggestions. Most important to look at is ppl who have done it. They can at least give u advice on what to and what not to look for.

It's great that u are considering to invest with the money. Leaving in the bank is the worst thing you should do. Actually the wrost is spending it :D.

[grant]

Trailers?? Most of the property that holds trailers are low value and low demand. Unless is at tourist area, land takes a long time (10,20,30 years)to raise in prices.


The idea with trailers is you can buy them very cheap ($20,000 = $5,000 down) and make fair return renting them out ($800 - $400 pad - $200 mortgage = $200/mo profit)

[amorak]

Yeah, I preach quite a bit about CUX, but its been soooooo good to me. I'm glad a few other people bought some and make a bunch of money. I rolled about a third of my RSP into CUX. It will go to $20 pretty soon and might fluctuate some, but in 2-3 years this stock will be $50 easy, maybe much sooner depending on their drilling results.

All you non believers, do some research on this company and see for yourself.


You're a dirty, dirty stock wh0re - Pimping your stock so others will buy it, simply to increase your profits...

Having done an analysis of CUX, it is over leveraged and under-capitalized - I would hardily suggest selling it now if you have any investment intelligence. It will crash the second there is any waiver of confidence in the oil sector.

[bionicbadger]

You're a dirty, dirty stock wh0re - Pimping your stock so others will buy it, simply to increase your profits...

Having done an analysis of CUX, it is over leveraged and under-capitalized - I would hardily suggest selling it now if you have any investment intelligence. It will crash the second there is any waiver of confidence in the oil sector.

Yeah I'm a dirty Wh0re...
I mentioned this stock a year ago:
http://forums.redflagdeals.com/showpost.php?p=603292&postcount=157
Look at the chart for the last year:
http://finance.yahoo.com/q/bc?s=CUX.TO&t=1y

Sorry you were too paranoid and missed out your chance to more than quadruple your money.

As for pumping and overvalued. A Cannacord report from last week has this in it:
“I think that in two years it’s quite possible to see Centurion Energy at $100.00 a share�, says Josef Schachter who is fast becoming a folk hero to many followers with some of his market calls in the oil patch of late.

...

What will make this magic appear for Centurion? Some of the deeper
drilling scheduled that happens about four to six months down the road, will tell us if the Jurassic zones are there, down at the 12 and 15,000 foot level, then you can see wells that deliver up to 50 million cubic feet a day, Schachter says, instead of the mere 30 they are getting on some currently. For further details on that area of the world in Egypt, he suggests people need to take a look at the Apache website ( www.apachecorp.com) for what they have accomplished in the area.

This is from a guy who is on ROBTV quite a bit.

Yes its over 100 times earnings based on 2 years ago data. New earnings will be out shortly and production has continued to increase steadily. If you look only at P/E it may not appear that great, but look deeper at their production, drilling, and lands. Yes it will fluctuate and might go down a bit, but pull this post out in a year or 2 or 3 and we'll see who's correct.

[hagbard]

Up 5% again this morning.
~$4/share to ~$18/share in the last 12 months.

Find me another investment like that please Hagbard.

Reminds me of Nortel. Things can head the other way in a big hurry, I still haven't recovered from that one.

[ctam]

Stock can either goes up or goes down. The rule is to buy low and sell high. Looking at the chart, are we buying it low or buying it high??


Yeah I'm a dirty Wh0re...
I mentioned this stock a year ago:
http://forums.redflagdeals.com/showpost.php?p=603292&postcount=157
Look at the chart for the last year:
http://finance.yahoo.com/q/bc?s=CUX.TO&t=1y

Sorry you were too paranoid and missed out your chance to more than quadruple your money.

As for pumping and overvalued. A Cannacord report from last week has this in it:

This is from a guy who is on ROBTV quite a bit.

Yes its over 100 times earnings based on 2 years ago data. New earnings will be out shortly and production has continued to increase steadily. If you look only at P/E it may not appear that great, but look deeper at their production, drilling, and lands. Yes it will fluctuate and might go down a bit, but pull this post out in a year or 2 or 3 and we'll see who's correct.

[BoxsterS]

Putting the money into a saving account? Do you know that the avg inflation is 2.7%. There is no growth at all. 2.5% of 18,000 is only 450 a month. I don't really consider that as living large.

Trailers?? Most of the property that holds trailers are low value and low demand. Unless is at tourist area, land takes a long time (10,20,30 years)to raise in prices.

Condo is good if u have good tenants. It really up to u to see what u want. If you love real estate, get into it. If u like stocks get into that. There is money to be made in either way. The most important is to do something u have an interested and do your homework.

I wouldn't suggest follow hot stock tips off the net. That is the same as going down the street and asking anyone for suggestions. Most important to look at is ppl who have done it. They can at least give u advice on what to and what not to look for.

It's great that u are considering to invest with the money. Leaving in the bank is the worst thing you should do. Actually the wrost is spending it :D.


Actually, the initial monthly return on a principal of $18,000 at 2.7 % APR is about $41. But I do like your math better. As for stocks, perhaps would you like to entertain us with the topology of your peaks and valleys of your portolio. Unless you have some inside information, you'll never see a major return. The only sensible advice when it comes to stocks is to have a balance of stocks and bonds.

[ctam]

Actually, the initial monthly return on a principal of $18,000 at 2.7 % APR is about $41. But I do like your math better. As for stocks, perhaps would you like to entertain us with the topology of your peaks and valleys of your portolio. Unless you have some inside information, you'll never see a major return. The only sensible advice when it comes to stocks is to have a balance of stocks and bonds.

Sorry, my math is off by a bit. :P In regards to what to invest and what not to, it depends on your risk level and your time frame. To blurb out what is the best is like telling everyone that the best car for them is a NASCAR stock car. It might be best for racing but not for family driving. It is impossible to pick one stock/one investment strategy/type/product for everyone. The only method is do your own research. Go and find out what is best for you. This involves, reading lots of books, going to different financial planner and looking at different strategies.

Yup, unless u have inside info, u will never see a great return. Or you are very lucky. If it is the latter, then you are more gambling than investing.

[hot_potato]

I think it all depends on the type of property and the location. Back in '83 they were selling condo units at Queen's Quay Terminal for about $300,000 on the harbourfront. In 2000, the same unit was selling for $2,500,000! Overall, I think luxury properties tend to maintain their value more compared to average condos. In your case, since $18,000 is not enough to invest in a higher end property, I would advise against purchasing a condo (and expect to make any money) unless you were living in it yourself. In which case, it would make more sense because you could build equity instead of squandering it on rent. Since you're living rent free, it's a good idea to try to save as much as possible and put your money in a diversified portfolio (stocks, mutual funds, bonds). When you're ready to move out in two years time, I would take a look again at the condo market with an eye on purchasing (of course, it would depend on market conditions - hard to say if mortgage rates will stay as low as they have been). In those two years, you will have saved more money for a bigger downpayment and your choice in properties will increase. If there is a lull in the housing market two years down the road, try to buy a condo/house closest to the most desirable neighbourhood as possible that you can afford. Good luck!

I have to disagree, because circumstances may vary and it really depends on personally situations. Although real estate seems to be the ultimate choice, but not necessarily so, especially in Canada when the real estate appreciation rate is rather slow comparing to may other places in the world due to the vast size of land we possess. Let me share with you a personal real case: my parents bought a very decent condo right on the lake in down town Toronto in 1982 for $140,000 and my mom sold it in 1998 for $255,000(245K after commission). You may say "wow" when you first look at the numbers, but then if you calculate the average compound annual rate of return on the property it turns out to be about 3.5%. Also, if you take inflation into consideration the 3.5% annual gain is wiped out completely. In the 80's the inflation rate was way up there in the 7 to 8% neighbourhood and gradually died down in the 90's to about 4 to 5%. What I am trying to say is that $140,000 in 1982 was probably worth more than $252,000 in 1998. Another thing is in 1982 when my parents bought the luxury condo unit the mortgage rate was outrageous: 1 year fixed term was 16.5% and they took a 5 year term for 23.5%! Of course the bank savings account rate was about 10% then as well.

I think it is inevitable if you mortgage a home for yourelf and your family to live in, but then if you borrow money to buy a property as investment you may only make money during boom time like the last 7 years in Canada, especially the 100K captial gains exemption was dropped in the 90's. Who knows much longer the real estate market will sustain this time. I have seen how the real easte in the 80's boomed and then just crumbled abruptly in 1991 for 5 years. I purchased my condo in 1992 during the midst of the recession and it cost me 161K, but just two years before that when it was brand new the previous owner had bought it for 249K! 90K difference in just two years, and that was a lot of money in 1990. Just my two cents.

[rc51]

Real estate is the way to go because land value pretty much only rises and never drops.


Tell that to the majority of mortgage holders back in the 80's when interest rates hit 18%-19%. If I remember correctly, people were simply walking away from their pretty much 'worthless' properties..they owed more than the properties were worth at the time.

Real estate values can go down... for many reasons, general economic conditions...zoning changes, etc etc.

[grant]

rc51 you're wasting your time... anyone who comes up with nonsense statements like that are impossible to reason with.

[plucky duck]

Saying property value never drops is like a stock is going to fly high and forever, not gonna happen.

If you're gonna go in doing a half ass job, might as well not do it. There are risks to real estate as well.

[swmc]

I know this thread is a little old but I stumbled on it and have to clear up a lot of misconceptions.

First, CUX is a high risk stock. Results are based not on tangible supply and demand, but a "chance" at finding a huge pocket of natural resources. (remember Bre-X?). Even so, look at the company's fundamentals. Do assets greatly outweight any debts? If the P/E ratio is so high, does the annual rate of growth justify it (Growth rate should always be much greater then PE)? Is there enough cash on hand to whether a potential bust in drilling?

If you want to truly understand the market, read Peter Lynch's book "One Up On Wall Street". This guy ran the largest and most successful mutual fund before retiring. He provides solid examples and backs them up with data, unlike Kiyosaki.

Stocks and mutual funds are not taxed at FULL rate. They are half taxed. That's why the rich get richer. The Canadian government encourages people to save up and invest because it is great for their long term financial health, and because you are only taxed on HALF of your capital gains. So let's say you bought and sold stocks and made 100k. You only calculate the tax for 50k.

There are only two times you should buy real estate:
1) when you are going to live in it.
2) when you don't need to mortgage it.

Let me explain number 2. Say you had $18k and put it as a down payment for a $170k condo and you might get $800/month in rent. As mentioned, that merely covers the mortgage. Yes you can write off the maintenance and taxes off your own income, you still end up losing money.

But let's say you had $170k and just bought the condo outright. Now you have all that equity. Go to the bank. Get a mortgage on that equity (safe to go with no more then 75%, but you can go higher). Take that money and put it in something dead safe like an index-linked fund or Royal Bank stock. Now rent out the condo. Now you can write off the interest paid on the mortgage because you used the money for investments. The rent also covers the interest. And on top of that, Royal Bank stock performs on average of 20% a year, which is only half taxed. Simple.

There's actually a lot more to this and even more ways to make money, but this is very basic info everyone should have.

Finally, real estate is about timing and it is hard to predict.
Yes, that condo on Queen's Quay sold for 300k in '83 and is worth 2.5 million now, but in '86 it was worth 2.5 million, then in '88, worth 250k. So depending on when you bought it, you could've either made a lot of money, or broke even.

[gorf]

rc51 you're wasting your time... anyone who comes up with nonsense statements like that are impossible to reason with.

Its true, the market was flooded with homes and buyers wouldn't assume mortages at such a high rate, they were looking for clear titles.