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

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...

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?

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

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.

Originally Posted by motorcycleguy

Condos are never a good investment.

You are never correct.

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

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.

Originally Posted by bionicbadger

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

Originally Posted by re:load

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.

Originally Posted by 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.

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.

Originally Posted by 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.

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.

Originally Posted by re:load

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.

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.

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.

Give it to charity ....

HA HA HA HA HA Ha Ha Ha ha!

I made a funny.

Originally Posted by 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.

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.

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.