If you want to say something, just say it.Just a Guy wrote: ↑27 Dec 2017 00:58 There are people in this world who only ever see the problems, and there are people in this world who look for solutions. I think, by the postings, it's easy to decern which is which.
Those who look for problems will probably find them because that is what they are looking for.
Those who look for solutions will probably find hem because that is what they are looking for.
The one type of person will never understand the other.
Housing Bust 2017
Re: Housing Bust 2017
Re: Housing Bust 2017
Depending on her choice of career, she may be better off not worrying about real estate while she is young. If she is only renting, she can easily move to another city when a better opportunity shows up. This would be my advice for anyone pursuing a career in IT, for instance.
Re: Housing Bust 2017
This might be a solution in isolation, but I am pretty sure Brian wants her to live close by.gobsmack wrote: ↑27 Dec 2017 07:34Depending on her choice of career, she may be better off not worrying about real estate while she is young. If she is only renting, she can easily move to another city when a better opportunity shows up. This would be my advice for anyone pursuing a career in IT, for instance.
For the fun of it...Keith
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Re: Housing Bust 2017
That's a luxury. It can come with a steep price tag.
Variable Percentage Withdrawal (finiki.org/wiki/VPW) | One-Fund Portfolio (VBAL in all accounts)
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Re: Housing Bust 2017
Yea that is the real dilemma for many parents these day, especially in the GVA and GTA, but more so the GVA I think.
For the fun of it...Keith
Re: Housing Bust 2017
Yes I'd like her to live fairly close but understand that if she has to move for a job she should go for it. Hopefully as a stepping stone that she could use to get back closer a some point. I'm afraid she's somewhat dead ended where she is now and not in her educated field. Monies pretty good and works from home mostly.
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Re: Housing Bust 2017
The Globe and Mail, Dec 25
Worried parents buying homes for school-aged kids
What I find curious is how she has her kids' future planned in advance. Braden will stay in Ajax for the rest of his life. Sydney will stay in Brooklin. Both will rent from the mom until she is gone (never mind the wishes of their future partners). To assume ownership of their own homes, they will have to pay a capital gains tax. Shouldn't be a problem... they will also inherit her primary residence. I wonder if she has any retirement savings or pension.
There I go again, looking for problems where others are looking for solutions.
Worried parents buying homes for school-aged kids
The houses have doubled in price, so I guess she did very well (despite negative cash flow).Jennifer Johnson felt she didn't have time to wait. The single mom of two children, she watched as house prices in her Ajax, Ont., neighbourhood soared year after year.
"When houses were starting to go up 20 per cent each year, I was worried about my kids' futures," says Ms. Johnson, a global bid manager and proposal writer.
So, in 2014, with her own house paid off, she decided to take the real estate plunge again, buying her son, Braden, then 10, a home in Ajax for $410,000. In 2015, she purchased a $430,000 home in Brooklin, Ont., for her daughter, Sydney, then 12.
Having made 20-per-cent down payments on both mortgages, Ms. Johnson, 50, finances the properties by renting both out for a total of $4,200 a month. She says the arrangement costs her an additional $1,000 out of pocket monthly.
The decision to buy homes for her kids has meant that Ms. Johnson has had to cut back on expenses. "We never eat out," she says. "We buy a lot of our things from Value Village. My car is 14 years old and has 390,000 kilometres on it. But I'm okay with it."
She has also had to hire local contractors to maintain the properties and to search out tenants, a process she concedes can be stressful. But having found two families who plan to stay long-term, she's less concerned about tenant turnover. Plus, she's encouraged by the vacancy rate, which in Toronto was 1.1 per cent this past fall, according to Canada Mortgage and Housing Corp.
Despite the huge debt load and the uncertainty of the real estate market, Ms. Johnson feels she's made the right decision. Over the past two years, "[the properties] have doubled in price," she says. For the process of eventually transferring ownership, she says that once the homes are paid off, she will rent them to her kids to ensure the homes aren't split up in the event of divorce – and then pass them on as her inheritance.
"This is an investment I'm making in my kids' futures," Ms. Johnson says.
What I find curious is how she has her kids' future planned in advance. Braden will stay in Ajax for the rest of his life. Sydney will stay in Brooklin. Both will rent from the mom until she is gone (never mind the wishes of their future partners). To assume ownership of their own homes, they will have to pay a capital gains tax. Shouldn't be a problem... they will also inherit her primary residence. I wonder if she has any retirement savings or pension.
There I go again, looking for problems where others are looking for solutions.
Re: Housing Bust 2017
A partial gift at any rate. I assume that she will be able to pay something.
However, a loan from a parent should not be as burdensome as a loan from say a bank. The bank incurs a host of transaction costs, such as credit checks, and profits to the institution, which the parent doesn't. The parent need not build in a risk premium. or at least not one as high as the bank. The rate charged can be set at the minimum rate required by CRA to distinguish a gift from a loan.
If we are talking about a married couple making the loan to a child, the loan should be made by the spouse with the lowest tax rate. That will minimize the amount of tax payable from all parties, and will probably be much lower than the tax rate which the bank (through corporate taxes) and its shareholders (through taxes on dividends) would have to pay.
Divorce always complicates financial planning. In this case, a loan to the daughter would be considered part of the assets to be divided, on whatever basis the couple agrees or the court decides. Presumably, if the loan hadn't been made, there would have been other assets instead, and these assets would also have been divided between the spouses. I don't see where a loan to the daughter adds to an admittedly complicated situation.Should a divorce happen, half of the loan will be lost to the other partner. It will be too late to demand the repayment at the time of divorce; the court won't honour the request.
I wish you and her good luck. I know that this isn't the easiest of times for those just starting out.(I am starting to think about a solution for my daughter as well)
George
The juice is worth the squeeze
Re: Housing Bust 2017
I think we (FWF) had this discussion before but I can't find the thread.ghariton wrote: ↑27 Dec 2017 13:13Divorce always complicates financial planning. In this case, a loan to the daughter would be considered part of the assets to be divided, on whatever basis the couple agrees or the court decides. Presumably, if the loan hadn't been made, there would have been other assets instead, and these assets would also have been divided between the spouses. I don't see where a loan to the daughter adds to an admittedly complicated situation.Should a divorce happen, half of the loan will be lost to the other partner. It will be too late to demand the repayment at the time of divorce; the court won't honour the request.
My very vague recollection:
Case 1: children strictly follow the repayment schedule. The loan is treated as a loan in case of divorce. It has to be repaid. You get your money back.
Case 2: children don't follow the repayment schedule. For example, they only pay back the principal but not the interest, make irregular payments, etc. The loan is treated as a gift in case of divorce. You don't get your money back.
The details likely vary from province to province.
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Re: Housing Bust 2017
Gee, $800k in 3 years at a cost of $36k. Yeah pretty dumb, foolish by any measure. Better to have dual incomes, two kids and complain about not being able to afford anything.
Yep, certainly locked in...handcuffed to the bedframe I'm sure. Certainly won't be able to sell them and move.
Gee, capital gains taxes or having to pay for an entire house at the inflated future prices...how will they manage even this partial payment?
I'd say the old adage of looking a gift horse in the mouth...or that sour grapes story again. Maybe can't see the forest for the trees?
Re: Housing Bust 2017
Hey, I said she did very well. She bought in 2014 and 2015... her timing was perfect.Just a Guy wrote: ↑27 Dec 2017 13:48Gee, $800k in 3 years at a cost of $36k. Yeah pretty dumb, foolish by any measure.
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Re: Housing Bust 2017
Unless she holds on too long and faces a major correction...
There's always a negative way to look at it right?
Better to sit back and do nothing, the time has passed, no chance of doing something like that ever again.
There's always a negative way to look at it right?
Better to sit back and do nothing, the time has passed, no chance of doing something like that ever again.
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Re: Housing Bust 2017
You probably won't want to hear about this either.
There's a guy on the other forum who's son "quickly turned $2000 into $16000 flipping weed stocks", not something I would have done, not in my personality. He's talked to his son who'll probably now put the 16k into bank stocks.
Of course, he'll have to pay capital gains on that $14k, unless it was in a TFSA, so it probably wasn't worth it, and the timing to repeat such an investment has probably passed.
There's a guy on the other forum who's son "quickly turned $2000 into $16000 flipping weed stocks", not something I would have done, not in my personality. He's talked to his son who'll probably now put the 16k into bank stocks.
Of course, he'll have to pay capital gains on that $14k, unless it was in a TFSA, so it probably wasn't worth it, and the timing to repeat such an investment has probably passed.
Re: Housing Bust 2017
Not something you would have done? Not in your personality? Then why are you talking about it?Just a Guy wrote: ↑27 Dec 2017 16:18 You probably won't want to hear about this either.
There's a guy on the other forum who's son "quickly turned $2000 into $16000 flipping weed stocks", not something I would have done, not in my personality. He's talked to his son who'll probably now put the 16k into bank stocks.
Of course, he'll have to pay capital gains on that $14k, unless it was in a TFSA, so it probably wasn't worth it, and the timing to repeat such an investment has probably passed.
I trust you are aware of survivorship bias. There were "sons" on the other end of those flipping transactions. They lost their gambling money. You won't hear from them or their fathers.
Is there anything else to learn here?
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Re: Housing Bust 2017
Nope, never take a chance or do anything but collect a paycheque (don’t forget to complain, and blame others of course). It’s the only way possible to live. Let’s teach everyone to be afraid of leaving the herd.
I hear you loud and clear.
I hear you loud and clear.
Re: Housing Bust 2017
Come on guys, knock it off. This is supposed to be a financial forum, where we learn about financial things. If you want to talk about moral character, go to Watercooler.
George
George
The juice is worth the squeeze
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