Roadmap to Millionaire as an Investor

7 years of experience on Finance and wealth building, this blog is created to generate ideas how everyone can make a million dollar through actively investing.

Wednesday, March 31, 2010

Canadian Real Estate Market- Coming Challenges for Investors

The Roller-Coaster of Real Estate Market, with Bank of Canada calling the end to "emergency low rates" anytime soon. Real estate investors must be prepared to deal with the change in raising costings of interest. Just One percentage point hike in a 2,000,000 portfolio will mean losing 20,000 dollars per year to interest- Coming to around 1,666.66 per month. However a more realistic guess on the market is half a point per year because of our dear US Neighbors- whom is having great difficulties with their unemployment rates - above 10%. Because we are still doing most of our business with our neighbor, our currency are not encouraged to be valued higher (Above Par) by adding more interest - and Bank of Canada know that. If Canadian dollars are higher than the US dollar, we would experience poor export due to expensive dollars on buying Canadian goods, therefore leading to more job losses for Canadians.

Another Issue Investors should be aware of is the uncertain market in Vancouver, with new HST implications affecting higher rental costs. The best case for this market is a sideways movements. Rental Prices are already least affordable compare to the rest of Canada. I suggest a strategy for investor is either to Refinance their properties (3%-4%)and invest the differences on other higher yield markets (9%-13% in Thunder Bay) to offset the cash-flow risk that may hit the Vancouver market anytime. If you can't afford to refinance and ride out the market for 3 to 5 years in Vancouver, then I guess just cashing out your profits.

Those that are running a High Debt Ratio on their investments should take extra caution and keep updated on market news at these times. Surviving is key to successful investing during uncertain times. Letting go some of your Negative Cashflow properties and holding some cash or changing it to high yield properties is the solution. Review your current portfolio and start planning how to allocate for your next investment.


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