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Buy anywhere to build equity. Rent where you want to live. The new Vancouver strategy

January 19th, 2016 · 14 Comments

I started hearing this kind of story that last few months almost, it seemed, every time I went out of the house. People who told me they were renting out the condo they purchased years ago, but had moved on to renting a larger house somewhere. My son-in-law was urged by a friend to buy in Squamish while just continuing to rent in West Van. (He chose not to.)

I tracked down some people doing this, one more strategy that people are using to try to get a foothold in the Vancouver market. It depends, of course, on two things: You can get reasonable rent for the condo that has now become your investment. And you’ve got some kind of favourable renting situation yourself. Everyone I talked to for this story had one thing in common: I’ve got an amazing deal where I’m renting. Apparently they still exist here.

My Globe feature on this is here. After this came out, more than one reader told me they have friends and colleagues doing this. It’s definitely a thing.

Categories: Uncategorized

  • Carlos Silva

    If you get a chance, talk to Garth Turner. Bearish on real estate, big fan of his blog, and I believe the former MP, and Revenue Minister does the same thing in Toronto.

    Liked the article. It’s interesting how the lack of 3 bedroom suites in the Metro area is affecting young families as well. Looking forward to more stories.

  • lainie

    It’s a question of families desperate for space. There seems to be quite a bit of larger places for rent (3-4 bedrooms), for reasonable prices (if you have two incomes), in Vancouver. But to buy these places? Dream on! We rent a 4 bedroom East Van teardown, for $2k per month. To buy? $1.3 million! Not affordable, even with two middle class incomes.

  • neil21

    I didn’t know buy-to-let mortgages were legal here. Interesting.

  • penguinstorm

    There’s a huge amount of risk associated with this: essentially you’ve got overlapping mortgage like payments for a time, unless you’re renting without a lease (in which case the overlap is only 30 days.)

    People would be better off buying a place they can afford, saving towards and upgrade and moving.

    The fact that Vancouverites seem to have abandoned the notion that there’s any risk with having so much of your equity in a single basket is…not god.

  • penguinstorm

    The lack of three bedroom suites is at least partly the fault of Vancouver’s recent city planners. They could have insisted on them, but didn’t: one bedroom suites have become the norm as developers squeeze as many housing units out of a building as they can.

    I love Garth and respect his past, but until the capital gains tax exemption on primary residences is lifted–and good luck doing that, any government ever–owning *one* home will remain one of the safest and smartest things a family can do with their money. I wouldn’t be bearish outside of the concept of real estate as an money making investment vehicle.

  • jenables

    Some friends of mine, who have two children ( age 3 and 1) and a small-medium sized dog, were looking for a place to rent and literally no one would rent to them. It’s so competitive and people would tell them outright they didn’t want to rent to people with kids. They own a house elsewhere but need to be in the city for work and actually had to mortgage a condo to live here because there were no other options for them.

    Also, I randomly ended up on some rental website and had to laugh at all these less than 700 sq ft shoeboxes being advertised for $2000 – $3500 a month. I even saw one for $25,000 a month, a furnished two bedroom penthouse that was about 2000 sq feet. It was nice, but I can’t imagine what kind of tool would think it was that nice. I wonder if these are the much touted rental housing being built, most were in new buildings.

  • jenables

    Sorry, I just thought I should show you guys what the city means when they talk or brag about creating rental housing. Please look at this site:
    The 535 sq foot studio in the west end pictured below could be yours for merely $2295/month. Yes, enjoy hallway living on the cheap! LOL
    THIS is why I get so pissed when perfectly good, reasonably priced and sized older rental accommodation gets bulldozed to build this bullshit.
    Meanwhile, I live in comparative luxury in a 57 year old walk up, with one bedroom, a large kitchen and living room with hardwood floors, multiple windows and 7 other suites with long term, fantastic neighbours in a great neighborhood for $730/month. I mean it when I say the city better leave my neighborhood alone. They want the below image to be the new normal, and they want you to think it’s luxurious, exclusive and fairly priced. >derisive snort<

  • A Taxpayer

    Every time the government implements yet more regulations to provide “protection” to tenants, it just makes investment in rental properties less attractive. Less investment, less supply which will put upward pressure on rents.

    As for affordability, you can’t help but notice the demographics in the line ups at Starbucks or who’s buying organic at Whole Foods. Now I really don’t care what people spend their money on or why they racked up a fortune on student loans studying Tibetan throat chanting unless they are asking me to contribute to reducing the cost of their housing. This is the downside of asking your fellow citizens to contribute to support your lifestyle.

  • jenables

    Nobody is subsidizing my lifestyle, taxpayer. I live in an old building owned outright, and I’ve lived here for more than a decade.

  • A Taxpayer

    If you are paying less than market rents because the landlord cannot legally raise them then the landlord is subsidizing your lifestyle since he could earn more from another tenant. Similarly, it is also a subsidy if the landlord is prevented from redeveloping the property just to maintain your and your neighbour’s lifestyle.

    I’m not sure how long you have lived in your residence is at all relevant other than to explain why your landlord is getting such low rent.

  • jenables

    My landlord is female, first off. Her late husband received many offers but thought selling would be bad for the neighborhood. I’m not sure why you think spending hundreds of thousands to rezone and rebuild a property would be a great idea for her. Did it occur to you that in the twelve years I’ve lived here, rents have doubled or tripled? And maybe, just maybe not everyone is buying it?

    Just because she could get more money from a new tenant does not mean she is subsidizing me, and it sure as hell doesn’t mean you are.

  • A Taxpayer

    I never suggested that your landlady should sell or redevelop her property. That is the point. She should have the ability to do so, or not, without maintaining your lifestyle a civic consideration.

    Your landlord does not have the choice to charge you market rent which means there is more money in your pocket and less in hers. How that benefit is labelled is just semantics.

    You have a very good situation but I don’t know how you expect the City to develop new accommodation that would provide similar affordability to what you have for other renters that does not involve a subsidy.

  • jenables

    The ironic thing is, these rentals that are being built ARE subsidized by the city through programs like rental 100 and the one that replaced it. And look at the picture and what 2295 a month gets you. It’s a joke.

  • A Taxpayer

    That is why I believe the less government involvement in my life the better. If they were smart enough to actually solve the complex problems they pretend to address they would be out in the real world making a buck. Wouldn’t surprise me if they do get outsmarted by those who have their own money at risk rather than someone else’s like the taxpayer’s.