What Was I Thinking When Prices Were Low

By
Real Estate Agent with Sutton Group-Capital Realty Ltd.

Graphic representation of houses for rent

So what was I thinking when prices for real estate were as low as they were?  I have asked myself that question a few times.  In St. John's we have seen real estate prices surge in the last three years.  Those who were "smart" enough to buy investment properties with record low interest rates and un-inflated real estate prices have enjoyed one of the best growth markets in North America. 

I have been in the real estate business for over 21 years and have had the opportunity to buy rental properties several times; but I did not do it.  Well, I did not buy them to the extent that I might have or dare I say, even should have.  Instead, I invested some of my hard earned cash in the stock market.  With the exception of a few lucky trades, I watched my invested assets dwindle to losses or at best remain flat.  Oh what a feeling when a plan doesn't come together!

Well during this past year, I have begun to correct this imbalance.  I have purchased a couple of homes and am in the process of building a two more within the next two years.  If this sounds like I am crazy, I remind you that the I thought the same way five years ago about buying real estate then.  The reality is, Newfoundland has an oil based economy and this oil prosperity is certainly not done yet.  Those who can accumulate a few rental properties over the next ten years will no doubt build some equity for their future.

Another factor for me is there are no real estate firms that offer a pension plan in our local market.  Buying rental properties is one thing that make some sense in terms of generating income for the future.  Yes, prices have moved up already.  But unless the Newfoundland economy turns downward or the oil boom dies prematurely, it is more likely that real estate prices will be higher in five years than they are today, even though they may seem high to us right now.

If you are hoping to gain from this growth market you might want to give your head a shake as I did and buy a piece of real estate.  Otherwise, it is likely in a few years time you will be asking yourself the same question.  "What was I thinking when the prices were low?"  And in case you haven't noticed, interest rates are still sitting at all time lows.  Furthermore, to underscore the point a little more, the vacancy rate in St. John's is now at 1.1%. See CMHC News April 2010.

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About the Author: R. Greg Osmond is a Platinum Award winning Realtor dedicated to serving the people of St. John'sMount Pearl, Paradise, Kilbride, Goulds, Conception Bay South (CBS)Portugal Cove-St. Philips, Torbay- Flatrock- Pouch Cove, and Logy Bay - Middle Cove - Outer Cove, Newfoundland and Labrador. For over 21 years Greg has been practicing in Real Estate. He can be reached at 709-895-2500.

Want to get in touch? Email rgosmond1@gmail.com. For more information, please visit http://www.rgregosmond.com. Thinking of selling your home? I have a passion for helping my clients with buying and selling real estate! If there is any way I can be of service to you today, please feel free to contact me!

Click Here To SUBSCRIBE. Your Mother will definitely approve!

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By R. Greg Osmond, MBA

About the Author: R. Greg Osmond, MBA is a Platinum Award winning Realtor dedicated to serving the people of St. John's, Mount Pearl, Paradise, Kilbride, Goulds, Conception Bay South (CBS), Portugal Cove-St. Philips, Torbay- Flatrock- Pouch Cove, and Logy Bay - Middle Cove - Outer Cove, Newfoundland and Labrador. For over 24 years Greg has been practicing in Real Estate. He is also president of Red Maple Development Inc., a firm focused on new home construction and existing home renovations, for Greg's clients and the market.  Greg can be reached at 709-682-9670.  Greg's Associate Realtor, Andrew Macdonald BBA, may be reached at 709-749-8879.

Want to get in touch? Email rgosmond1@gmail.com. For more information, please visit http://www.rgregosmond.com. Thinking of selling your home? I have a passion for helping my clients with buying and selling real estate! If there is any way I can be of service to you today, please feel free to contact me!

Go ahead and SUBSCRIBE to this blog.  Your Mother will definitely approve, I guarantee it!

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Topic:
Real Estate General Information
Location:
Newfoundland Avalon Region St Johns
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Comments 7 New Comment

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Rainmaker
974,275
Michael J. Perry
Lancaster Relo Specialist
RE/MAX Associates of Lancaster, PA.

Very Interesting !!! In our area prices are still dropping and rates are great !!!!!!!!!!

August 23, 2010 08:15 PM
Rainmaker
309,304
Larry Estabrooks
REALTORĀ®, Moncton, NB
a Fully Independent Real Estate Agent -

Greg, 1.1% is indeed very low. Note though - newer, energy efficient buildings are better investments. Energy prices are not going down.

August 23, 2010 08:20 PM
Rainmaker
124,372
R. Greg Osmond
MBA, Red Maple Realty
Sutton Group-Capital Realty Ltd.

Michael,  with prices dropping and rates low, buyers should be picking up some rentals for the long term.  Property values will pobably come back up again.

Larry,  I would agree with you.  Heating is going to be a significant factor as energy gets more costly.

August 24, 2010 11:58 AM
Rainmaker
572,328
Phil Leng
Phil Leng Team - Residential Real Estate Experts &
Keller Williams Eastside Market Center

Hi Greg,

I was happy to read your post.

With the massive foreclosures in our area, it is nice to read about rising prices.

Phil

August 25, 2010 06:03 AM
Rainmaker
124,372
R. Greg Osmond
MBA, Red Maple Realty
Sutton Group-Capital Realty Ltd.

Phil,  I think the top end of our market is no longer seeing prices rise now.  Some prices are beginning to fall as a result. 

August 25, 2010 10:51 AM
Rainmaker
415,659
Ted Tyrrell
Selling Homes in Beautiful Victoria
DFH Real Estate Ltd.

Who knows where the market is going in the next year, 5 years, 10 years? My wife and I live at Mile "0" at the other end of the Trans Canada Highway--Victoria BC. We own a few rental properties that we bought 3 years ago, 5 years ago and 18 years ago, respectively. I have never felt that we did the wrong thing or bought at the wrong time. "ALL" of our mortgages are currently tied to the Canadian prime lending rate (currently 3%).

Since purchasing each one, rents have gone up, prices have gone up and principal has been paid down. Every year we are in a bit better position than the year before. Over time, we feel that we are in the driver's seat as vacancy rates in Victoria are usually below 0.5%. We've never had a vacancy! Our biggest property is a four-plex. We have always thought it best to own smaller revenue properties because of ease of sale in the future.

You have had a recent upward house price spurt in Newfoundland due to oil. You are now a "have" province just like us out here on the west coast. You are right, Greg. Buyers should take advantage and buy up property while prices and interest rates are favourable! But choose houses wisely. Generally, houses with more bedrooms and inlaw suites tend to get you better rents.

Cheers,

October 10, 2010 10:45 PM
Rainmaker
124,372
R. Greg Osmond
MBA, Red Maple Realty
Sutton Group-Capital Realty Ltd.

Hi Ted,  Nice to hear your story.  It kind of corroborates my thinking that the best time to buy rental properties is sooner than later because tomorrow, prices will probably be higher.  Thanks for the comment.

 

Greg

October 10, 2010 11:08 PM
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Rainmaker
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R. Greg Osmond

MBA, Red Maple Realty
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