Anyone selling to beat the April deadline?

[fumbrunner]

Just wondering if anyone is selling their properties to beat the deadline for the changes to CMHC financing. This would apply to SFD, duplexes, and threeplexes mostly. I have a three plex that has probably appreciated about 40% that I`m thinking of selling. It cashflows fine, but I am wondering if this is the best time to sell as investors will no longer be able to put 10% down.

Thoughts?

 

[housingrental]

Maybe its just in this market, but I`ve never seen an investor be able to purchase a triplex with only 10% down anyways.
When you have a good product, it rarely makes sense to sell.

Some questions to ask before selling:

Will you be profitable from operations this year? and next year? and in five years?

Will after transaction fees (lawyers, real estate, TAX, etc..) be able to take your funds from sale and purchase an alternate investment that provides better returns?

 

[2ndstory]

QUOTE (housingrental @ Mar 19 2010, 09:48 AM) Maybe its just in this market, but I`ve never seen an investor be able to purchase a triplex with only 10% down anyways.
When you have a good product, it rarely makes sense to sell.

Some questions to ask before selling:

Will you be profitable from operations this year? and next year? and in five years?

Will after transaction fees (lawyers, real estate, TAX, etc..) be able to take your funds from sale and purchase an alternate investment that provides better returns?

You need a better broker. I bought a 4 plex with 10% down.

I`m not sellling anything. I`d rather buy than sell at this point. The value may have increased 40% so the bank will allow you to refinance it if their appraiser agrees with the 40%. Then buy another for yourself. Other investors will most likely not one to pay that extra 40% you are hoping to get in cash that the bank will lend you.

Nik

 

[DaveRhydderch]

QUOTE (fumbrunner @ Mar 19 2010, 08:01 AM) Just wondering if anyone is selling their properties to beat the deadline for the changes to CMHC financing. This would apply to SFD, duplexes, and threeplexes mostly. I have a three plex that has probably appreciated about 40% that I`m thinking of selling. It cashflows fine, but I am wondering if this is the best time to sell as investors will no longer be able to put 10% down.

Thoughts?

I still think a 3plex is definitely something that a potential non-investor home buyer would consider buying for personal use, esp. a younger first time home buyer. I don`t think the change in mortgage rules will hurt your property value at all. More than likely, all you`re going to see is an increase in rents as less rental stock is available. Obviously, I don`t think you should sell, at least based on this.

 

[Thomas Beyer]

QUOTE (2ndstory @ Mar 19 2010, 09:59 AM) You need a better broker. I bought a 4 plex with 10% down.

...
selling a triplex will take more than 2 months anyway . assume that any new buyer will put down 20% minimum .. sell if it fits your personal goals .. keep if it cash-flows enough to allow holding ..

selling means: work, paying taxes, paying realtor fees, paying lawyers .. and then spending more time finding a replacement property, getting a new mortgage, pay more legal fees .. thus the "switching costs" are very high in real estate .. thus holding is often the better solution unless you want to buy a boat, toy, send kids to school, .. etc. i.e. need the cash for non-investment purposes !!

 

[fumbrunner]

QUOTE (ThomasBeyer @ Mar 19 2010, 11:33 AM) selling a triplex will take more than 2 months anyway . assume that any new buyer will put down 20% minimum .. sell if it fits your personal goals .. keep if it cash-flows enough to allow holding ..

selling means: work, paying taxes, paying realtor fees, paying lawyers .. and then spending more time finding a replacement property, getting a new mortgage, pay more legal fees .. thus the "switching costs" are very high in real estate .. thus holding is often the better solution unless you want to buy a boat, toy, send kids to school, .. etc. i.e. need the cash for non-investment purposes !!

I appreciate the comments Thomas. Aside from the CMHC rule changes, I think I have increased the value as much as I can through renovations and rent increases. I guess the question more specifically is whether the CMHC changes should be a driver as an exit strategy. From the posts here, the answer seems to be no.

 

[fumbrunner]

QUOTE (2ndstory @ Mar 19 2010, 10:59 AM) Other investors will most likely not one to pay that extra 40% you are hoping to get in cash that the bank will lend you.

Nik

Cap rates would say otherwise. but I guess we will see.

 

[2ndstory]

QUOTE (fumbrunner @ Mar 19 2010, 12:18 PM) Cap rates would say otherwise. but I guess we will see.

Hmm. Maybe I should buy it.

What area of the city is it in?

Nik

 

[Cargren]

I agree with everyone here.

Stick with your investing strategy. Sell if that was your plan prior to the new CMHC announcements: hold if that was your plan before. Do not sell just because of the new CMHC ruling!

Rob

 

[fumbrunner]

QUOTE (2ndstory @ Mar 19 2010, 02:47 PM) Hmm. Maybe I should buy it.

What area of the city is it in?

Nik
In the Inkster area.  you`ll see it on MLS by Monday

 

[housingrental]

Why are you selling?
What will you buy with proceeds?
Will you be better off after transactions costs with the sale?


QUOTE (fumbrunner @ Mar 19 2010, 09:50 PM) In the Inkster area. you`ll see it on MLS by Monday

 

[housingrental]

In Waterloo?
Assessments are lower than market value.
I`m not saying it hasn`t happened, I just haven`t seen anyone buy an investment plex with 10% down in Waterloo.


QUOTE (2ndstory @ Mar 19 2010, 10:59 AM) You need a better broker. I bought a 4 plex with 10% down.

I`m not sellling anything. I`d rather buy than sell at this point. The value may have increased 40% so the bank will allow you to refinance it if their appraiser agrees with the 40%. Then buy another for yourself. Other investors will most likely not one to pay that extra 40% you are hoping to get in cash that the bank will lend you.

Nik

 

[Nir]

Hi Adam, I also purchased a 4-plex with 10% down.. in Orillia. I`m sure it could be done in Waterloo too.
Please note: properties being assessed lower than market value is a MUCH more common phenomenon in apartment buildings (6 units or more) than residential (4 units or less)!
Regards,
Neil

 

[housingrental]

Orilla isn`t Waterloo.
Re my post above I`m sure it could theoretically be done in Waterloo too.
I`ve seen many sales and I`ve not seen someone be able to buy an investment small plex at 10% down.
I`m not referencing owner occupied.




QUOTE (investmart @ Mar 20 2010, 10:24 PM) Hi Adam, I also purchased a 4-plex with 10% down.. in Orillia. I`m sure it could be done in Waterloo too.
Please note: properties being assessed lower than market value is a MUCH more common phenomenon in apartment buildings (6 units or more) than residential (4 units or less)!
Regards,
Neil

 

[gwasser]

QUOTE (housingrental @ Mar 21 2010, 11:10 AM) Orilla isn`t Waterloo.
Re my post above I`m sure it could theoretically be done in Waterloo too.
I`ve seen many sales and I`ve not seen someone be able to buy an investment small plex at 10% down.
I`m not referencing owner occupied.

Supplementary question: with commercial real estate and 30% down do lenders still require CMHC? I had one mortgage broker telling me this.