Buying strategy advise needed

[andrejusc]

I am currently looking to buy my first investment property.

There are 2 options for me:
- to buy a duplex, live in one unit and rent the other to a tenant;
- keep renting apartment myself (considering my apt.rent payment is lower that I would get from my tenant) and rent out the whole house (would it be a duplex, townhouse or smth. else).

With the first option my choices are limited to duplexes (I can`t afford bigger house right now) + living with tenants might be not the best idea (or maybe vice versa?)

With the second option the question is wouldn`t I loose first time home buyer`s benefits? + in case of vacancy I would have to pay for rent and for mortgage.

What would you do if you were in my shoes? Are there any other pros and cons I should consider?

The properties I am looking for are in K-W area, up to $250K.

Would appreciate your input.

Andrejus

 

[Aneta]

My personal opinion, go with #1. What better way to learn how to manage a property than live right in it? You can also tap into benefits that can be correlated to part of the property classified as primary residence (tax, mortgage loan products, other government programs). For my first property, I bought house with secondary suite, and I don`t regret it. Before you pull the trigger though, talk to your mortgage broker and lawyer to ensure that the bank allows for part of property to be a rental. Also good idea to talk to accountant and understand the tax breaks/implications. Also make sure your town allows secondary suites.

Living with tenants is not that bad, if you take your time in selecting and are picky - it is your residence, you want to make sure you like your `neighbour`. I marketed my basement unit as `well managed, pride of ownership, owner lives onsite, quiet, professional neighbour (referring to myself, of course)`.

Good luck!

 

[mrembecki]

QUOTE (andrejusc @ May 27 2009, 05:58 PM) I am currently looking to buy my first investment property.

There are 2 options for me:
- to buy a duplex, live in one unit and rent the other to a tenant;
- keep renting apartment myself (considering my apt.rent payment is lower that I would get from my tenant) and rent out the whole house (would it be a duplex, townhouse or smth. else).

With the first option my choices are limited to duplexes (I can`t afford bigger house right now) + living with tenants might be not the best idea (or maybe vice versa?)

With the second option the question is wouldn`t I loose first time home buyer`s benefits? + in case of vacancy I would have to pay for rent and for mortgage.

What would you do if you were in my shoes? Are there any other pros and cons I should consider?

The properties I am looking for are in K-W area, up to $250K.

Would appreciate your input.

Andrejus

 

[kboughen]

QUOTE (andrejusc @ May 27 2009, 05:58 PM) Are there any other pros and cons I should consider?
Andrejus
Hi Andrejus,


If you are planning on buying the investment property with less than 20% down, you will want to consider the CMHC Fee benefit of occupying one of the units. If you occupy one of the units, you only have to pay the "owner occupied" CMHC fee. If you stay in the apartment and buy the investment property, you need to pay the "rental property" CMHC fee. Depending on the down payment, amortization and property type, you could be adding the equivalent of 2 – 3 years in equity appreciation by choosing to live in the property.


Fell free to contact me with any questions.