Sell or Rent

[Ruchi]

Hi all,



We had our townhouse for sale in GTA, and we are moving to a bigger house in GTA itself (need more space with two kids).



Our real estate agent and financial advisor think we should just rent it and keep it as an investmet property (it is a good area for renting). They think the property will appreacite in a few years.

The bank says we can afford both houses.



I am in a dilemma as to what should be done ?

 

[Sherilynn]

Speak with your banker and accountant as well, especially if you have a lot of equity in your soon-to-be rental property and then have a big mortgage on your personal property. It would be nice to have the large mortgage on your rental instead so that the interest is tax-deductable. And be sure to get a professional appraisal to set the point at which capital gains start.



Another option is to lease option your property. You set the price a bit higher than what you would otherwise get today, you enjoy cashflow and mortgage paydown, and the repairs and upkeep are the responsibility of the tenant. I suggest this route not only because I like the strategy myself, but also because it is difficult to see your personal home get turned into a regular rental and get abused by regular tenants. Lease option tenants tend to treat the home as it it was already their own.

 

[Rickson9]

Sell it. If my realtor starts giving me investment advice, I know it's time to sell. Book that tax-free gain.

 

[invst4profit]

Is it your desire to operate a business, take emergency calls at night and on weekends, chase tenants for rent, evict tenants. Are you OK with a stranger destroying your home. Do you mind the thought of having to screen applicants, paint and repair between tenants and do all the other jobs associated with being a landlord.



If it has not been your desire to be a landlord in the past you should definitely sell. Being a landlord in Ontario is not for the faint of heart.

Keep in mind once you have a tenant they do not have to move out until they want to. Once they have possession you no longer have control of your own property. Landlord/tenant legislation is extremely pro tenant in Ontario.



Sell and invest in something less stressful unless being a landlord has been a personal dream of yours.

 

[jayMichaels]

What do the numbers look like? Do you cashflow on this property? If you are cash flowing and you say it's in a good rental area...why would you sell? If there's any money in selling, what will you do with the money? If you are not investing it anywhere else, why sell?? Most people make more money from their real estate then they do working everyday. The Canadian market is considered a safe heaven for investor's. I would not call this a dilemma, I would call this a no brainer.



Happy Investing



J

 

[Thomas Beyer]

[quote user=Ruchi]I am in a dilemma as to what should be done ?
More info please on you, your cash requirements today or in 5-10 years, the stability of income, the rent achievable in this asset, the price you could get, your desire to be a landlord.



Your question is akin to "shall I buy a car or take public transit ?"



A useful answer can be given only with more info at hand otherwise a lot of "it depends" answers will be forthcoming.