5% down to purchase a new property

[kou]

Hello,

after reading one of the post in here about 5% down and rent it to relative. I am going to ask another question in here.



my daughter will be leaving home to Montreal for her University study next year. i am planning to purchase a Condo under our names, myself, my wife and my daughter. since she will be there for at least 4 years or more ( if she decided to do her master there, that will be even longer), it would be wise to purchase the condo and for her to live in it. this way, she have a nice place to stay and it also save up on equity and property appreciation.

may be some of you will have the answer for me. I had purchase RESP for my daughter these years to prepare for her education. Can i use her RESP to pay a portion of the mortgage ( like monthly rental at a fair market price ). the condo will be under her name as well, can she pay rent to herself??



many thanks

 

[Thomas Beyer]

Buy the condo in her name only,then she gets any gain tax free. Co-qualify for the mortgage, and/or even pay for the monthly payment.

 

[housingrental]

From a quality of life stand point / future flex ability - I would not purchase a condo for her at this point unless it makes sense as a rental property if she does not want to live there in 2 years, etc.

 

[kou]

Hello Thomas,

Thank you for the reply. as you suggest that buy the condo under her name to avoid captial gain. I wonder How can she qualify for the mortgage ? she will be 18 next year and doesn't have a job( may be a part time job) beside going to school.

I did the same procedure with my son in 2011 but my son is working part time and not going to school( he decided back to school this year and that made me very happy). I can't find any bank to qualify the mortgage for him unless my wife and myself on the title.

may be in a year or 2 she decided to study somewhere else and want to move to other city. This condo can become a rental. I am planning to buy the condo in down town Montreal near McGill University. It should be easy to rent and have good return on my investment. I estimate that for 4 years to pay on rent( if we going to find a rental for her) should be around $1,000 a month, that is $48,000 for the full 4 years term and no worry for the mortgage, electricity, property tax etc..

and if I buy a condo that including condo fees and ultities, insurance, tax. that should be around $1,300 per month and I got the principle deduction for the 4 years should be at least $20,000 ( I am not counting in the property appreciation for this 4 years yet). it should be a good move.



In addition, I have to pay for her room and board to let her have a steady place and condition for her study anyway( well lucky her but she is worth it! she try very hard in everything).

My question is can she pay rent to herself by using her RESP money? that way, her RESP money can pay a portion of mortgage and expense. may be my accountant can answer some of the question here.



Thank you for your input.

Chio

 

[mortgageman]

Under CMHC's family plan, you can buy the property with her on the mortgage and title with you.

You can do as little as five percent down.

I would suggest you buy a property with your wife and one child on mortgage and title and you and the other child on the second property's mortgage and title. That will make it easier for you to qualify since you won't have the benefit of rental income to help you qualify.

Talk to a broker who can help you plan and work through these applications.

 

[Thomas Beyer]

You co-qualify. Don't apply for a mortgage at a bank. Always always use a capable mortgage broker.

 

[kou]

Thanks for your input!

we already bought a house with my son since 2011when he turn 18 and he is living in the house since. with 2 of his friends that help paying the mortgage and expense and I put in whatever he need for the remain balance. so far he had paid $15,000 into the annual lumpsum payment. I can say it is a good investment and this teach him how to save money for his future.

I would like to do the same for my daughter and I do have a team to help me including a mortgage broker,a realtor and an accountant.

again, thank you for sharing your idea.

Chio