I am relatively new in Canada and would like to venture into real estate investment, which is completely new to me. I got motivated by reading Don Campbell's book. Would it be advisable to get a rental property for investment purposes while at the same time I am renting an apartment until I could identify the exact location of my dream principal house? Thank you.
Opinions regarding obtaining a rental property for investment while at the same time renting...
- Thread starter Malchiah
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[quote user=Malchiah]Would it be advisable to get a rental property for investment purposes while at the same time I am renting an apartment until I could identify the exact location of my dream principal house?
A loaded question with few details on your end.
Rental propertuies are usually profitable, thus "advisable" but not always. It depends on: cash invested, mortgage interest rate, location, your skills and desires to manage a rental proeprty, your income, your age, your exit plan, your other life desires, your ability to fund negative cash-flow or cash-calls for serious property upgrades, your networth, the value of the property today, the estimated value of the property 5 or 10 years hence, the rent, the operating expenses, the state of repairs of the asset ...
So to summarize your question: it depends !
Renting might make more sense than buying your own property, if
A loaded question with few details on your end.
Rental propertuies are usually profitable, thus "advisable" but not always. It depends on: cash invested, mortgage interest rate, location, your skills and desires to manage a rental proeprty, your income, your age, your exit plan, your other life desires, your ability to fund negative cash-flow or cash-calls for serious property upgrades, your networth, the value of the property today, the estimated value of the property 5 or 10 years hence, the rent, the operating expenses, the state of repairs of the asset ...
So to summarize your question: it depends !
Renting might make more sense than buying your own property, if
- you can rent for far less than buying a similar property
- you envision living there shorter than 5 years
- you don't know an area well enough yet
prices will be flat or declining for a while
you cannot qualify for an inexpensive mortgage
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No
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What about buying a home with a suite? You live either upstairs or downstairs and rent the other portion of the house. When you're ready to buy your dream house you rent both suites of the house.
Possible advantages are: 5 percent down payment on the property since it will be owner-occupied/rental vs 20 percent for a rental.
You'll likely be able to keep the rental when it's time to buy your dream house because you'll get rental credit from the rental property to help you qualify for the mortgage on the dream house. And you'll be able to buy with another five percent down.
Possible disadvantages: you'll likely be highly levered but if you are buying the right types of properties in an area with strong economic growth you'll likely do well.
Possible advantages are: 5 percent down payment on the property since it will be owner-occupied/rental vs 20 percent for a rental.
You'll likely be able to keep the rental when it's time to buy your dream house because you'll get rental credit from the rental property to help you qualify for the mortgage on the dream house. And you'll be able to buy with another five percent down.
Possible disadvantages: you'll likely be highly levered but if you are buying the right types of properties in an area with strong economic growth you'll likely do well.
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Home ownership is a life style decision not a investment. Home ownership is a liability not generally considered a asset as it generates no income, costs money to maintain and generally speaking is left to family at your time of death.
The only exception being if one were to sell their home, realise the appreciation, and become a tenant at some future date prior to their death.
Or if one were to pay down then re mortgage to invest.
Being a tenant is generally less expensive than being a home owner but to remain a tenant while investing in rental income properties is only for the true diehards driven to become wealthy at all cost.
The only exception being if one were to sell their home, realise the appreciation, and become a tenant at some future date prior to their death.
Or if one were to pay down then re mortgage to invest.
Being a tenant is generally less expensive than being a home owner but to remain a tenant while investing in rental income properties is only for the true diehards driven to become wealthy at all cost.
Thank you so much for your valuable replies/contribution. Considering that I am relatively new in Canada, I am still in the process of learning and reading as much as I could. I do not want to venture into something that I am not familiar or knowledgeable of. I find this forum very helpful as I am laying out my plans for me and my family's future.
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http://ontariolandlords.org/forum/
You may want to take a read through this forum before venturing into becoming a landlord in Ontario.
REIN is for investors and about investors where as ontario landlord is the grass roots real world of
those that face the every day up hill battle when they discover they are actually landlords.
Our Ontario RTA is blatantly pro tenant and not supportive of small time landlords in dealing with bad
tenants. Aspiring Landlords beware.
You may want to take a read through this forum before venturing into becoming a landlord in Ontario.
REIN is for investors and about investors where as ontario landlord is the grass roots real world of
those that face the every day up hill battle when they discover they are actually landlords.
Our Ontario RTA is blatantly pro tenant and not supportive of small time landlords in dealing with bad
tenants. Aspiring Landlords beware.
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The forum is admittedly somewhat biased based on the fact that the majority of landlords posting have been in the business a long time and are familiar with the experience of dealing with both bad tenants and the Ontario LTB.
One of the greatest causes of bad tenants is the fact that our government enables those on welfare and ODSP to steel from landlords and declares them untouchable by preventing the courts from garnishing there income. As landlords have wised up to the situation welfarians have found it increasingly difficult to find landlords that will rent to them. They become mostly cellar dwellers.
One of the greatest causes of bad tenants is the fact that our government enables those on welfare and ODSP to steel from landlords and declares them untouchable by preventing the courts from garnishing there income. As landlords have wised up to the situation welfarians have found it increasingly difficult to find landlords that will rent to them. They become mostly cellar dwellers.