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To sell or not

S

suzuki12

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We`ve got a rental house in Kelowna that we purchased 4 years ago. We have been fortunate to have found tenants that are taking good care of the house and always paying on time. The property is currently worth about $380,000 with a mortgage of $210,000. Rent is $1350 and they pay all utilities. We live near Waterloo, On. and travelled to Kelowna regularly since my wife`s parents lived there and also kept an eye on the house. They are now moving away so we won`t be visiting Kelowna as much.
My question is, should we sell the property and buy a rental unit like a triplex in Waterloo area? Will property values go up faster in Kelowna than Waterloo and so rely on appreciation there, or buy here in Waterloo and plan for a higher gross income with the same money invested.
 
QUOTE (suzuki12 @ May 30 2009, 02:04 PM) The property is currently worth about $380,000 with a mortgage of $210,000. Rent is $1350
If it was me, I would sell and reinvest in Waterloo or any other Top Ten Town that met my investment strategy. I would do this because the Rent To Value ratio, Rent To Mortgage ratio and overall cash flow numbers do not meet my minimum requirements and this is more important to me than which has the best appreciation potential. Of course you may have other personal reasons for holding the property.
 
Hi there;

Its tough to say, since I am not an expert in either market. But if I were you, I would do a comparative analysis of Waterloo and Kelowna. Complete the REIN Property Goldmine Scorecard and see which market you are more comfortable and shows greater potential for returns (appreciation)/strong fundamentals.

Then I would look at property valuations v.s the cash flow since you will want to make sure that you can achieve positive cash flow.

You`ll need to factor in the property management costs as well, especially for the Kelowna property since your parents are no longer available to manage the property.

Lastly, according to REIN, the Kitchener, Waterloo, Cambridge area was rated #1 in Ontario. I am not sure where Kelowna is on the BC Top Ten town list.



Ajayan Sritharan
Professional Real Estate Investor
Real Experts Inc.
www.RealExpertsInc.com
416-251-0075
 
If you`re going to have to hire a property manager in Kelowna then it might be better to go to Waterloo where you can manage yourself, also if you can get a triplex in a top ten town that would be awesome! Either way best to pick you focus and stick with it, if you don`t plan on buying more in Kelowna but do plan on buying in Waterloo then probably a good ideal to consolidate. My 2c.
 
yes, sell as
a) no more personal motivation to go to Kelowna, and
b) rent of only $1350 is WAY TOO LOW for an asset worth $380,000
 
Assuming you`ll realize a capital gain, will the after-tax proceeds be enough to purchase property or a properties of a greater total value, than your original property? Will the new property or properties likely produce more positive cash flow than your current property?

A group of us were playing Cash Flow last night and it became very clear during the game that there was little chance of winning if a player didn`t sell assets at some point in order to have capital available to invest into bigger and better deals.

From a day-to-day-make-your-life-easier stand point , if it were me, I`d invest closer to home.
 
Thanks for the quick responses. There will be a significant capital gain if sold now.
This has been an effortless property so far, maintenance wise with an excellent tenant. With my in-laws gone it will be a lot more grief to keep it.
Your input will help in our decision.
 
QUOTE (suzuki12 @ May 30 2009, 02:52 PM) There will be a significant capital gain if sold now.
Great !

Isn`t this the point of selling .. for a GAIN ???
 
Sell Kelowna property - rent to price is to low

Buy in Waterloo - rent to price, even if lower due to taxs and fees that need to be paid on Kelowna sale, will be higher. It`ll be easier to oversee.

Don`t buy a triplex - there too costly in Waterloo (if not a student rental).
 
If you`re like 99% of Canadians, you probably have some capital losses from the last year to use against the capital gain you will achieve.

If not, consider buying a Limited Partnership flow through in oil and gas or minerals. There are lots of them around and they help greatly in reducing net income.
 
CD`s our always a good bet

It will depend on what price range you can afford, how much cash you have to put down, how much will and cash you have to renovate.
Send me an email with details


QUOTE (suzuki12 @ May 30 2009, 08:21 PM) What do you recommend buying in Waterloo?
 
Another option maybe rent to own. Talk to your tenants and see if it is viable. Some food for thought.
 
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