Buy a big house or 2 smaller houses

[pandaforever]

We have the option of buying

1. a big house,
2. two smaller houses, or
3. a small house and put the rest of the money in the bank.

We intend to
1. a big house - rent it out and in return, we will rent a cheaper place
2. live in one and rent the other one out
3. live in it and put the money in a term deposit and collect interest

We do not need a mortgage. We are looking at the fiancial return in 5 years time - since we may not stay there forever but would like to invest our money. Your input is appreciated!

 

[steaky]

are you going to manage the rental yourself? Operating a homestay like business? Or hire a company to manager while you are away?

 

[pandaforever]

If we rent out we will use a real estate agent. We are not thinking of a homestay business since you need a licence for that. One of the reasons we are keen to rent out is because you can get tax deductions for rentals - we figure it's cheaper to maintain the house as a rental rather than an owner-occupier.

So back to the question, what would be the best investment? A big house, 2 smaller ones, or a small one and put the rest in the bank.

 

[steaky]

I am told that most rooming houses are operate by the owner which could be heavy work and there could be many issues. The less hassle option is to buy 2 smaller ones rather than a big rooming house. Most agents hesitates to manage rooming houses and big houses tend to empty longer periods than smaller ones. Of course, put money in the bank is the least hassle option.

It's a tough decision.

 

[hassanbukhari]

I will suggest that don't invest on a place where you are not going to live.

If you do want to invest then go for apartments which are managed by some company. Houses are also good investment but what if something went wrong and need a repair, your tenant is not going to do that and nor your property agent. You are responsible for the major problems in house. Very few tenants are kind enough to handle things by themselves, others just order or threat.

 

[livefaisal]

Hi,

I will suggest 2 smaller house. There are few reson why i am suggesting.

1-Buying and selling of small house is much easier. Lets say after soemtime you want some cash flow you can easily sell smaller house and ge your money back.
2-If you are buying to rent you dont have to pay any utilities but in case of Condo you have to pay all the utilities and maintinance fee as well. You are gonna end up with nothing.
3-Other thing rather than putting all money in one house buy more with cash+mortage becaz when you will sell it you will get more return.
4- Lot of real estate agent do Property Management. SO you dont have to worry about property management.IF you choose one good agent and then work with him long term he is gonna all the property management.

If you need more info you can contact me @ livefaisal@hotmail.com I am Realtor by profession.

Regards,

 

[newcomer]

Hi livefaisal,

Would you like to disclose where are you placed at?

I am looking for a realtor in Calgary.

Thnx

 

[hassanbukhari]

Dear Faisal, Since you are in real estate can you please let me know what is better in current condition to rent or buy. Since the property prices in GTA is going crazy what you think where it will stop. Its all feel like bubble. Rents are very low as compared to the sale prices.

 

[jamescharls123]

If you want to get financial return within 5 years than buying two small houses would be much better for you. From these two houses you can use one house for your personal use and rent out the other one. After 4 or 5 years when the value of your rented house will increase you can sell it out.

 

[jazzalbart]

Well, I just want to say that whether you are buying or selling, work with a professional real estate agent, who knows all about real estate market. With a right real estate agent you will have the added benefit of working with an associate who takes the time to clearly identify and understand your needs when buying, selling or investing. You should try to get a referral from a friend or family member who has worked with the agent.

 

[Aquib]

We have the option of buying

1. a big house,
2. two smaller houses, or
3. a small house and put the rest of the money in the bank.

We intend to
1. a big house - rent it out and in return, we will rent a cheaper place
2. live in one and rent the other one out
3. live in it and put the money in a term deposit and collect interest

We do not need a mortgage. We are looking at the fiancial return in 5 years time - since we may not stay there forever but would like to invest our money. Your input is appreciated!

Hi panda ,
Sorry , if you dont mind can i ask you which is your country of citizenship .

As if you from india then i say that - buy some property in India , like in mumbai . If you buy new flat range 50 Lac to 1.5 crore. Which are under construction from big builder , you will get following benifits :
1. Any thing u transfer from Canadian bank account to Indian builder/NRE acc will be classed as tax free in india , you can sell it anytime and take all capital back to Canada tax free , though profit/Capital gains is taxable .
2. In City like mumbai for (50 lac inr) 100K $ you will hardly get 1 bedroom flat in tower , can rent it for 40,000 rs a month . 4,80,000 rs a year mean hardly any tax in India on it .
If you sell it in 10 year you will get lot of appriciation on it (as per market today) .

3. In canada you wont find apprication on Real estate (i mean compare to - upto double in price in 5-6 year in Indian city like mumbai) . Plus it will be hard to sell prop in Ca as compare to big Indian city like Mumbai , Delhi , banglore etc .

4. Only buy in Canada once you decide to live there . If you not sure then buy small flat only.

I telling you by my own experience .

I bought 1 house in UK on mortage. Now getting mad calculating what best for me - leave it on rent , sell it and clear mortage or give it to some rental Agencey , and things not so colourful once i spoken to rental people .

Whereas i bought one flat in India too and still i had to get possetion this december but property prices are up by 40-50% in 3 year , bought for 68 Lacs and its 95 Lac as of today. Still under construction and market say that it will be 60% + appriciation by Dec when prop is ready for possesion , i bought that at time when thought to apply for FSW thinking to sell it when getting settlement in Ca. But now i thinking to keep it as perm rental income source , plus if you buy new flat then MNC are happy to sign 5-10 year lease rental agreement with you in very good terms .

 

[steaky]

3. In canada you wont find apprication on Real estate (i mean compare to - upto double in price in 5-6 year in Indian city like mumbai) . Plus it will be hard to sell prop in Ca as compare to big Indian city like Mumbai , Delhi , banglore etc .

4. Only buy in Canada once you decide to live there . If you not sure then buy small flat only.

I think you are wrong about the property market here in Canada.

Whether or not the property appreciate or sells quickly, depends on location and economic strength. I seen properties here in Toronto and Vancouver double in price in 5-6 years. Do you have actual Canadian experience when you come to your conclusion?

 

[Aquib]

I think you are wrong about the property market here in Canada.

Whether or not the property appreciate or sells quickly, depends on location and economic strength. I seen properties here in Toronto and Vancouver double in price in 5-6 years. Do you have actual Canadian experience when you come to your conclusion?

Toronto and Vancouver prices are stable know , google it , they say they are overprised and property bubble may get brust getting property prices may fall down .

Inastead of these big city , property prices rising in other areas though but not as fast as prices in India .
I dont have any Canadian experience but all know is from reading forums like this where experience people like you share there experiences.

May be I m wroung , but I feel safe to invest in growing economy we know well instead of new place like Ca , untill we live and understand it in better way .

 

[Galip]

We have the option of buying

1. a big house,
2. two smaller houses, or
3. a small house and put the rest of the money in the bank.

We intend to
1. a big house - rent it out and in return, we will rent a cheaper place
2. live in one and rent the other one out
3. live in it and put the money in a term deposit and collect interest

We do not need a mortgage. We are looking at the fiancial return in 5 years time - since we may not stay there forever but would like to invest our money. Your input is appreciated!

Now the housing market is very risky in Canada. Everything is overpriced.

If you have more than one property, and when you decided to sell one you will be asked to pay taxes on your profit. However if you have only one property you won't be asked to pay taxes.

A big house = High Property Taxes. I don't know how big you mean? But if you have a 4000 sqf house in Toronto your annual property tax will be more than 6000 dollars. You will also pay more for the maintenance.

It's another headache when you decide to sell your house. You can't sell it right away. Some owners wait for months to sell their properties. If you work with an acent you have to pay 2-3% commission, plus legal fees, etc.

I recommend you to buy a property if you're going to live, otherwise it's much better to invest your money in a different way.

 

[steaky]

Now the housing market is very risky in Canada. Everything is overpriced.

If you have more than one property, and when you decided to sell one you will be asked to pay taxes on your profit. However if you have only one property you won't be asked to pay taxes.

You are wrong. There are no tax on the profit if the property is your principal residence. If property is not your principal residence, it will be tax on the profit regardless if this is your only property.