Should I sell or Continue to rent out? By Perrii
Ontario Premier Kathleen Wynne and Finance Minister Charles Sousa unveiled 16 new housing measures recently to address mainly housing affordability in the province.
It’s the rent control tweak that concerns most investors. For an investor, it’s now very easy to calculate return on rental properties. Because the rent control puts a ceiling on income, Such a scenario may discourage many people buying new rental properties. Some investors may even sell their existing investment properties, believing that this is the top of the market. If that happens, the market may have increased supply, which in my opinion is unlikely to happen.
Some people might have planned to become a real estate investors when they are upgrading their lifestyle say from condo to a home, by converting the first property into a rental property. Such people may shelve such an idea now.
Here’s an article to help all such people.
When you own a home for the first time and planning to buy a new home, your options are:
- Sell the existing home and buy a new one or
- Rent out the current home and buy a new one
Here are some questions you need to ask yourself:
- Are you willing to be a landlord?
- If you are willing, how are you going to identify the right tenant?
- Once the tenant is in place, how will you handle, the issues associated with leasing?
- What is the cost of leasing or selling?
- If renting out, did you take into account vacancy and management fees?
- What is your long term goal? If passive income is one of your goals, is it not still better to have rental properties in your investment portfolio?
- What will the likely future value be? In the long term home prices are bound to go up even if price presumed to fall soon, which is unlikely to happen in my opinion.
- If sold, how will the money be invested? What will the return be? Is it going to be higher than renting out? How to compare both?
- Most important. Will you be able to get the required finance (mortgage) without selling the current home?
Broadly, factors to consider include:
- Your financial situation.
- Local market conditions, particularly for rental homes.
- Your plans or goals.
- Your tolerance for being a landlord.
- Current and projected home prices.
- Rate of return
- Taxes in general.
To build wealth, selling may not be the best option when you have alternatives. Consider all your options and avoid any hasty decision.
Need some assistance to decide? You can contact the author at 416 473 6100 or email:firstname.lastname@example.org