# Need a little advice



## envision29 (Jun 17, 2010)

I bought a brand new condo 5 years ago for 150K with 10% down payment. Today, my neighbour has sold his condo for 205K. My remaining mortgage is 110K + unlike my neighboor I have bought interior parking as well. If I would to sell I can easily ask for 215 to 230K which will give me a profit of 100-120K
*I want to ask your opinion on what should I do with my profit. *
At first I thought investing in rental property would be a good idea, example, buy a triplex live in one apt and rent the other 2. But then I compared prices of plexes to prices of houses and realized that for the same price I can get a much, MUCH better single family house. And I dont want to sell my condo (which for me is pretty luxurious) in order to move into an old triplex even if it's wiser financially. One detail that needs to be mentionned - my parents are presently renting a small penthouse, they have very low income of around 30K per year. They always showed interest in buying something but couldn't afford anything by themselves so they want me to buy something nice, move in with me and help me pay off the mortgage rather than paying the rent. I know that with their help I can buy something even better but I would prefer to have 2 separate entrances or maybe a house bi-generation (if they exist). So I am wondering, if instead of buying a duplex/triplex, I am buying a house with the profit I made on the sale of my condo, can the bank give me a bigger mortgage if they know that my parents will help me paying it off (just like If I would to buy a rental property) ? 

Here's what bank told me so far :
Condo profit 100-120K
My salary - 50K
Parents salary - 30K

Rental property price shopping up to 420K (depending on income from rental property)
Single house property shopping up 320K 

Maybe I should consult with construction company regarding a model of a house that would accomodate 2 families.

Any thoughts/suggestions are very welcome.


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## GeniusBoy27 (Jun 11, 2010)

RE: Bank mortgage -- yes, you can probably get more if your parents were "tenants" per se, but I guess the best people to answer that is a mortgage broker/bank.

I think there's lot of options for houses that could fit 2 families, but it depends what you want to do in the long run, and how integrated you want to be with your parents. In theory, the best option would be a duplex, but it depends on where you want to live, etc ... Do you really want 2 separate kitchens, etc.? Would your parents accept a basement? There are lots of different options to think about ...


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## kcowan (Jul 1, 2010)

I think the price range will dictate what you can buy. A duplex/semi with a door through the shared wall might be the best investment. Anything else might be too custom to sell when the time comes. You want to maintain separation.

My friend had an inlaw suite in his home. I stayed in it when his inlaws were in Florida and at their cottage. The separation made it very pleasant (joined through a shared laundry room).


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## Cal (Jun 17, 2009)

I think you should make your financial assumptions on what you have calculated on your own. You state, that your parents have 'very low income'. I would use any money they give you to pay down the mortgage, sort of like a bonus, and would not count on it for mortgage payments.

At best I could see a lender assessing the amount to lend you for a property that you would buy, that has (for example) a basement apartment, that would rent for $800 a month, and give you credit for income of 1/2 that in monthly rent. But that (in this example) would only raise your annual income to about $55K for their lending purposes.


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## tinypotato (Jul 27, 2010)

It sounds like you are on the fence about whether your next move will be to find a home (not giving up on the comfort / luxuries) or for investment purposes. I think determining which is higher priority (home vs. investment) will help you in your decision.

It's likely that the bank will let you use some of the "rental" income from your parents to qualify. You can discuss that with them when applying for pre-approval.

Also, I'm not sure if this possible or desirable for you, but maybe you and your parents can buy the house together...that way all of your incomes can be used to qualify.

That being said, it's most important to stick to a budget that you are comfortable with and one that is realistic. Just because the bank is willing to lend it to you does not mean it's the best option to use it all.


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## Cal (Jun 17, 2009)

Upon rereading....what should you do with your profit?

Not sure how the rest of your financial picture is...but I would consider staying in the condo, and using the equity to diversify my net worth away from RE. Making sure the RRSP and TFSA are utilized fully.


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## iherald (Apr 18, 2009)

My mortgage broker would only use the 'rental income' from my duplex, if the apartment I was renting was a legal apartment. At the time I didn't know if it was, so the rent was not used. But, as Cal said, they would have only used 50% of the rent anyway.


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## Shayne (Apr 3, 2009)

The bank will not consider any income for your parents as rent unless there is a legal suite in the home.

You can get around this by purchaing the property with your parents and use all of their income.


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