# Sell or keep renting dilemma



## sepandee (Aug 14, 2015)

Just keen on getting as much input as I can on this matter from friends, family, colleagues, and strangers 

I acquired a property in Toronto two years ago. It was around $1MM, and now it's around $1.4MM, according to my friend/family broker. Not bad. But also according to him, should I want to sell, right now is a great time in Toronto, with the market hot and with the possibility that in 6-12 months from now, we'll be in a recession with a possibility of price correction.

The other issue is that, while this is a really good property in a good recession that has pretty much been recession-proof for the past 60 years, it's a property I rent out but comes with a high cost due to some intricate features in the backyard that add to the cost of maintenance and utilities. Combine that with the fact that I bought this house just as I left my job to go back to school and couldn't acquire a decent mortgage , I was left very much in the negative in terms of cashflows. It also seems to be difficult to rent out, with last year going 15 days empty, due to possibly having only one bathroom on the top floor (with 3 bedrooms) and one more bathroom in an unfinished basement.

I can now pay down more of the mortgage and secure a better rate with a traditional bank (albeit fixed though, around 2.8 or 2.9%). But this means that, should I be able to rent it out without any vacancies, I'll be able to generate a very, very small cashflow.

This is the most conservative and safest option I have. The other option is selling the property and sitting on the money (plus the additional money that I had planned to pay down the mortgage) and wait for a better opportunity to present itself within the next year. 

ANother alternative I was thinking about was to invest some of the money in a portfolio of stocks, bonds, and ETFs, buying a smaller property somewhere in or outside of Toronto, and using the rest to buy a rental property somewhere with a better rental income. There are much better places in the world with a better ROI. Unfortunately, I don't have enough time to thoroughly research this option. And the CAD has fallen.

Would be interested in hearing some thoughts. Thanks.


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## Spudd (Oct 11, 2011)

I would totally sell it. It sounds like it's not cash flowing, and it's appreciated by 400k since you bought it which is amazing. I really do believe a crash is coming so I would take my profits while I still had them.


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## jaybee (Nov 28, 2014)

I would totally sell. If it s not cash flow positive, I would get out while you can.

RE in Toronto is long over due for a correction.


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## NMoney (Aug 14, 2015)

*Totally Sell it*

Sell it. Read greaterfool.ca for motivation


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## none (Jan 15, 2013)

Sell that overpriced sucker!


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## heyjude (May 16, 2009)

Sell it ASAP. take your profit, pay the taxes and amputate your cash flow losses. It's a no brainer!


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## sepandee (Aug 14, 2015)

Just to play devil's advocate and keep the conversation going...

Regarding a crash or price correction, the neighbourhood which my property is in hasn't really seen a great price correction and has been pretty much recession-proof for the last 60 years.

As for cashflows, cashflows are one part of the calculation. The other part is the capital gains. It has showed it can gain a lot, and it's generally a very good land with the potential to still keep going up.

And, if I reduce the mortgage by a third (let's say it's around 700k and I bring it down to 450k) and get on a better mortgage, which I'm confident I now can, then it'll generate a slight positive cashflow. 

Finally, I don't have any plans as to what to do with the money that'll be left over from the sale. I can just sit on it for a year and look for opportunities right here in Toronto's real estate, but if you're acting conservatively: no plan = don't sell. 

Back to you


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## jaybee (Nov 28, 2014)

^ The answer to the OP's question is so obvious, I can't tell if he\she's trolling or not.

Market correction or not, it makes no sense to tie up this much capital in a cash flow negative property....especially for someone, "going back to school".


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## sepandee (Aug 14, 2015)

jaybee said:


> ^ The answer to the OP's question is so obvious, I can't tell if he\she's trolling or not.
> 
> Market correction or not, it makes no sense to tie up this much capital in a cash flow negative property....especially for someone, "going back to school".


lol. I can see why you'd think that but I swear I'm not trolling. I've heard the price correction and crash argument so many times and nothing has happened. Not to say that this means it'll never happen, but it hasn't happened so far despite all the doom and gloom predictions.

Negative cash flows, yes. But I spent around (more exact numbers) $420k for a $1.2MM home. Now it's $1.5MM, maybe even $1.6MM. If I sell it at 1.5MM, after I take all teh costs out, including mortgage payments, capital gains tax, commission, land transfer tax, maintenance, etc., I will have made around $150k from the gain in capital. In two years $150k for $420K + $45k costs after revenue deduction. Not bad, considering the negative cashflow.

But just because it's been a good 2-year run doesn't mean that in 3, 5 or 10 years it won't be a good investment anymore. And I can turn the cashflow positive from next month, albeit a small one. So, if I don't have a plan for what to do with the proceeds of the sale, and it's a good property with more potential, what's wrong in keeping it?


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## sepandee (Aug 14, 2015)

Forgot to mention that part of the cashflow being negative is because so far in two years, I've had two tenants. Each time that's one month's rent gone to commission. And one year it was empty for half a month. The intricacies of the backyard (water features, etc.) were also part of the reason, and after two years I think I'm having a better handle of it which should translate into slightly lower costs.

Finally, and at the risk of beating a dead horse, I can reduce my principle, get a better mortgage rate, and reduce my mortgage payments almost by half.

Seriously, I just want a conversation and to hear from your ideas. I'm not refuting anyone's suggestion. Just hear to listen. Thanks, and I appreciate all the feedback.


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## OnlyMyOpinion (Sep 1, 2013)

You provide no context - this rental property relative to your other assets and income. Is this your only asset or a subset of other investments? Do you have the means to carry the house ad still have a maintenance budget if it sits vacant for a month or two? What is your rationale for paying down the mortgage on a rental property, etc. 
One gets the impression that you have rolled the dice, been a bit lucky but should cash out while the getting is good. That impression may be totally wrong however.


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## sepandee (Aug 14, 2015)

OnlyMyOpinion said:


> You provide no context - this rental property relative to your other assets and income. Is this your only asset or a subset of other investments? Do you have the means to carry the house ad still have a maintenance budget if it sits vacant for a month or two? What is your rationale for paying down the mortgage on a rental property, etc.
> One gets the impression that you have rolled the dice, been a bit lucky but should cash out while the getting is good. That impression may be totally wrong however.


Fair enough. Very appropriate questions. 

This is my only asset, except for a measly stock investment in the high thousands.

I can carry the house vacant for 3,4, maybe 5 months. But that's about it. However, I can also reduce the rental price should that be the reason why it's not being rented out, and be slightly in the negative in terms of CF instead of slightly positive.

The rational for paying down the mortgage and reducing it by a third is so that I can get the mortgage transferred to a traditional financial institution (i.e. one of the five big banks) at 3/5th of the rate I have it at now with a non-traditional financial institution. This would help me get some positive cashflow, albeit a small one and assuming that it rents out. 

NOTE: I'm being very conservative here. I'm essentially calculating my cashflow by assuming that 1) I will miss out on a month's rent every year due to a new tenant coming in, 2) I've reduced my future rental price by $100 compared to what I was renting out for in the last two years, and c) I'm assuming that the property will be vacant for 1-month of the year. Given all this, I'm around $700 in the positive per month averaged over a year.


I did roll the dice, but maybe not. When I bought this house, I knew that it was a great property, in a great almost-recession-proof location, and I actually planned on living there myself and didn't mind having the expensive backyard with the water features. Unfortunately, because I quit my job at the same time to go back to school, I had to rent it out. But I still knew that it was a good property.


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## Feruk (Aug 15, 2012)

This is pretty risky... All your money is in one big basket, so a housing turnaround would be disastrous. You've made a great return in a short time period, but ask yourself, are you being smart or greedy? Very simple way to value this is to look at chance of continued market rise and potential gain/loss a couple years out. For easy math let's say there's a 60% chance of a turnaround and you could lose 30%, and a 40% chance of continued growth and you can make another 20%. So the investment decision is 40%*(20%*$1.4MM) - 60%*(30%*$1.4MM) = -$28K, which would mean you're more likely to lose money than make money. Of course the downside is all these numbers are guesses, but you need some way to value your decision. 

You cash flow $8.4k/year (700/mo * 12). Take your $570K and invest in the stock market and you can expect average 6% returns, yielding $34.2K... Not to mention that the place likely wouldn't cash flow anything if you just had 20% down. Your return isn't exactly very good. I bet you don't include the opportunity cost of not investing that money elsewhere into your numbers. 

An additional risk not mentioned is risk someone is gonna do serious damage to your $1.4MM house. I get owning and living in a place that expensive, but renting out a place that expensive boggles my mind.

In my unprofessional opinion owning this investment (considering the size of your portfolio and the risks) is downright bad money management, but you can't see that because you have been lucky thus far and generated a great return in a short period of time. If I was in your position, I'd sell the thing and either invest all the money into stocks or invest some in stocks and buy 1 to 2 rental properties closer to the $500K mark to spread out your risk.


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## RBull (Jan 20, 2013)

Get rid of the house. Supposedly you've made some good money on it in a short time. The market has more likelihood of going down rather than up.
You keep saying its recession proof, a great location etc but also say home has shortfalls making it harder to rent and more expensive to operate. You're leveraged and can't manage it it things fall apart more than a few months, unless you refinance etc It sounds like you've been lucky or very good if the profit is anywhere near that, but don't count your money until that thing is sold. If it's good then you should be able to do the same thing again and really turn your realized money into something. 

Sell, lock in your profits and invest in something else. Everyone is saying that but you seem to be looking for someone to support your obvious bias to keep it.


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## sepandee (Aug 14, 2015)

RBull said:


> Get rid of the house. Supposedly you've made some good money on it in a short time. The market has more likelihood of going down rather than up.
> You keep saying its recession proof, a great location etc but also say home has shortfalls making it harder to rent and more expensive to operate. You're leveraged and can't manage it it things fall apart more than a few months, unless you refinance etc It sounds like you've been lucky or very good if the profit is anywhere near that, but don't count your money until that thing is sold. If it's good then you should be able to do the same thing again and really turn your realized money into something.
> 
> Sell, lock in your profits and invest in something else. Everyone is saying that but you seem to be looking for someone to support your obvious bias to keep it.


As I said, I'm just playing devil's advocate. I am in fact leaning towards selling it. I'm not sure why there's hostility towards asking a question and just wanting a conversation


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## Sampson (Apr 3, 2009)

sepandee said:


> And, if I reduce the mortgage by a third (let's say it's around 700k and I bring it down to 450k) and get on a better mortgage, which I'm confident I now can, then it'll generate a slight positive cashflow.


This will not make it a good investment. You could pay cash for the unit, $1.4M, then have a positive cash flow of $10 per year and it would be a terrible investment.

Sometimes people are too focused on 'positive cash flow'. Calculate your return using a proper investing metric like cap rate or cash-on-cash return. Use this to judge whether it is a good investment or not. Personally, for an individual investor, I would also consider all tax implications on income, write-offs on expenses etc and calculate a total return.


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## Just a Guy (Mar 27, 2012)

Look, you seem to like real estate as an investment, why not sell this (bad) real estate investment and, with the proceeds buy a bunch of lower cost, cash flowing rentals, or even a small apartment block? Multiple doors means multiple streams of income. He chances of everything being vacant at the same time is very remote. The money you can make would be significantly more for the same investment dollar and you'd still be in a fairly safe investment.


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## sepandee (Aug 14, 2015)

Just a Guy said:


> Look, you seem to like real estate as an investment, why not sell this (bad) real estate investment and, with the proceeds buy a bunch of lower cost, cash flowing rentals, or even a small apartment block? Multiple doors means multiple streams of income. He chances of everything being vacant at the same time is very remote. The money you can make would be significantly more for the same investment dollar and you'd still be in a fairly safe investment.


Very good idea. I was thinking about this myself. The only downside is that you'll have to deal with 3+ tenants. I've been a landlord for 7-8 years now and sometimes one tenant is enough to suck out all the life in you  But such is life. Gotta work for the $.


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## Just a Guy (Mar 27, 2012)

One bad tenant, right now, could damage your entire investment and cost you a small fortune. I'm not talking 3 units by the way, that still won't make you money, for 1.4M I'd be looking around 15+ tenants making around $15,000/month or more.


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## sepandee (Aug 14, 2015)

So I did some calculation, and I don't mind sharing it with you. #s are roughly accurate.

Purchase date: Sept. 2013
Purchase Price: $1,170,000
Everything that went out of my pocket, including downpayment, bank fees, land transfer tax: $440,000

Operating Income, Sept 2013-Sept 2014 and Sept 2014- Sept 2015 (rent - all costs, including mortgage payment and any taxes): $-24,000 and -$22,000

Current Sale Price (estimated): $1,500,000
Current mortgage principal: $770,000
Commission: $60,000
Capital Gains Tax: $30,000
Other fees: $3,000

In case anyone wants to crunch some numbers 

Again, thank you everyone for your input. I do really appreciate it, truly.


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## RBull (Jan 20, 2013)

sepandee said:


> As I said, I'm just playing devil's advocate. I am in fact leaning towards selling it. I'm not sure why there's hostility towards asking a question and just wanting a conversation


You mistake frankness for hostility. 

Good luck whatever you choose to do.


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## none (Jan 15, 2013)

Also, it's a no brainer so there's not much a conversation to be had.


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## fraser (May 15, 2010)

Sell now.

Remember the old stock trading phrase...'pigs get slaughtered'.

You have no gain until you have realized the proceeds of sale.


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## Just a Guy (Mar 27, 2012)

When everyone, but the OP, is saying sell...but the OP keeps asking for a different answer, then you're not looking for advice, you want people to justify your decision. 

Experienced advice says sell, you want to keep...so keep it. It has to fall a long way before you'll be in trouble.


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## sepandee (Aug 14, 2015)

Just a Guy said:


> When everyone, but the OP, is saying sell...but the OP keeps asking for a different answer, then you're not looking for advice, you want people to justify your decision.
> 
> Experienced advice says sell, you want to keep...so keep it. It has to fall a long way before you'll be in trouble.


As I said, I'm actually leaning towards selling. I just wanted to push to see if someone can make a good argument for keeping it. But ok, keep saying I'm ignoring everyone's advice and that I don't want a conversation.


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## jaybee (Nov 28, 2014)

Hi Sapandee. Sorry my post earlier in this thread was really tongue in cheek, but I really think it is a no brainer to sell and lock in some profits. If you don't mind being a landlord, why not sell and reallocate the capital into another property that cash flows better?

For what it's worth, "Just a Guy" seems to be one of the more knowledgeable posters on this forum with regards to investment real estate. I would heed his advice if I were you.

Good luck either way.


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## Just a Guy (Mar 27, 2012)

sepandee said:


> As I said, I'm actually leaning towards selling. I just wanted to push to see if someone can make a good argument for keeping it. But ok, keep saying I'm ignoring everyone's advice and that I don't want a conversation.


No one is giving you a good argument to keep it, because there isn't a good argument for keeping it. You've got too much money tied up in one asset, the return on investment is pretty bad compared to what you could be getting, for real estate it's high risk, and the potential for gains is probably fairly low as most sane people think the market is heading for some sort of correction eventually. The only thing going for it, as I said before, is that you don't need to sell it to avoid losing real money.

As anyone can see, you've had a good run, but even the investors with the thickest rose coloured glasses out there (no offence to those investors) can see that there is probably very little upside to this "investment" and that other opportunities would probably be better. You've benefitted from an unprecedented run up in real estate prices, and a strong economy which has created a demand for high end rentals...both appear to have hit a few roadblocks lately. As no one could predict that these two events would occur, I'd say your gamble paid off handsomely and it's time to cash out from the table before the house's odds start to take away your winnings. If this were more of an investment, you may have had the conversation you wanted.


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## Causalien (Apr 4, 2009)

I did a similar calculation as OP at some point and was leaning towards selling. But before I did that I did a test to see how much I can rent out the place this year. It turns out that I managed to double the rental income this year and the demand is through the roof. 3 years ago there were 3~4 inquiries. This year it is 7 and within 1 day.

This is the sole reason I am renting it out again. Also, this is in Vancouver so the situation might be different since the housing market has less to do with employment income.


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## Berubeland (Sep 6, 2009)

I can make an argument for keeping it... 

First of all you mentioned that you originally bought it for your own personal residence. Maybe even thought you can't live there now due to your schooling, you still want to live there. 

Second transaction costs in real estate are horrid. It will cost you $84,750 to sell this asset plus other cost associated with selling such as getting rid of the tenant, carrying costs, painting/reno costs if there are any. 

In the USA only upscale high demand locations escaped relatively unscathed. Maybe you think your area is more likely to weather the storm. 

In my opinion there is no point in churning real estate. Selling this piece of real estate and paying $84,750 for the privilege, only to buy another property or 15 crappy properties far away from from you, is a foolish idea. 

The only point to that is to get out of real estate as a class altogether. Other than that a 1 million dollar property in Toronto is nothing special and they don't cash flow, but neither do the condos or anything else around here. 

My thoughts...


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## LBCfan (Jan 13, 2011)

sepandee said:


> As I said, I'm actually leaning towards selling. I just wanted to push to see if someone can make a good argument for keeping it.


No one will. There isn't one to be made. 

OK if you want one here it is: It's in a great location in Toronto and has never seen a correction. Therefore it will continue to increase in value by 25% (or whatever) annually until judgment day. There are all kinds of people lining up to overpay for cash-flow negative properties in the GTA and that supply will only increase.


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## Financialplannerdude (Apr 30, 2015)

As Garth often says, property is the most emotional of investments. The wife and I are on the countdown (8-10 years) to retirement and we’ve been discussing how we’re going to approach this. From a pure investment cash flow tax point of view it makes the most sense to sell our first rental property (we own 3 rental units in Germany) but we’re hesitant to pull the trigger because there’s an emotional attachment to it. We became accidental landlords and it was such a good experience that we bought two more units. There is a sense of pride and ownership that you don’t have when you’re renting. It’s main the reason why so many people end up buying even though on paper renting makes more sense. Family pressure doesn't help either, no matter what way you cut it everyone is going to think you’re crazy to sell. I'm personally very happy being both a tenant and a landlord. 

On the hand when in the world will you ever have liquid a half million dollars to work with (I believe that's the amount of your equity). The after tax income it throws off could not only pay the rent on a very nice place but send you and the wife/girlfriend on a nice trip around the world each year. 

Few thoughts if you decide to sell

If you can sell it into a bidding war, that could that could conceivably add 100 to 200 grand to the price. Money right in your pocket
Read Millionaire Teacher - one of the best investing books out there!
Get a good for fee financial planner and if you’re inclined let him manage 75% and you 25%.

And finally remind people when they comment about you renting, that you earn more doing nothing than they do working 40 hour a week!


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## My Own Advisor (Sep 24, 2012)

The way I see it, struggling for cash flow (securing, keeping tenants) but great appreciation in recent years. We are entering a recession (i.e., likely more struggles with cash flow coming).

I believe the answer is obvious but you need to be comfortable with your decision!


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## cashinstinct (Apr 4, 2009)

In my opinion, you have been lucky the value increased so much.

I would sell for sure.


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## Ottawa Realtor (Aug 16, 2015)

Listen to Just a Guy. He's correct in his assessment. Just a couple of other things that will affect any decision, though. The Toronto Real Estate Board stats show that prices increased 13% in the last two years, (which is better than Ottawa by the way) so your home may only sell for a little over $1.3 mil. Everybody believes their house is the best and recession proof. I wish I had a dollar for every time I heard that. Ask your friend/realtor to explain exactly why your house should increase more than the average. Otherwise you find that it sits on the market and you end up having to lower the price repeatedly. If a buyer has a decent agent he will tell them what you paid and you will have to explain why yours is worth so much more than the average. You may end up having it listed for a long time with little or no money coming in.


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## sepandee (Aug 14, 2015)

jaybee said:


> Hi Sapandee. Sorry my post earlier in this thread was really tongue in cheek, but I really think it is a no brainer to sell and lock in some profits. If you don't mind being a landlord, why not sell and reallocate the capital into another property that cash flows better?
> ...


No worries. My worry is that I reallocate into a property that might have better cashflow, but won't appreciate in value as much.



Just a Guy said:


> No one is giving you a good argument to keep it, because there isn't a good argument for keeping it. You've got too much money tied up in one asset, the return on investment is pretty bad compared to what you could be getting, for real estate it's high risk, and the potential for gains is probably fairly low as most sane people think the market is heading for some sort of correction eventually. ...
> 
> I'd say your gamble paid off handsomely and it's time to cash out from the table before the house's odds start to take away your winnings. If this were more of an investment, you may have had the conversation you wanted.


 The predictions for market corrections have been coming from many directions for the past 20 years. So far it's just gone up, pretty much.

In my ideal world, I would take out this money, invest in a cheaper property with better cashflow here, invest in another property in Western/South Europe with again better cashflow, invest some of the rest in stocks/bonds/ETFs, and aggressively invest the little bit of remainder in something else. Alas, I'm not good with the stock market, and the few times that I did have someone else managing it for me it didn't go too well.



Causalien said:


> I did a similar calculation as OP at some point and was leaning towards selling. But before I did that I did a test to see how much I can rent out the place this year. It turns out that I managed to double the rental income this year and the demand is through the roof. 3 years ago there were 3~4 inquiries. This year it is 7 and within 1 day.


 No way I can double my rental. No way. When you're renting out for $4000+, you're catering to a very small section of the market, and even then that's pretty difficult. From my experience, renting out a house as one unit in a nice location with a rent that is above $3500 is just not the best way to generate cashflows, on average.



Berubeland said:


> Second transaction costs in real estate are horrid. It will cost you $84,750 to sell this asset plus other cost associated with selling such as getting rid of the tenant, carrying costs, painting/reno costs if there are any.
> 
> ...
> 
> ...


How did you get that $84k number?

I would love to get out of real estate, but it's been working well for me for the past 10 years, and I have very little clue about other investment options, such as the stock market. And as I indicated, the times that I have been in the stock market has gone terrible for me.



Financialplannerdude said:


> As Garth often says, property is the most emotional of investments.
> 
> Get a good for fee financial planner and if you’re inclined let him manage 75% and you 25%...


Garth Turner? He's actually the tenant of a friend of mine. Garth is great, and he's been right on a lot of issues, but real estate hasn't been one of them. He's been leading the price correction drumbeat for the past two decades. I mean, sure, maybe there will be a price correction this year, soon, and definitely eventually, but even a broken clock is right twice a day. 



My Own Advisor said:


> The way I see it, struggling for cash flow (securing, keeping tenants) but great appreciation in recent years. We are entering a recession (i.e., likely more struggles with cash flow coming).
> 
> I believe the answer is obvious but you need to be comfortable with your decision!


 Exactly. I want to sell, but I worry so much about whether it's the wrong decision!



Ottawa Realtor said:


> Listen to Just a Guy. He's correct in his assessment. Just a couple of other things that will affect any decision, though. The Toronto Real Estate Board stats show that prices increased 13% in the last two years, (which is better than Ottawa by the way) so your home may only sell for a little over $1.3 mil.


 13% is the average. It's different from neighborhood to neighborhood. The estimated selling price i came up with is based on the listings sold in the area in the past 2 to 6 months.


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## jaybee (Nov 28, 2014)

sepandee said:


> Garth Turner? He's actually the tenant of a friend of mine. Garth is great, and he's been right on a lot of issues, but real estate hasn't been one of them. He's been leading the price correction drumbeat for the past two decades. I mean, sure, maybe there will be a price correction this year, soon, and definitely eventually, but even a broken clock is right twice a day.


Hhaah.* Please convince your friend to jack the **** out of Garth's rent*. I wonder how he'd react? And yeah, you know what, Garth has been wrong for far far too long to be taken serious. Having said that, I hope you realize that Toronto Real Estate is ridiculously over priced.


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## sepandee (Aug 14, 2015)

jaybee said:


> Hhaah.* Please convince your friend to jack the **** out of Garth's rent*. I wonder how he'd react? And yeah, you know what, Garth has been wrong for far far too long to be taken serious. Having said that, I hope you realize that Toronto Real Estate is ridiculously over priced.


I know it is. For some reason this city thinks it's London or Tokyo, when it's not! But, so far, no price correction.


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## jaybee (Nov 28, 2014)

Maybe, you mentioned this upthread, but another consideration would be what sort of percentage of your net worth is tied up in this property. If it represents a significant portion of your net worth, the case becomes even stronger for selling.


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## none (Jan 15, 2013)

As for garth being wrong about the correction and clock twice a day thing.... 

Just because you haven't had an accident it doesn't mean you shouldn't wear a seatbelt.


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## Just a Guy (Mar 27, 2012)

The price correction hasn't happened, in my opinion, because the bank rate keeps falling. With cheaper money, people could "afford" to pay more for housing. That trend doesn't have much more to go. We're at, the unheard and unimaginable, .5% rate. No one would ever have predicted rates going this low over the past 20 years. These numbers are unsustainable, they won't allow 40 year mortgages again, there is nothing driving up the prices anymore unless we enter hyperinflation...

If interest rates rise, I'll guarantee there will be a correction in housing prices as it will cost more to borrow money...since they can't go down much more, I can't see prices rising much more as people can't afford to pay much more. Most houses are bought based on payments, not on price.


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## Ottawa Realtor (Aug 16, 2015)

sepandee said:


> 13% is the average. It's different from neighborhood to neighborhood. The estimated selling price i came up with is based on the listings sold in the area in the past 2 to 6 months.


I've had this discussion with investors and real estate agents many times before. Over a relatively short period it's possible for one type of property or one area to increase more than another. But over the long haul the average will prevail. For example, if you take the position that one type of home, say freehold townhomes, increase at a faster rate (say 6%) than freehold detached homes that are increasing at 5%. Then if you do the math in 20 years or so the average townhome will be worth more than the average detached home which can never happen. This is also true of homes in one area increasing more than homes in another area. It's possible your home is worth what you say and comps are the most important part of the picture. I just take exception to the argument that one neighbourhood has increased more than another by almost double over a couple of years.


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## TorontoGQ (May 18, 2015)

*If I was you..*

I'd sell it and put that money in REIT or some other medium risk investment vehicle while in school. 5% return is not uncommon assuming you're an accredited investor


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