# Not a divorce, but similar.



## OK-bachelor (May 24, 2011)

Hi, 
I am doing some investment and living arrangement research for about 3 years from now. I know most advice based on that time frame would be speculation and interest rate sensitive, but I am open to all ideas and opinions about what steps I could take next. 

I've co-owned in the tri- cities with my sister and her husband for 11 years, and when they eventually decide to move to an area more suited for them , I will have to change my lifestyle to cover 100% ( No spouses , or dependents ) of a mortgage or rent and figure out what the best thing to do with the approx . 200 k equity that will be in my pocket . I am not excited about going from sharing all expenses and going way up from my small $670 ( my half ) of the mortgage , to probably a $ 1500- 2000 mortgage , as I would probably need to borrow around 200 k for a move to my own property.

I currently have about 80 K in RSP'S @ 6.36 % , and in 3 years it should be over 110 k *knock on wood* , as paying down the mortgage quicker was never an option due to my sister and bro-in-law's lack of extra funds . Makes sense to me for a co- own type arrangement - if you can't pay the mortgage off quick , then RSP that money and eventually earn some lost % $ back .

I'm not sure being a landlord is my thing , but its not off the table yet.
I would really like an enclosed garage and some privacy like what I have now , and to continue living without strata BS and the associated expenses. I would rather fix up a small single family dwelling , or look into a converted commercial space , floating home , rent and invest my equity , etc. etc.. I hope to have some accessible TFSA money for the un-known expenses that will come up . I need some food for thought. Thanks in advance !!


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## I'm Howard (Oct 13, 2010)

Please excuse my ignorance, what are the Tri Cities??


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## Sherlock (Apr 18, 2010)

Kitchener-Waterloo-Cambridge?


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## Karen (Jul 24, 2010)

If he lives in B.C., it would mean Coquitlam, Port Coquitlam, and Port Moody - adjoining suburbs of Vancouver that are commonly referred to as the Tri-Cities.


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## OK-bachelor (May 24, 2011)

Karen said:


> If he lives in B.C., it would mean Coquitlam, Port Coquitlam, and Port Moody - adjoining suburbs of Vancouver that are commonly referred to as the Tri-Cities.


 Yes , that is right , north of the fraser river in greater Vancouver area.


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## Andre112 (Apr 27, 2011)

few questions,

what's the arrangement with your sister and her husband when they move out? Are you going to pay them 200K for the part that they have been paying for the past 11 years?

Are you able to keep up with the morgage payments if the interest rate goes up? 

Is it a townhouse? It usually requires new roof after 15 years or so. It's gonna be a huge bill. Will you have money to pay for that?

The market can go up or down. Are you prepared if it price goes down?


Don't over stretch yourself to keep a property. This is what I think.


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## OK-bachelor (May 24, 2011)

Andre112 said:


> few questions,
> 
> what's the arrangement with your sister and her husband when they move out? Are you going to pay them 200K for the part that they have been paying for the past 11 years?
> 
> ...


 It's a 2000 sq. BC box , built in 75 , and finished upstairs and down with an attached garage. Similar houses on this street sell for 530 now, and we paid 219 11 years ago. We are locked in fixed rate for 4 more years @ 4.21%. The title is 50/ 50 between my sister and I and we will have about 150 k left owing on the loan in 3 years . I would roughly have to borrow 300 K in 3 years to buy their half out. Our relationship is typical family stuff at times, but overall it's unusually good. 
300 K is a lot to borrow in my mind, and I really don't want to go backwards much. Forward is good.


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## Cal (Jun 17, 2009)

A 3rd option would be to buy them out....but rent out a room to a co-worker or someone you know, thus cutting some of your costs.

Also...not sure on your RSP comment 80K @ 6.36%...is that in preferred shares? Or in a GIC? The wording of the comment makes it sound as if the $ is not locked in (like in a GIC), but is in a fixed rate (like in a preferred share)?


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## OhGreatGuru (May 24, 2009)

What do you think the FMV will be in 3 years? I'm not clear on why you would need 300K to buy her out if she is leaving you with the 150K mortgage.


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## marina628 (Dec 14, 2010)

He will have to pay her share of the equity and to do it will have to refinance leaving him with a $300,000 mortgage.I would sell it and find something a bit cheaper if it is just for yourself .


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## OK-bachelor (May 24, 2011)

Cal said:


> A 3rd option would be to buy them out....but rent out a room to a co-worker or someone you know, thus cutting some of your costs.
> 
> Also...not sure on your RSP comment 80K @ 6.36%...is that in preferred shares? Or in a GIC? The wording of the comment makes it sound as if the $ is not locked in (like in a GIC), but is in a fixed rate (like in a preferred share)?


 Buying them out would save a chunk on on the various fees that you see during a regular real estate transaction, but I am not crazy about how busy the roads are getting close to my home , so perhaps a smaller place on a quieter street would be more suitable . I would even consider oddball homes like converted shipping containers, which I think look pretty funky , and only cost about 1/3 of what a traditional stick frame home cost to build. 

My RSP's are mutuals that lost 10k in 2008 , gained 22.5% in 2009 , and gained 6.36% in 2010. They are with Berkshire investments , under the big umbrella of Manulife. Due to not being very liquid, RSP's are not as good as real estate, but they are fine . Looking at the state of humanity, I am very grateful to be in this position .


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## OK-bachelor (May 24, 2011)

marina628 said:


> He will have to pay her share of the equity and to do it will have to refinance leaving him with a $300,000 mortgage.I would sell it and find something a bit cheaper if it is just for yourself .


 Yes, that is why its similar to a divorce.

I think town home/ condo stratas would be a nuisance, but I have no real experience with them . I am facing the fact that I have been spoiled with the freedom of a free standing home ,where I can paint it whatever color, leave my shoes on the steps, leave the garbage can wherever , pee in the yard, and grow the lawn into a jungle if I wish. 
But hey. thats life, all good things come to an end.


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## Karen (Jul 24, 2010)

Those of you suggesting that he sell the house and buy something cheaper are forgetting this house is in a suburb of Vancouver. The OP tells us that it's a 2000 square foot "box" built in 1975, currently worth about $530,000; he's not going to find a house in the Greater Vancouver area for much less than that; that's about as low as houses sell for in this part of the country. He could find a nice condo or probably even a townhouse for less than that, but not a detached house.

I'm still puzzled as to why he would owe his sister $300,000. He says they paid about $220,000 for the house originally; add at least $10,000 for expenses (realtor's commission, legal fees, etc.) - that makes the amount it cost them $230,000. He says it's now worth $530,000, so even assuming they could sell it for $630,000 three years from now, less $12,000 to $15,000 for expenses, that would leave them with a profit of a little under $400,000. His half - about $200,000. That's the amount he said he would expect to have in his pocket after the sale, so why would he owe his sister and brother-in-law $300,000? Or have I missed something?

On a positive note, though - he's wise to be giving the situation serious thought several years before it it will have to be resolved.


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## OK-bachelor (May 24, 2011)

Karen said:


> Those of you suggesting that he sell the house and buy something cheaper are forgetting this house is in a suburb of Vancouver. The OP tells us that it's a 2000 square foot "box" built in 1975, currently worth about $530,000; he's not going to find a house in the Greater Vancouver area for much less than that; that's about as low as houses sell for in this part of the country. He could find a nice condo or probably even a townhouse for less than that, but not a detached house.
> 
> I'm still puzzled as to why he would owe his sister $300,000. He says they paid about $220,000 for the house originally; add at least $10,000 for expenses (realtor's commission, legal fees, etc.) - that makes the amount it cost them $230,000. He says it's now worth $530,000, so even assuming they could sell it for $630,000 three years from now, less $12,000 to $15,000 for expenses, that would leave them with a profit of a little under $400,000. His half - about $200,000. That's the amount he said he would expect to have in his pocket after the sale, so why would he owe his sister and brother-in-law $300,000? Or have I missed something?
> 
> On a positive note, though - he's wise to be giving the situation serious thought several years before it it will have to be resolved.


 Thanks for the comments . For example, if our house is worth 550k - in 3 years there will be approx. 150k left owing on the mortgage . If we sold we would clear 200 K each, and then if I wanted to buy a house again worth 550k I would need to borrow 350k . 
If would be the same formula if I bought her half out. 

Apparently you can still find a 1500 sq. ft. rancher in the tri cities for about 400 k that will need some TLC.


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## Cal (Jun 17, 2009)

OK-bachelor said:


> My RSP's are mutuals that lost 10k in 2008 , gained 22.5% in 2009 , and gained 6.36% in 2010. They are with Berkshire investments , under the big umbrella of Manulife. Due to not being very liquid, RSP's are not as good as real estate, but they are fine . Looking at the state of humanity, I am very grateful to be in this position .


Again not sure if it is lost in the wording, but I wanted to clarify. Holdings within RSP's generally are very liquid, being able to sell them with the click of your computer or a simple phone call to your broker. Perhaps it is the mutual funds that you are holding that are not highly traded, I don't know.

Although this is not a discussion for here, perhaps you should discuss this with your financial advisor or broker, if you feel your holdings are not easily tradable.

Just wait for a down RE market to find out how illiquid RE can be. And my broker does not charge me 4 1/2% to sell some shares like a RE broker.


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## OK-bachelor (May 24, 2011)

Cal said:


> Again not sure if it is lost in the wording, but I wanted to clarify. Holdings within RSP's generally are very liquid, being able to sell them with the click of your computer or a simple phone call to your broker. Perhaps it is the mutual funds that you are holding that are not highly traded, I don't know.
> 
> Although this is not a discussion for here, perhaps you should discuss this with your financial advisor or broker, if you feel your holdings are not easily tradable.
> 
> Just wait for a down RE market to find out how illiquid RE can be. And my broker does not charge me 4 1/2% to sell some shares like a RE broker.


 My CFP practices the long term conservative approach to investing. I wouldn't play around with a large sum of my money , until after I gained a significant amount of experience trading on the markets. The way I used the term 'liqiud' was in regards to how RSP's are heavily taxed if I cashed them in before I'm a 65 year old root .


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## kcowan (Jul 1, 2010)

OK-bachelor said:


> My CFP practices the long term conservative approach to investing. I wouldn't play around with a large sum of my money , until after I gained a significant amount of experience trading on the markets. The way I used the term 'liqiud' was in regards to how RSP's are heavily taxed if I cashed them in before I'm a 65 year old root .


I think you should consider liquidating the property. Put the money in something safe, and try renting for a while. You will find a comparable TH if you take your time and look around.

If you are not comfortable putting a big chunk of your equity in one asset class, then doubling down on real estate is probably not the best choice. Stay away from purchasing a condo.


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## OK-bachelor (May 24, 2011)

kcowan said:


> I think you should consider liquidating the property. Put the money in something safe, and try renting for a while. You will find a comparable TH if you take your time and look around.
> 
> If you are not comfortable putting a big chunk of your equity in one asset class, then doubling down on real estate is probably not the best choice. Stay away from purchasing a condo.


 I hear you, condos are such a competetive market and they seem to be hard to sell right now. Renting and taking my time looking is definetly on the table for me. 
Please excuse my ignorance , but is TH short for townhome? I would prefer one of these http://zigloo.ca/ over a townhome


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## Andre112 (Apr 27, 2011)

Container homes will get very hot in the summer and really cold in the winter?


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## OK-bachelor (May 24, 2011)

Andre112 said:


> Container homes will get very hot in the summer and really cold in the winter?


 According to the FAQ - http://zigloo.ca/faq/ , the containers insulate like a thermos with soy based spray foam insulation, so perhaps a small AC unit would help in the summer months. These homes take recycling to another level, and if I understand correctly , the plans pass building codes and bylaws in Victoria. If Victoria allows it , then other regions that are aiming to be on the green train, will probably follow .


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## kcowan (Jul 1, 2010)

OK-bachelor said:


> is TH short for townhome?


Yes it is. Townhouse actually. Not sure why they don't refer to them as homes. ("... a house is not a home...")


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