# Moving and would like to keep my Condo as a rental property



## Jeebs (Jun 1, 2011)

Thanks for taking the time to read this. I'm intending to move into a home within the next 2 years (more room to start a family) and I would like to hold onto my condo as a rental property. I live in the Halifax area close to downtown in a decent neighbourhood close to colleges and short bus ride to 3 universities.

the numbers are as follows @ time of moving:

Condo 1+ a den: $150,000
Remaining mortgage: $120,000
Maintenance fees: $180/month
Property Taxes: $1,500/year
Expected rent: $850-1,000/month

I will be consumer debt free and have enough cash to put $15,000 down on my next home and have $5,000 in my RE bank account to cover expenses for searching for tenants, special appraisals, etc.

I've been reading these forums for awhile, formulating my entry into the RE market as a landlord and I was hoping for some opinions on my starting situation and getting some basic numbers set up. Thanks for any assistance.


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## Just a Guy (Mar 27, 2012)

What's your mortgage payment? Is maintenance fees your condo fees?

Your rent seems high for a 1 bedroom if you're targeting students. Are you including utilities or is that on top of rent?

On the surface, I'd say it won't cash flow if interest rates increase...what are the mortgage terms?


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## Jeebs (Jun 1, 2011)

The maintenance fees are the condo fees.

Currently my mortgage which is for $136,000 on 30 year ammortization is $800 taxes in/month at 4.75% fixed. 

Students are a large group, but I am also close to the naval base, as well as the shipyards with the new ship building contract coming in.

My unit is pet-friendly as well as in-unit laundry which are what I guess I would term as tenant luxuries. I have scanned rentals in my area and I'm pretty sure that I could get $850 at the bottom end.

Utilities are not included, but costs for my unit are about $90/month.


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## skyavenuerealty (Apr 13, 2012)

Hey Jeebs, I understand your situation. But you have to think again on your proposal as the rent is too high the student will not be interested in your deal.

But yes you are saying you are close to naval base they might be take interest in it.


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## Just a Guy (Mar 27, 2012)

So, your mortgage is $800 with taxes, your condo fees are $180, your insurance will be about $50, maintenance should be about $100...and you can rent it for a minimum $850 with a real cost of $940 with utilities...

What happens when you renew at 6% interest on your mortgage, or 8%? 30 years is a loooong time.


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## kcowan (Jul 1, 2010)

You will have to budget for real maintenance like painting and repair every year. There will also be a cost to re-rent when it gets vacant. Given that it will cash flow negative, I would not depend on future mortgage rates and capital gains to make it positive.


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## Jeebs (Jun 1, 2011)

well, I would be refinancing at $120,000 so my payments wouldn't be as high as the $800 I'm paying now.

If I find room to increase my payments over the next year and a half, what size mortgage would be reasonable to make this a cash flow positive property?

As for the mention of insurance, do I have to pay insurance on the property on top of tenants insurance?

I appreciate the points people are raising. It seems like I'm a little off from where I need to be to reach a good starting point.


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## iherald (Apr 18, 2009)

Yes you need your own insurance. What if the tenants start a fire, or if there is a leak and causes damage to your neighhbour.

Where did you get the $1,000 a month in rent? Are other condo's in your area renting for that amount?

The way I look at a property, you want to make it profitable (even one dollar profit) with 10 months of rent. One month set aside incase you have an empty condo for a month and one month rent for repairs. What if your fridge breaks, etc. Be prepared.


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## Just a Guy (Mar 27, 2012)

Face reality, this isn't a good investment. If you want to get into rentals, sell this and buy something that will cash flow and make you a profit. If you pay down the mortgage, the money you spend is dead money, it won't make you anything and is at risk if the housing market drops. If interest rates rise, and there is EVERY indication that they will before the end of the year, then you'll lose even more money. You've amortized this place for 30 years (too long, in my opinion, to begin with) that means 30 years of payments at higher levels.

Get yourself a copy of The Simple Solution to Real Estate investing in Canada. It's a beginner's book on buying rentals. It will explain what you need to know so you don't lose money. The 25 bucks, less if you buy the electronic copy could save you a fortune.


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## Jeebs (Jun 1, 2011)

Thank you for the assistance, I'll look into that book.

This is something that I want to do, but don't want to start off on the wrong foot.

My current property may not be the proper one for me to start with.


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