# Advice wanted on turning a rental property into more real estate investments



## Nic (Feb 23, 2014)

I inherited two unit rental property a few years back in BC. It lost just over ten percent of its value in the last assessment and I anticipate it will probably drop some more given that it's not in Vancouver. It takes in around $1300 monthly, is mortgage free and worth around 340,000. 

Near term it needs about 15-20,000 investment in things like hot water tanks and repairs etc. Long term it needs a more investment in things like a new roof, floors, new fence and basement refinishing. I'm prepared to do some of the work myself.

I was hoping to use the equity to finance other real estate investments. In the meantime I am currently unemployed and getting a part time education, with good credit and additional funds in RRSP's and TFSA's. I was hoping to get some education in real estate as well but am reluctant to try things like REIN etc.. from things I've read. 

Any thoughts and suggestions would be welcome,

Thank you,

Nic


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## Potato (Apr 3, 2009)

$1300 on $340k is a 260X price-to-rent -- you're making 4.5% before expenses and vacancy. Just sell it, it will be nothing but trouble. You'll make just as much in a savings account without the headaches.


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## Just a Guy (Mar 27, 2012)

I'd sell it and buy something cheaper and in better shape, less maintenance. You may want to check out www.easysafemoney.com. He has a good book and blog, but a lousy name for a website. It would probably answer a lot of your questions.


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## martin15 (Feb 18, 2014)

If you are going to sell, better sell it soon.

I just did some checking on a property I owned in Victoria.

assessed at 545k in 2012, sold for 520k, 2014 it's now at 512k.

You won't get 4.5% in a savings account, either sell it real soon or plan to hang on to it for the next 5yrs at least.

If it was me, I would hang on to it, easy money.


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## andrewf (Mar 1, 2010)

4.5% gross rent minus property taxes, insurance, and maintenance is getting to a net income range approaching a savings account.


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## Cal (Jun 17, 2009)

Thats assuming the 340 is after RE commsions. If not, then with TMI, you would be in the 4% range for your return.

A basket full of dividend equities could give you that return, with out the pita factor of being a LL.


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## Berubeland (Sep 6, 2009)

I wonder how much tax he will pay if he sells? That might cut into his future returns on the stock market if he manages to make money in the stock market which is not guaranteed.


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## Pluto (Sep 12, 2013)

Sell. Put the money is some safe interest bearing thing. Then take your time scouting out and learning about some alternate investment that makes sense and tickles your fancy. Continuing with the present scenario, as others have said, is a bad idea. If the place has gone down in value since you possessed it, as you imply, it is possible you could get a capital loss to offset future capital gains.


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## Arshes76 (Jul 5, 2013)

Berubeland said:


> I wonder how much tax he will pay if he sells? That might cut into his future returns on the stock market if he manages to make money in the stock market which is not guaranteed.


When he inherited the properties, he got them tax free at fair market value. And since the properties are now worth less then when inherited them he will end up paying no tax. He will only owe if they are sold more than fmv when inherited.


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