# Should I buy now or continue renting??



## plaza (Sep 16, 2010)

Hi,

In a couple weeks we will be closing on the sale of our home. We sold it pretty high and were able to walk away with a very nice profit. It was mortgage free so we have more than enough to buy our next home, but wondering if we should buy right now. Half the economists are calling for a drop/crash in real estate, while other half says it will continue to rise.

We will be living in a townhome I own outright and use to rent for 1000/month. So I will be losing the income but not paying rent. Only problem is that the home is rather small for a family of six and not sure how long we will be able to last in the confined space 

We are having a hard time finding a next place. We have found one place under market, we are considering but with the renos it needs, at the end we will break even with what we sold. It is a much bigger home and worth more than our existing one, but if the market corrects ourself we might be stuck with it for many years before we can break even again.

I know I am generalizing here and not to get it confusing, but what we are wondering is in this market, should we be buying or hold off for a price drop or correction to happen in canada. Also my agent keeps telling me Canada will drop but not Quebec (where we live) as we are doing better than the rest of Canada and our real estate is still undervalued. Can this really be? I mean Canada is Canada....why would we be any different.


----------



## sprocket1200 (Aug 21, 2009)

plaza said:


> Hi,
> 
> In a couple weeks we will be closing on the sale of our home. We sold it pretty high and were able to walk away with a very nice profit. It was mortgage free so we have more than enough to buy our next home, but wondering if we should buy right now. Half the economists are calling for a drop/crash in real estate, while other half says it will continue to rise.
> 
> ...


of course you would buy again. you don't want to miss your property value going up 20-25% each and every year! get in now, have your parents buy for you, buy a house together, buy your parents another house. RE will always go up...


----------



## kcowan (Jul 1, 2010)

plaza said:


> We are having a hard time finding a next place. We have found one place under market, we are considering but with the renos it needs, at the end we will break even with what we sold. It is a much bigger home and worth more than our existing one, but if the market corrects ourself we might be stuck with it for many years before we can break even again.


I think this answers your question. Why did you sell your last place? If the new place is break-even, then you are buying a family home and should not consider it as an investment.


----------



## plaza (Sep 16, 2010)

I might of given the wrong impression. I was able to double my money in 4 years after renovating the place. When I bought it it was a dump. One of the reasons that also influenced me was the small backyard for my kids and wierd neighbours that didn't like my kids playing outside. The house was 3200 sq feet.

This new house I am looking at is 4600 sq feet, which is kind of too huge, but there is potential to make a good equity after renovating it if the market continues to rise as it has. If it decides to crash then that's a different story.

Originally I wanted to sell my current place to downgrade a bit, but there seems to be less and less listings on the market lately. 

I don't regret selling one bit, but wondering how many think the market is due for a correction and if it does, can it happen to all but quebec? Does that make sense?


----------



## slacker (Mar 8, 2010)

plaza said:


> I might of given the wrong impression. I was able to double my money in 4 years after renovating the place. When I bought it it was a dump. One of the reasons that also influenced me was the small backyard for my kids and wierd neighbours that didn't like my kids playing outside. The house was 3200 sq feet.
> 
> This new house I am looking at is 4600 sq feet, which is kind of too huge, but there is potential to make a good equity after renovating it if the market continues to rise as it has. If it decides to crash then that's a different story.
> 
> ...


There are plenty of people on this forum who would say that a correction is due. But no one can say when that will happen. What if it doesn't correct for another 5 years? or 10 years?


----------



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

plaza, Quebeckers love to fel they are differant, but Canada is a huge country and each area is differant from the others.

Buy with a long term horizon, but be prepared for 10% mortgages.


----------



## plaza (Sep 16, 2010)

I'll try and open another thread in a couple weeks when I decide what we are doing, but how would you buy the next house? Pay it entirely at purchase with the proceeds of our current home or take a mortgage on it and do soemthing with the cash. I was thinking buying it all cash and then once fully renovated in about 6-9 months applying for a HELOC for it's new value after renos hopefully at prime and I could possibly use this for investment like purchase of my next income property.


----------



## financialnoob (Feb 26, 2011)

Are you planning on buying the house to live in for a while? If so, then the potential market correction some are calling for shouldn't matter as much. But it sounds like you're thinking more short-term here and flipping the house once it's fixed up. Is that correct?

If that's the case, have you considered the option of renting the place out if the market drops? Say you don't put all of your money into buying a place outright, just enough for the downpayment. You could live there while fixing it up. Then if the market drops by the time you're done, you could always use your savings to buy a nicer place and rent out the old one. The renter could help pay down the outstanding mortgage, and I believe your mortgage payments on it would be tax-deductible for the interest (requires a few accounting steps to transition from a personal property to a rental property, and best to check with a pro about this beforehand).

If the market doesn't drop, then you can re-sell and pay off the outstanding mortgage and have some extra money. All the money you didn't put into buying the house outright could be spent on some low-risk investments since it's considered a short-term thing and still make some money to subsidize the few years you'd be living there and paying a mortgage.


----------

