Should You Rent Or Sell Your Home – Time travel to 10 years ago. It’s 2013 and you bought a new house in Toronto. Feel good that you got a chance to stop this business. Ten years ago, you met the partner of your dreams and now your current home isn’t big enough for the two of you.
Now you are ready to climb. But before you can find your new home, you need to know what to do with your current home.
Should You Rent Or Sell Your Home
Do you need to enter the seller’s market to make a profit, or can you generate positive cash flow and passive income by renting out your existing property?
To Rent Or To Buy: Top Things You Should Know
Well, that’s the question, and that’s why I’m writing this blog for you, to give you a real estate agent’s perspective on the rent vs. sell debate in Canada.
The best advice I can give is to ask yourself what your long-term goals are. Once you know that, you should start looking at the housing and condo market to find out what the average property price is for the homes you want.
You may find that what you want in your mobile home is that you have to sell your condo in order to have an additional payment. If owning your dream home by 2024 is your top priority, then go for it.
If you want to build serious real estate wealth, you can rent a property that fits your lifestyle, leaving you with enough capital for reinvestment.
Should I Sell My Home Or Rent It Out?
Having a clear understanding of your financial situation and your long-term goals is a cheat code to real estate investing success. I tell all my clients. if you start with a well-defined and well-thought-out goal, we can put the other pieces in place.
As with all real estate investments, there is no one size fits all answer. Before you decide to sell your home and rent your home as an investment, ask yourself a few questions.
These are just a few questions to help you put a broad lens on the sale vs. lease conundrum. If you do not know the answers to these questions, you can call a real estate agent, share your goals, and determine the strategy that is best for you.
Alternatively, you can use one of the many online rent-to-sale calculators to better understand the costs and benefits of each strategy for your unique situation. But remember, you need variables like current market rent and property valuation. It can be nuanced, so seeking the help of a top realtor can be helpful.
To Rent Or Sell Your Home Before The Big Move
As an example, let’s say you bought a one-bedroom apartment in Toronto in 2013 for $400,000. Since then, if you took out a 30-year mortgage with a fixed rate of 4.5%, the remaining balance of your loan due in 2023. would be approximately $227,000.
Meanwhile, the equity your home has gained over the past 10 years has increased your property’s current market value (CMV) to $650,000.
In this example, the average annual capital gain is 6.2%. While Toronto’s historical average is 5% per year, downtown Toronto’s housing market has grown slightly in recent years, with most properties achieving 9% equity per year. There has been a slight slowdown in the last two years, between 2021 and 2023, due to changing market conditions.
The Toronto real estate market is busiest during the spring and fall months. This is the time of year when buyers flood the market and all listed properties face high competition due to the general lack of supply in Toronto.
Should You Rent Or Sell Your House?
But if you want to sell your home fast, the busy months may not always be the best months. Listing your home for sale in the fall, between August and December, can set your property apart. These months will see fewer listings on the market, increasing your chances of selling your home quickly for market value.
Related: Yes, spring is the best time to sell your home in Toronto. But why? When is the best time to rent your property?
If I had to choose, August and September are the best months to rent your property in Canada. The Toronto rental market has a huge impact on international students and their respective investments. As a result, the months leading up to the start of the term (be it spring, summer, autumn or winter) are the busiest and best months to look for tenants in your property.
As we mentioned above, you can use the equity you got in your first home to invest in your remodeling property and hold your home as an investment property. Renting means you can take advantage of Toronto’s competitive rental market and high rental prices, however, you’ll lose the property tax break you get if you sell a primary residence. – there.
Sell Now, Move Later!
If you decide to sell your home at the current market value of $650,000, you will make about $397,200 ($650,000 – loan balance of $252,800). An important benefit here is that if you sell your primary residence, your profit is completely tax-free. So whether you want to move home or move home, choosing to cash out and sell your home in this example means you can buy a home for up to $1,800,000 (in total, but there are many factors to consider to a mortgage broker).
If you have built enough equity, it may be more profitable to sell your home and buy a remodeled home that is not completely below your budget. This way, you can use the remaining profit to reinvest in the pre-construction market, allowing you to build equity quickly without having to re-mortgage the property for years.
One of the reasons that many people are able to make a fortune through real estate is the magical power of leverage. Once you own a home, you can borrow up to 80% of your home equity at a low interest rate known as a Home Equity Line of Credit, or HELOC.
So if the current market value of your home is $650,000 (the bank determines the value), you can borrow 80% of that value, minus your outstanding mortgage. That leaves you with $267,200 to pay for your return.
Should I Sell My House And Rent In Ontario?
By using home equity to buy a second home, you can improve your living situation and have two properties that build equity for you.
The question you need to answer is this. Now that you have accumulated enough capital, can you make more of your capital by selling and reinvesting the funds or by holding onto the property and capitalizing? This is where the experience and guidance of a professional real estate investor can help.
Do you have a condo in Toronto that has gained significant equity? If you want to discuss your financial situation, give us a call and we can help you create a custom action plan for your unique real estate investment goals.
Disclaimer. Pierre Carapetian Group Realty makes no warranty, expressed or implied, and assumes no responsibility or liability for the accuracy, correctness, completeness or usability of the information provided. Assessments are based on our calculations and fair market value is what we determine.
The Pros And Cons Of Renting Vs. Buying
Pierre Carapetian is the broker of record for Pierre Carapetian Group Realty with over 12 years of experience in the real estate market. As a proud Torontonian and realtor, he prides himself on knowing this city inside out. He started investing at the age of 18 and has facilitated over half a billion dollars in real estate transactions. If you’re a homeowner ready to take the plunge, you might want to consider using your current home as a short-term rental property. to sell it. Short-term rentals (STRs) are often offered as an alternative to a hotel and investments have become popular in recent years. According to a Harris poll, 28% of homeowners are considering using a rental service to temporarily rent out their home for additional income.
Owning a short-term rental may be a tempting idea, but you may find you are actually responsible for one. Here are some challenges you may face when you rent your home instead of selling it.
Owning and renting a home successfully takes work. Consider your ability to meet this commitment, especially if you plan to use a platform that advertises your rental listing. Many of them have specific requirements that hosts must meet and this requires a lot of work. A recent Bankrate article explains:
“Managing rental properties can be time-consuming and difficult. You are handy and you can repair yourself. If not, do you have a network of contractors available that you can easily contact? Consider whether you want to take on the additional responsibility of being a landlord, which means, among other duties, checking on tenants and grounds, or paying a third party to take care of things for you.
Rent Vs Sell
Not only is the initial time and cost of a short-term rental,
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