Need a real estate advice.?

Question

Hi all,

My wife and I own a house for 16 months now in Ontario, Canada. This is our first home and we went in with 5% down. Real estate prices in our area have gone up some good 20%, BUT our calculations show us that even with the price increase, we'd lose 10K if we sold now.

Here's how:
We've calculated all the money we've invested over the course of 16 months (property tax, insurance, down payment, initial lawyer expenses, mortgage payments) and when we add it all up, and deduct agent's 5%, we're gonna come up $10 K short.

Is this something that's common for sellers like us, who've spent short time owning a house? Does anyone know if there's some sort of formula on what you should expect to get back on investment after one year?

We're selling the house cuz my wife got a job transfer, so we need to sell.

I'd really appreciate if anyone local to Ontario could share advice.

Answer 1

Living has expected costs and trying to add in all your expenditures and get them back is NEVER going to happen .

Reality , it usually takes more than 5 years just to break even , over the cost of renting .
If you can get 20% more than you paid , you are extremely fortunate .
I would say take it and run , but you may have hefty captial gains tax with that short occupancy .

Take it and saunter ?

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Answer 2

What about keeping that home and renting it out?

You'd have a tenent paying down the mortgage, you'd still be able to get a lot of the tax benefits, and you'll still get the market appreciation making it a more tempting/profitable sale 5 years down the road.

But it's happenings like this i like to remind people to pay their mortgages down as fast as possible.

If you had put even an extra $100 USD into your mortgage a month, you'd have that money back, plus about 3.5% (depends a little on your interest rate) more equity. Over 5 years, you'd have and extra 19.95% of equity.

This happens because you're paying down your principal faster, meaning more money from your monthly payment will go against the principal faster.

Answer 3

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Answer 4

almost impossible to do that in that short of time unless you fsbo. then it might take it a long time to sell. you need to find something else if you are looking to make money that fast on real estate. flipping repo's is a faster cash flow.