Condo as rental property good idea?

[KRZY403]

So parents have decided to buy a bigger place and we're debating whether we should sell the condo (close to dt) or use it as a rental property.

We talked to our realtor today and assuming we decide to rent it out, we can profit ~700/month after condo fees, property tax etc., then put down ~50% for the new house and take out a mortgage for the rest.

Or.... should we just sell the condo and use the funds towards the new house and invest the leftover funds (~80k)?

From what I've been told, new condos are always getting built close to or in dt (the guardian down in victoria park for example) and will ultimately drive down rent soo maybe that 700$ rental income every month won't be as attractive a few years down the road..

Let's hear your ideas!

[masoncgy]

If you are going to realize $700 a month profit after expenses using actual rental market value in the area, then it would make sense to keep it as a rental unless you are in dire need of the equity in that condo to fund the next purchase or to lower the overall cost & carrying costs of that purchase.

Too many people *think* they can get more rent than what the actual market will give. Be conservative when you are determining actual income potential... anything over and above that should be considered a bonus.

[CanmoreOrLess]

Originally posted by KRZY403
So parents have decided to buy a bigger place and we're debating whether we should sell the condo (close to dt) or use it as a rental property.

We talked to our realtor today and assuming we decide to rent it out, we can profit ~700/month after condo fees, property tax etc., then put down ~50% for the new house and take out a mortgage for the rest.

Or.... should we just sell the condo and use the funds towards the new house and invest the leftover funds (~80k)?

From what I've been told, new condos are always getting built close to or in dt (the guardian down in victoria park for example) and will ultimately drive down rent soo maybe that 700$ rental income every month won't be as attractive a few years down the road..

Let's hear your ideas!

Are you taking the advice (rent estimate) of the realtor who is also involved in the new condo purchase? He benefits from your new purchase and needs you to believe in the $700/month net dream on rental of the old place. Get an unbiased opinion on the condo rental market. Are your parents in the position (and have the skill set) to manage the rental?

[Manhattan]

$700/mth is a reasonable expectation for net gain on a condo close to dt. Assuming that condo prices aren't going up anytime soon and your condo has a market value ~$300K then you're making $700/mth X 12. That's less than 3% returns on your $300K investment. You could probably do better investing in something else. With that said the condo is a safer investment and provides you with consistent monthly cashflow.

[Tik-Tok]

I always thought rental prices were historically around 80% of what a mortgage for the same unit would be... am I wrong?

[canadian_hustla]

the big thing on condos which is a huge deterrent for me is the fact that you are more likely to have very large special assessments.

I thought about purchasing a condo for rental, however it doesn't matter how much rent you charge because a $15k special assessment scares the heck out of me.

[max_boost]

Originally posted by canadian_hustla
the big thing on condos which is a huge deterrent for me is the fact that you are more likely to have very large special assessments.

I thought about purchasing a condo for rental, however it doesn't matter how much rent you charge because a $15k special assessment scares the heck out of me.

Yep. I abandoned my condo search for that reason. you just never know.

[msommers]

^x2

[msommers]

Originally posted by Tik-Tok
I always thought rental prices were historically around 80% of what a mortgage for the same unit would be... am I wrong?

Is that the norm? Just seems awfully high but I could be out to lunch here.

[Tik-Tok]

Originally posted by msommers


Is that the norm? Just seems awfully high but I could be out to lunch here.

I dunno, I just remember it being around there when we were looking at renting VS buying a house way back in 2001.

[KRZY403]

Thanks for the ideas guys! After some thinking we've decided not to keep the condo as a rental. We have no experience in managing it and prefer lower monthly payments

[revelations]

Originally posted by max_boost


Yep. I abandoned my condo search for that reason. you just never know.

Not sure if this is feasable, but you could also talk to the MGMT company and get an idea of the financials of the building. Our 125 suite unit has 1/4 million$ in reserve right now. Were going to be investing that money soon.

Owing a house is no different; a leaky roof, furnace or a hot water tank conks out and your out a lot of loot the same.

[msommers]

My nightmare (http://www.calgaryherald.com/homes/Condo+owner+questions+loan/6209315/story.html)

[canadian_hustla]

Originally posted by msommers
My nightmare (http://www.calgaryherald.com/homes/Condo+owner+questions+loan/6209315/story.html)

i rest my case