Rent or sell? Find out which is best for you
Investment homes can be good source of extra cash
You meet someone, fall in love and before long, you’re talking property.
If you both own a home, you may find yourself asking: What should be done with a spare house?
My husband and I faced this question when we decided to purchase a home together.
I already owned a house I was emotionally attached to, though it didn’t offer the space we needed.
We debated pitching a “For Sale” sign on the lawn, but ultimately turned it into a rental.
Whether you wish to list or generate extra income, both carry pros and cons, says sales rep Brendan Powell with the Brel Team.
“If you can afford to hold the property and own your primary residence, then you can potentially benefit from the gain in value over time,” says Powell.
“What better way to have control over that part of your investments than managing your own property?”
On the flip side, “selling your property locks in whatever return you’ve made since you bought and frees that cash up for you to use somewhere else.”
“Real estate allows you to buy an asset without paying the full price, via a mortgage. It’s hard to find that with other investments.” MATHIEU YUILL REAL ESTATE INVESTOR
Certainly holding property sounds appealing, but managing it can get gritty. When Bowmanville-based Lesley Rodrigues met her husband, she was renting out her Pickering townhouse.
“When my tenant decided to leave, we moved into it together,” she recalls. “After a while, we bought a bigger place, so I rented the townhouse out again.”
Last year, a bad tenant prompted them to sell. Cheques were bouncing and the house was getting ruined.
“The place just looked worse and worse,” says Rodrigues. “The dog had destroyed the laminate flooring as well as the front and back doors.”
Meanwhile, she had to refinish the damaged bathrooms, install new carpets and repaint.
Mathieu Yuill, a real estate investor since 2004, believes the benefits outweigh the risks.
“There is a lot you can do to increase the value of your property unlike other investments,” he says.
“Real estate allows you to buy an asset without paying the full price, via a mortgage,” says Yuill. “It’s hard to find that with other investments.”
Still, some might not anticipate the work involved, including unexpected tenant and maintenance issues.
“Owning an income property is a job,” says Powell. “Even the best tenants will eventually leave and it costs time and/or money to find new ones.”
Yuill says a strong landlord-tenant relationship is essential for success.
“A lot a lot of landlords think they can ‘set it and forget it,’ ” he says.
“Your tenants are going to help you build cash flow, equity and value — you need to treat them well to achieve this.”
There are pros and cons to consider before buying an investment property and renting it out.