Hold vs Sell my investment home in Hamilton

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Hold vs Sell my investment home in Hamilton

Sienna Lu
Member since 2021 · 4 posts · 0 votes

Hi Everyone, I am new to BP. By browsing for a couple hours, I know that this is a great forum with a lot of info. Really appreciate everyone sharing info/knowledge.

I bought a freehold townhouse in Hamilton last year about $650K, the rent is pretty good and can almost cover everything. The tenant is leaving end of Jun this year. I also need to close another 4 single family properties in the next 1.5 years all new built homes in Ontario. I managed to get firm approvals from banks for borrowing up to 80%, but still worry that the banks may change their minds in the last minute. I am quite stretched at the moment. Based on the report (link below), Hamilton market is overpriced by over 40% and will need a correction. So I am thinking whether I should sell it and capture the gain, and it will be safer for closing the next four properties. But on the other side, it's a great property with balanced cashflow, which is not easy to find in Ontario nowadays.

Appreciate everyone's input.

https://betterdwelling.com/can...

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  • Andy Sung
    Member since 2021 · 10 posts · 1 vote
    5y

    I think your gut is already telling that you are "quite stretched" at the moment.  is your reserve high enough to tide you over for half a year if you are not receiving the rent?   A new tenant comes in, decides not to pay you rent for whatever reason, what will happen?  

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    If you sold it, what would you do with the money? Is it just for the buffer right now with the four new homes?  

    With the price, I'm guessing the reason it makes financial sense is because you bought it when the price was lower.

    I'm guessing Ontario is like a few other places where houses are selling quickly.  Remember even if prices go down, if you are in it for the long term, they will go back up.

    Everyone says the market is in for a correction and they've been saying that for years.  We don't know what the future holds.  Make sure you are comfortable with where you are now and have a plan for the short and long term.  That's all you can do.

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  • Kash Jawed
    Toronto, ON · Member since 2018 · 102 posts · 61 votes
    5y

    Welcome Sienna,

    I agree with Andy as well. follow your "gut". I assume your firm approval is from RBC. I've not heard them backing away from their firm approvals before but again, this is not a normal market. Fundamentals are out the window. Most would disagree with me with arguments such as immigration, etc. If you feel you're already stretched, then follow your gut. Unless you really thing you can ride the wave and god forbid and if required, can you get private funding to close your other deals?

    The article does highlights "Hamilton real estate prices are increasing at a much faster pace than fundamentals"

    I sold my MF in Hamilton. Why? I wouldn't buy it at the price that I sold it at. I'd rather explore other markets. A few folks I know are closing using creative financing. I don't want to guess what would happen when govt. pulls the plug on printing money or increase interest rates. 

    Again, that's my thoughts. You should follow your gut and I suggest talk to a mortgage broker who is investor focused and not just the bank. 

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  • Sienna Lu
    OP
    Member since 2021 · 4 posts · 0 votes
    5y

    @Andy Sung I am not that concerns about rent default, although that’s definitely not good. I am more concerned about the mortgage down payment for the next four properties. If the bank decrease the borrowing from 80% to 75% or 70%, that will be a big problem for me.

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  • Sienna Lu
    OP
    Member since 2021 · 4 posts · 0 votes
    5y

    @Theresa Harris Thanks Theresa. The recent dramatic increase reminds me the year of 2017. The price in GTA increased 40% at the beginning of the year and then dropped significantly after that.

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  • Sienna Lu
    OP
    Member since 2021 · 4 posts · 0 votes
    5y

    @Kash Jawed Thanks Kash. Totally agree with you. I am monitoring the market closing by checking the asking price, sale price, DOM etc. Still have sometime to decide whether to put in on the market for rent or for sale, maybe I will do both.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y
    Originally posted by @Sienna Lu:

    @Theresa Harris Thanks Theresa. The recent dramatic increase reminds me the year of 2017. The price in GTA increased 40% at the beginning of the year and then dropped significantly after that.

     I know of a few areas outside of Ontario that also increased, but haven't come back down.

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  • Huong Luu
    Specialist · Vancouver, BC · Member since 2016 · 315 posts · 145 votes
    5y

    @Sienna Lu before you put your investment prop on the market, calculate what your costs are to sell (including penalty to break your mortgage, capital gains, realtor fees). Since you purchased last year, there wouldn't be much mortgage paydown. The other thing to keep in mind, is the new builds may get delayed, as many often do, thus that 1.5 year timeline you have could be 2 -2.5 years. Lastly, take everything you read with a grain of salt. Good luck.  

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