Time to Purchase Property 1
In the past week, I had been looking into the purchase of my first property.
As it stands now, I am looking to purchase a 1 bedroom + 1 den condo unit somewhere in a developing city north of Toronto.
The reason for my purchase is to accommodate my aunt who is looking for a unit to move into since her current contract is about to expire. After speaking to her, we found it to be a win/win situation as she will paying rent to a family member instead of a stranger and I would be able to offer some sort of discount on her rent.
This seems like an excellent opportunity especially since my aunt will be a long term tenant and the neighbourhood is undergoing many projects that will lead to appreciation. Here is what I have done so far:
Finding a real estate agent
The first thing that I did was to check out the community realtor to find a real estate agent.
After speaking to an agent, I have discovered that a realtor have more information on listings that are not disclosed in the public MLS system.
We talked about my goals in purchasing a property for a bit and went through a few of the listings. The next step would be to check out some of these listings next week.
The neighbourhood
The neighbourhood that I am looking into is at the core of the city where there are transit construction projects along with plans to build a university campus in a few years. Personally, I see this area as an appreciating neighbourhood with the option to rent out to students in a few years.
My budget
I am willing to spend a maximum of $300,000 for this property at the moment as rent will pay for itself. This means that I would need to come up with $60,000 for a 20% down-payment on the property.
Using rough calculations, mortgage should amount to about $1,000 a month along with the cost of $300 to $400 for the maintenance fee. As my aunt currently pays $1,400 a month, the mortgage should be covered in the rent.
So far this has just been an idea. I will update my blog on my property 1 endeavour should more information come to light. Just out of curiousity, do anyone have any ethical conundrum when it comes to renting to family members?
That’s very exciting to be at the stage of buying your own investment property! Tristan and I are many years off going down the investment property road.
I think it’s very generous to offer your aunt discounted rent, when it comes to your own financial life I’d probably be a little more ruthless – you’re selling yourself slightly short compared to all the other investors in the area, getting less return on your investment out of the kindness of your heart. As long as you still agree on a competitive rent (aka lower end of the market) then you could be getting a better deal knowing your tenant will take care of the property.
Personally I would make sure to go through proper contracts/agreements so that you’re both covered as an official rental agreement – at the end of the day you want to keep your great relationship with your aunt if you had disagreements on the rental.
Jasmin
Hello Jasmin. Excellent point! Having contracts should prevent any future arguments. My rent fee should cover the mortgage and maintenance fee. Except, I wouldn’t have much positive cashflow but that wouldn’t matter because I would still be building equity. Gotta sleep on it more.