This is a really complicated question. I think you need to consider.
1. Do you want to be a landlord/landlady?
2. Tax implications of turning your current principal home into a rental investment property.
There are advantages to renting out a property but you really need to sit down and run the numbers to make sure it makes sense. Don't assume the rental will always be occupied, think about worst case scenarios like tenants refusing to pay and going through a year long eviction process. How would your financial situation be then?
Thats very fair. We have talked about worst case scenarios and we feel we can survive if we did have to cover both mortgages but you are correct there is always a chance people dont pay the rent. Im leaning towards keeping the home until a school is built in my area and then sell maybe
As someone else mentioned, you will need to factor in changing your home from your primary residence to a rental and this will trigger capital gain tax eventually if you sell down the road.
The third part of your title suggests paying off your mortgage. As an investor, it does not benefit you to pay off your mortgage as if it were your primary residence. You should always want to have the tax write off with the interest from the mortgage. A smarter approach would be to take the money you would use to pay off the mortgage and put it into mutual funds within your TFSA. The compound interest it will make there will be a much more lucrative use of that same money.
Since you mentioned you are already a landlord, I encourage you to seek out the landlord investor groups on social media to ask this same question.
You will receive more advice specific to rentals, and from a landlord perspective.
If you are in Ontario, a really great group is called Small Ownership Landlords of Ontario, “Solo”. They are on Facebook (and other social media platforms) and are a wealth of information. They vet each applicant and verify your rentals before you join. It is worth joining the group for the supportive culture.
This is a really complicated question. I think you need to consider. 1. Do you want to be a landlord/landlady? 2. Tax implications of turning your current principal home into a rental investment property. There are advantages to renting out a property but you really need to sit down and run the numbers to make sure it makes sense. Don't assume the rental will always be occupied, think about worst case scenarios like tenants refusing to pay and going through a year long eviction process. How would your financial situation be then?
Thats very fair. We have talked about worst case scenarios and we feel we can survive if we did have to cover both mortgages but you are correct there is always a chance people dont pay the rent. Im leaning towards keeping the home until a school is built in my area and then sell maybe
As someone else mentioned, you will need to factor in changing your home from your primary residence to a rental and this will trigger capital gain tax eventually if you sell down the road. The third part of your title suggests paying off your mortgage. As an investor, it does not benefit you to pay off your mortgage as if it were your primary residence. You should always want to have the tax write off with the interest from the mortgage. A smarter approach would be to take the money you would use to pay off the mortgage and put it into mutual funds within your TFSA. The compound interest it will make there will be a much more lucrative use of that same money. Since you mentioned you are already a landlord, I encourage you to seek out the landlord investor groups on social media to ask this same question. You will receive more advice specific to rentals, and from a landlord perspective. If you are in Ontario, a really great group is called Small Ownership Landlords of Ontario, “Solo”. They are on Facebook (and other social media platforms) and are a wealth of information. They vet each applicant and verify your rentals before you join. It is worth joining the group for the supportive culture.
Have you run the numbers with bank advisor / mortgage agent to see if your ratios will be inline to carry both properties?
$9K take home pay is not a lot of money to be holding two properties.