Bit burned out with house and life and not sure what to do.

[pudding]

I have a situation that is not exactly a straight up money / investment dilemma.

The short version of it goes like this;

9 years ago I bought a house in Vancouver BC

I'd been travelling for 12 months out of the previous 24 and was on a roll, then my poor old mum got cancer and passed away. It sort of put me in a bit of a spin.  While in said spin, I got the opportunity to buy an 8 bedroom house.

So being the creative and financially naive type I went around borrowing the downpayment and a second mortgage of 50k at 12% off previous owner, and somehow a mortgage broker scored me a 600 k mortgage.... at 6. 5 % !!  I felt quite good about it, but if I'd know the hole I'd just dug I would have been crying.

So my plan was to live in the house and rent rooms out to international students. I figured I'd make money and be able to go off travelling again (boy was I wrong)

I had the mortgage for 2 weeks when a huge tragedy struck and my youngest brother died back in the UK, he had a 3 month old son. We were close and it rocked my world.

I had absolutely no money, but went to the UK and when I got back I really didn't feel like living in a house with 7 students who I hardly knew.

I wasn't making any money like I'd thought I would, instead I was 1. working my renovation job to pay for my living expenses  2. working to pay back all the money I'd borrowed to get a downpayment and closing costs.  3. working to pay the interest on the 50k at 12% second mortgage.  4. paying the 25k I now had on a credit card     5. working my new 2nd job of keeping 7 rooms rented and managing the 7 students  and pay the mortgage. 7. working to renovate the house I'd bought that needed a LOT of work.

When interest rates dropped after the financial crisis I couldn't re fi so I sold the house to a friend of the women I bought my house off.
A couple of days later I heard from a broker i'd randomly tried that I could get a mortgage at a great rate and one that would allow me to use the portion I paid off the principal each month to pay off my high interest debts like the 2nd at 12% and credit cards.

Great except I'd sold the house!!  The person I sold it to agreed after a lot of trouble to let me off the hook IF I agreed to give her 10k which I did and I consider to be fair enough.  ( I can't remember exact details but we signed the agreement for sale but nothing was registered yet( Anyway that was 6 years ago.


So fast forward to now.

It's been 9 years that I've owned that house and since my brother died. I've jumped through a lot of hoops over the years. Met some good people and some bad, occasionally someone I'd like to strangle.  Worked a heck of a lot on that house and managing it! A HECK of a lot! Like it's been my life and i didn't do much else except that.

I owe no money except the 1st mortgage, I have excellent credit according to the bureau.

When I bought the house I paid too much for it, but... the market has gone up and up, and the area improved a great deal..  If I sold today I could put a whopping 750 thousand bucks in my pocket. I never imagined it would be worth that much.

Recently my daughter and grandkids moved back to town and they are living in part of the house and paying some rent, I gave them the  best deal I could, but they pay rent of a thousand and I could maybe get $1500/ 1600 if I rented it out to public.

Also a while ago a tenant that left on bad terms called the city and reported my unauthorised basement suite. So now I have this big head ache with the city... BIG big headache ;)

They say my basement suite needs this and that to be allowed ( 20 to 30k)  and that my garage is supposed to be a carport and I have to demolish it or put it back to car port ( roof on posts, no walls or door)

Also my house is on 3 levels and close to 3000 square feet. Ive had the top and middle floors rented separately, but of course the city want basement suite legal and top and middle as one unit. This makes it hard to give a deal to daughter and grandkids now living on middle floor.

Also before I bought that house someone had bypassed the electricity meter and half the electric has been free all these years. When city came around they spotted this, I have to get an electrician to put in a new panel. If I'm lucky it will end there.

So now I have these letters with red stamps on them telling me to either do the work or they will demolish and bill me !!!

Also they came up with a bylaw that says I can only live with x amount of family and x amount of non family in a single family home. Which totally screws up my numbers and if it was me and daughter and 2 grandkids then I'm allowed only 2 non family members, which is only 6 people in a house that has 8 bedrooms?  Basically they DO NOT want it rented out as rooms!

So I started to pull the garage walls off to put it to a carport, I have to do this first in order for the city to issue a permit for the basement suite, and I have to get the basement suite authorised or the city will demolish stuff and bill me.

Dealing with the city of Vancouver is a f-ing nightmare. To talk to somebody I have to honestly get there before 8.30am to line up to get a number to see someone later that same day. If get there later than 8.30 a number will me issued but chances are you wont get to see anyone.

I did this last week again and all that to speak to this grumpy city employe for less than 5 minutes... drives me up the wall. Half a day off work for a 5 minute conversation.

So I started to put the garage back to carport but I also have an option to pull the garage down and build whats known here as a laneway house. Basically a small house in the back half of the property. This option wasn't available when I bought the house.

The garage is old and falling apart, to pull it down and put up a laneway house would clean it up... However the permits alone to put up the laneway house are 40k from the city and its a lot of work....and I've just done 9 years of A LOT of work.. If I paid a builder to do it, they'd charge me about 200k the house would put maybe 250k on the value..

If I did some of the work myself then I could do it for maybe 140k  BUT of course when I'm working on that I'm not working on other things, so ???

The laneway house would make money when rented though.. 

It's like if I go to all this trouble of building a laneway house and authorising my basement suite ( which I have to!)   I would have a 3 addresses at one property, expenses of around 4500 a month and potential rents of 5900 when all rented so say an average 5400 to allow for empty unit. so  1000 before tax. maybe 800 after.  Thats if I dont live there and its all rented.


that seems like a lot of work and a lot of aggravation... and on top of the city stuff and the 9 years of aggro so far. Makes my energy drop thinking about it all.... polar opposite of the travelling guy that naively got into it 9 years ago. 

So I came across this forum and the idea of FIRE... something I'd never really thought was possible until last few weeks. Now I'm on the fence about building a laneway house. Thinking like I can sort of smell the freedom now. Yes a laneway house may make me more money, but if I could be out of this quagmire I'd take it.

Any thoughts?

[Zikoris]

Honestly, if it was me I would sell the place tomorrow, put the money into a good index investment account, and wash my hands of the problem in one fell swoop. This city is a little insane for purchasing property, but can be quite reasonable for renting, especially if you have roommates (which you already do).

[humbleMouse]

Sell the crap out of that place right now while the market is still in short supply.

[pudding]

Honestly, if it was me I would sell the place tomorrow, put the money into a good index investment account, and wash my hands of the problem in one fell swoop. This city is a little insane for purchasing property, but can be quite reasonable for renting, especially if you have roommates (which you already do).

Hi Zikoris, thanks for your reply. I see you are in this city too and probably know the score here.

I agree it can still be OK renting, I have a friend that manages a building down by English Bay ( the beach) and I could get an apartment for just over 1100 and no aggro with tenants and free to leave for a month or 3 in November when it starts raining.

I'm new to this forum and the idea of investing outside of real estate. To be honest I don't even know what an index investment account is but I'm going to check i out right after writing this.

As you're in Canada too any pointers you could give me as to investing?

[pbkmaine]

Sell.

[Zikoris]

Honestly, if it was me I would sell the place tomorrow, put the money into a good index investment account, and wash my hands of the problem in one fell swoop. This city is a little insane for purchasing property, but can be quite reasonable for renting, especially if you have roommates (which you already do).

Hi Zikoris, thanks for your reply. I see you are in this city too and probably know the score here.

I agree it can still be OK renting, I have a friend that manages a building down by English Bay ( the beach) and I could get an apartment for just over 1100 and no aggro with tenants and free to leave for a month or 3 in November when it starts raining.

I'm new to this forum and the idea of investing outside of real estate. To be honest I don't even know what an index investment account is but I'm going to check i out right after writing this.

As you're in Canada too any pointers you could give me as to investing?

You can get your rent even lower - I've always shot for the $600-$800 range for studio suites. Right now my boyfriend and I pay $776, which we split, so it costs us each less than $400/month in housing, which is not bad for Gastown.

For investing, I think Canadian Couch Potato is the best Canadian blog advocating and explaining indexing. I personally use a robo-advisor service (Wealthbar) because I'm too bone-lazy to manage my investments myself, and they base their portfolios around index funds, with prices to match. But you can make your own portfolio with any of the major banks or investment brokerages yourself as well.

[ShoulderThingThatGoesUp]

If your daughter and her kids need the help, it sounds like you'll be better able to provide it when you don't have this regulatory nightmare, even if they have to move.

[JustGettingStarted1980]

sell yesterday

[pudding]

It's almost funny.

When I'm on the fence about something like this. Yesterday and when I got up today I was gung ho about selling, phoned 3 realtors and asked them to come around for a chat.

The I started putting the garage back to a carport. Sounds like a big task but inspector allowed me to keep one wall, another wall abuts the house and the garage door takes up another wall. So was only really one full wall to do and it being wood it wasn't such a huge deal as I'd built it up to be.

So I got it done and I started thinking that hey, here's a nice space for me to do my carpentry and stuff...  and then my mind started to change to 'keep it'

Maybe I should just get the city required work done, drink a nice big cold beer the day they get in their truck and get beep off my property and see how I feel then.

Will see... One thing about a house on land is that you can do things with it, rent a unit out, take in a room mate, find a place for family to stay etc...

Of course it can also run your life.

Anyway I'll sleep on it and see what the realtors say.

[Cyaphas]

I would take a good hard look at your health and where you want to be in 10 years. Once the Chinese stop buying up your local market, I think it's going to tank. IF you can walk away with such a substantial amount and move out of Vancouver, I'd take the money and run. You could be locking yourself in a very sticky situation for a very long time.

[Nickels Dimes Quarters]

I'd sell. Today.

NDQ

[zolotiyeruki]

I think you're wise to not rush into a decision.  It still sounds like the better decision would be to sell.  That feeling you had about "this is a good place to work on projects" can be had in any garage, not just a $750k one! :)

[Kaspian]

Let's see...  HEAPS AND HEAPS OF NEVERENDING STRESS, "NIGHTMARES", AND THINKING versus walking away with $750K in my pocket and never looking back?  Yep, it'd be a no-brainer for me.

[pudding]

  That feeling you had about "this is a good place to work on projects" can be had in any garage, not just a $750k one! :)

Thats exactly what my buddy said

[pudding]

Let's see...  HEAPS AND HEAPS OF NEVERENDING STRESS, "NIGHTMARES", AND THINKING versus walking away with $750K in my pocket and never looking back?  Yep, it'd be a no-brainer for me.

Yep, I know what you're saying. Anyway I'll be meeting the realtors today and tomorrow and I'll see what they say.

Not sure why I'm sort of attached to the idea of 'hanging on to it'   as I've said and people have stated back to me, the fricking house has been a nightmare and a ton of stress and for sure there'd be more down the pipeline.

One thing of note is how quickly this equity built. Was only 5 years back when if I'd sold it I would have made maybe 100k  lately the gains have been huge. Almost a 1/4 million last year.

If the Asian investors stop coming to Vancouver then for sure the bottom would fall out of the market. Not sure if that will happen anytime soon though. The government here is pro Asian investor and so many people stand to lose if they created some strict rules suddenly around that.

But take the money and run is a song I've been listening to lately.

Thanks all for the replies, It's really beneficial for me to have these conversations

[ZiziPB]

I would take a good hard look at your health and where you want to be in 10 years. Once the Chinese stop buying up your local market, I think it's going to tank. IF you can walk away with such a substantial amount and move out of Vancouver, I'd take the money and run. You could be locking yourself in a very sticky situation for a very long time.

The Chinese have been buying up that market for well over 20 years and I really don't think it's going to stop any time soon.  I remember visiting my aunt in the area back in 1995 and she was telling me about the crazy local real estate market due to all the people from Hong Kong who wanted to move to Vancouver before HK went back to China.... Today, I read this article http://www.nytimes.com/2016/04/13/world/americas/canada-vancouver-chinese-immigrant-wealth.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-spot-region&region=top-news&WT.nav=top-news&_r=0

ETA: that same aunt recently sold her house in the Vancouver suburbs, bought a beautiful house outside of Ottawa with less than half the proceeds and used the rest of it to fund her retirement...

[pudding]

I would take a good hard look at your health and where you want to be in 10 years. Once the Chinese stop buying up your local market, I think it's going to tank. IF you can walk away with such a substantial amount and move out of Vancouver, I'd take the money and run. You could be locking yourself in a very sticky situation for a very long time.

The Chinese have been buying up that market for well over 20 years and I really don't think it's going to stop any time soon.  I remember visiting my aunt in the area back in 1995 and she was telling me about the crazy local real estate market due to all the people from Hong Kong who wanted to move to Vancouver before HK went back to China.... Today, I read this article http://www.nytimes.com/2016/04/13/world/americas/canada-vancouver-chinese-immigrant-wealth.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-spot-region&region=top-news&WT.nav=top-news&_r=0

ETA: that same aunt recently sold her house in the Vancouver suburbs, bought a beautiful house outside of Ottawa with less than half the proceeds and used the rest of it to fund her retirement...

Yes it's true. Vancouver is a somewhat unusual situation in that its a place where wealthy Chinese investors like to put their money thats been salted away from China. The amount of luxury cars with new driver or learner driver plates is amazing.

Still not sure if I can make a decision on house yet. Still ongoing with city.. actually they are almost comical in that one department doesnt know what the other is doing, makes a huge headache for me though.

Mentioned to daughter I might sell house and as I figured she said she'd head back to Toronto, that would be a drag... Im kind of thinking that if I dont sell she might still be living there in 5 years? Who knows... but selling would probably make her mind up.

Spoke with a couple of realtors too, one threw out a list price of 1.5 million. So not all bad news.

In the mean time the rents are covering my bills so I think I just have to not react and just carry on until things come to some kind of conclusion.

[CmFtns]

It's like if I go to all this trouble of building a laneway house and authorising my basement suite ( which I have to!)   I would have a 3 addresses at one property, expenses of around 4500 a month and potential rents of 5900 when all rented so say an average 5400 to allow for empty unit. so  1000 before tax. maybe 800 after.  Thats if I dont live there and its all rented.

House is holding $750k in equity and making $1000/mo profit and requires constant work and headache...

The opportunity cost of $750k is much higher than $1000 per month in other forms of investment. Even if the house ran itself and required no headache I would still sell and use the equity to invest in a diverse index fund which would require zero effort and on average over time give greater returns.

[mm1970]

Honestly, if it was me I would sell the place tomorrow, put the money into a good index investment account, and wash my hands of the problem in one fell swoop. This city is a little insane for purchasing property, but can be quite reasonable for renting, especially if you have roommates (which you already do).

+1

[pudding]

It's like if I go to all this trouble of building a laneway house and authorising my basement suite ( which I have to!)   I would have a 3 addresses at one property, expenses of around 4500 a month and potential rents of 5900 when all rented so say an average 5400 to allow for empty unit. so  1000 before tax. maybe 800 after.  Thats if I dont live there and its all rented.

House is holding $750k in equity and making $1000/mo profit and requires constant work and headache...

The opportunity cost of $750k is much higher than $1000 per month in other forms of investment. Even if the house ran itself and required no headache I would still sell and use the equity to invest in a diverse index fund which would require zero effort and on average over time give greater returns.

Hi comfyfutons, thanks for your input!

Might sound a bit odd, but honestly until last week I had no idea that things such as index funds existed. 

I've watched some youtube videos explaining what they are, and I'll educate myself a lot more. 

Something like that would be perfect for me as I like to travel and the responsibility of that house over the years!  I think it'll be a huge weight off my shoulders.   Also if grandkids end up back on east coast, with no house to hold me down and dividends from index funds I'd much more mobile that Ive been last 9 hears with house/ albatross hanging around my neck.

There are some other things in the house equation though.

One is the mortgage is paid down around 1050 a month.

Another is that I have a renovation business and I have a good size secure workshop and storage. Would cost about 400 to rent similar

One other is my daughter and grandkids are living there at the moment and thats good to know! If I sold it and they moved all the way back to Toronto I'd miss then terribly, I think I'd rather have them here than have the money form the house to be honest.

Of course the other is any appreciation. It's good old appreciation thats what has got me to this great equity position. Even if it averaged a 2% a year increase, on 1.5 million its 30,000 a year. Or 2500 a month , forecasts say a 9% increase in 2016 in the area its in.

If looked at that way sounds different.   Maybe make average 500 after bills paid from rents. If added up its $4450 a month and a secure and reasonably priced place for my daughter to live.

Sorry I know I'm sort of contradicting myself a bit here, but I think thats why I'm sort of on the fence and thinking its kind of like I dont really have all the information I need yet to make a decision yet.

It's almost like I need to get the city permits and upgrades done and then go on a trip for a week, come back and look at it with a fresh start and see if it works from there.  And then look at the variables and weigh things up and make a decision. At the moment I'm kind of on the ropes and feeling stressed.

And the city and their red tape permit BS that goes way beyond being reasonable... drives me nuts. Thankfully I have a couple cold beers in the fridge.

[former player]

I wonder whether some of your feelings towards this house are bound up in the facts around its purchase: the recent death of your mother and the very sudden death of your brother, plus all of the debt you incurred.  It would be understandable if you can't get past that, and if you can't I would suggest selling up and allowing yourself to move on.

Whether you sell or not I am sure you are right to put things straight with the council, as you will need to do this if you are to sell at the best price or to avoid enforcement action if you keep it.   Have you had any professional advice on the use you can make of the building, and what existing rights you have?  It might be worth consulting an expert to see what can be done in the way of retaining or creating separate rental units which the council may not have told you about.

9 years of not knowing that half the electricity had been bypassed looks a bit like wilful blindness, at best.  Be prompt in dealing with this, be innocent, be regretful and hope for the best.

While you are undertaking the renovations you might rethink which parts of the property are occupied by you and by your daughter and grandkids.  Although I am a bit concerned about the statement that they would go back to Toronto if they had to leave their subsidised housing: is that because it would be financially impossible for them to stay or is it because they are only in Vancouver for the subsidy?

[ShoulderThingThatGoesUp]

With the money you get from the house, couldn't you put something towards helping your daughter? Why does she need help? Could you live more cheaply by following them to Toronto?

[2Birds1Stone]

Sell ASAP.

[pudding]

Sell ASAP.

I'm pretty sure its going. Just a case of when. Before fall anyway. 

[CmFtns]

It's like if I go to all this trouble of building a laneway house and authorising my basement suite ( which I have to!)   I would have a 3 addresses at one property, expenses of around 4500 a month and potential rents of 5900 when all rented so say an average 5400 to allow for empty unit. so  1000 before tax. maybe 800 after.  Thats if I dont live there and its all rented.

House is holding $750k in equity and making $1000/mo profit and requires constant work and headache...

The opportunity cost of $750k is much higher than $1000 per month in other forms of investment. Even if the house ran itself and required no headache I would still sell and use the equity to invest in a diverse index fund which would require zero effort and on average over time give greater returns.

Hi comfyfutons, thanks for your input!

Might sound a bit odd, but honestly until last week I had no idea that things such as index funds existed. 

I've watched some youtube videos explaining what they are, and I'll educate myself a lot more. 

Something like that would be perfect for me as I like to travel and the responsibility of that house over the years!  I think it'll be a huge weight off my shoulders.   Also if grandkids end up back on east coast, with no house to hold me down and dividends from index funds I'd much more mobile that Ive been last 9 hears with house/ albatross hanging around my neck.

There are some other things in the house equation though.

One is the mortgage is paid down around 1050 a month.

Another is that I have a renovation business and I have a good size secure workshop and storage. Would cost about 400 to rent similar

One other is my daughter and grandkids are living there at the moment and thats good to know! If I sold it and they moved all the way back to Toronto I'd miss then terribly, I think I'd rather have them here than have the money form the house to be honest.

Of course the other is any appreciation. It's good old appreciation thats what has got me to this great equity position. Even if it averaged a 2% a year increase, on 1.5 million its 30,000 a year. Or 2500 a month , forecasts say a 9% increase in 2016 in the area its in.

If looked at that way sounds different.   Maybe make average 500 after bills paid from rents. If added up its $4450 a month and a secure and reasonably priced place for my daughter to live.

Sorry I know I'm sort of contradicting myself a bit here, but I think thats why I'm sort of on the fence and thinking its kind of like I dont really have all the information I need yet to make a decision yet.

It's almost like I need to get the city permits and upgrades done and then go on a trip for a week, come back and look at it with a fresh start and see if it works from there.  And then look at the variables and weigh things up and make a decision. At the moment I'm kind of on the ropes and feeling stressed.

And the city and their red tape permit BS that goes way beyond being reasonable... drives me nuts. Thankfully I have a couple cold beers in the fridge.

While all that may be true, from what I read in this thread so far it seems like you run a large risk of the real estate market declining after such a huge increase in 9 years. You have to factor that risk into your situation but with this extra information I do agree it gets more complicated... with the 1000 in income/mo and 1000 mortgage reduction/mo and having family living there it's a tough decision.