*EDITED - I am 23 years old living in the east end of Toronto and I have saved $10,000. I am currently renting an apartment but I am in the process of buying a condo in Scarborough. I was approved for a mortgage of $150,000 and I found a great 3 bedroom condo for $130,000. I was thinking I would buy the condo, live in it for a bit then start renting it out once I can afford a second property to live in. I was reading the MMM blog and he mentions investing in stocks and mutual funds. So my question is, what should I do?
*I work in television and my current income is $2,400 a month after tax. I am currently renting a 1 bedroom apartment + den and with a parking spot for $1,185 a month plus utilities, so approximately $1,260/month.
Because I am renting with my girlfriend I am able to save $1,500 a month. We do not have any children and I am happy to say I am dept free. My car is paid for and I paid off my OSAP in the first 2 years after I graduated.
If I were to buy the condo with a 5% down payment of $6,500, my monthly payments will be roughly $1,289.55 including property tax, utilities and I will be making accelerated weekly payments of $147.01. After legal fees and everything it will cost me roughly $8,000. So I will have $2,000 as an emergency fund which I will continue to add to as I work. 3 bedroom condos rent between $1,400-1,700 a month in that area.
The condo is renovate with new appliances and laminate flooring. It is in a great area close to a few elementary schools, secondary schools and two colleges. The subway station and go station is just up the street no more then 5 minutes away.
So as of now, it will only cost me $30 more a month to own and the condo is a bigger property. I double checked and I can rent out the condo. Another note that might be interesting is that the same condo in the same building sold for $90,000 in 2011 and is now selling for $130,000.
And lastly, I would not be interested in renting out the two other rooms while I am living there as I will be using them as office space.
1. Buy the condo, live in it for a bit and once I can afford a second place start renting out the condo?
2. Buy the condo and put a small amount around $500 - $1,000 into Mutual funds?
3. Continue to rent my current apartment but put the $10,000 towards mutual funds?
Thank you