I'd try to get a second opinion about that pole. If you want to FIRE with Vancouver money, sell now at great prices while you still can. There are some signs the market is shifting there. Even if you have to pay 8K, how much is that really affecting your bottom line? It's way cheaper and easier than building another house!
That is a good point! I kind of got stubborn on having to maybe pay that, but as you say its not a lot of money in the grand scheme of things.
It ends up I have quite a few options, difficult to know which one to follow.
The provincial government here brought in a controversial tax.
The tax is an extra 15% on foreign investors, was only brought in a few of weeks ago and with only 5 days notice.
So far it has slowed sales down but prices have remained steady. I think in September when market usually picks up again after summer will tell just where things are going.
http://www.theglobeandmail.com/report-on-business/rob-commentary/vancouvers-new-foreign-buyer-tax-beware-of-unintended-consequences/article31347447/My daughter and her kids were living there, they have now moved to Toronto, so I don't have that desire to keep it and have family living close by.
I signed up for a newsletter from a local real estate investor 'guru' Ozzy Jurock. He's been around for years and his predictions of where Vancouver real estate is headed have been pretty accurate over the years.
It's my belief that if things here do go down some, they'll go back up again.
A house on it's own 33 x110 foot lot in Vancouver is a bit like gold, and there's no land left here, so they just increase the density, and the value goes up with it. The rents I get can cover the bills plus a bit left over. Plus the mortgage is paid down about 13k a year and I have a place to run by renovation business out of.
If I did build the small house I can rent it for about 1600 to 1800 a month and only have to pay about $500 to 650 a month interest only on the money borrowed to build it. So then I'd have positive cash flow. Maybe even $1500 a month in positive cash flow.
In the past I rented rooms to students as a way to get more revenue, but it was a pain in the neck. Rents have gone up enough now that I could just rent to 2 families and pay my expenses. I think it would be less hassle that way and I could do some of the travelling I keep saying I want to do.
I'm not totally against building the small house, construction is my trade and to build a house would be interesting. My friend is building one down the street and it looks good.
If I don't build one, I still have to meet the city requirements to;
1. take down my workshop
2. address the garage/ carport that they say I have to either take down or get a structural engineer to look at and say what has to be done to keep it.
3. the electrical panel has to be replaced, so either A/ new pole in garden for 8k B/ laneway house and lay cable in trench to house C/ second opinion on options D/ would be to keep existing panel and just say forget basement suite and they will say existing panel is enough.
The thing is I don't want to just panic and run for the hills. I've had this place 9 years and I almost ran for the hills 6 years back and if I had I would have left about 750K on the table !!!! Shocking! I can only imagine how I would have felt today had I done that.
I looked at the prices in my area again last night and it looks to be a bit of a case of what used to be considered a 'cheaper' area has now become quite a sought after area. The areas that were once 'sought after' have become way out of most peoples reach.
I think it gets to a point where even if prices soften, the area has changed so much that it's not going back to how it was.
Now I could be missing an important point here too.... How to say it? OK, I've just had a few days off from a gruelling summer of busting my azz as usual. Painting houses, renovating places.... elbows ached, knees still ache, neck aches, missed a lot of the summer fun stuff. On the one hand there's a kind of satisfaction I get from working and then chilling out. A bit like going to yoga, you can only enjoy the chill out at the end when you put the work in first. If you just went in there and laid on the floor hoping to get that buzz! It's not going to happen.
But it's too much! I don't like to miss out on things and I don't like to be too tired to enjoy other things. Perpetually tired from working.
So I think now it comes down to these 3 choices.
Do I (drum roll) .....
1. Hustle it up, get that place ready for sale ASAP, be it a private pole in the garden etc... sell it and be happy with my 'freedom' ? and go see my lovely grandkids in Toronto. A lump of cash in hand (maybe 750k or a bit more?) Go to Bali in winter, forget about sh*tty grey and rainy winter here.
2. Rent it out to 2 families and build this small house and rent it all out. It would be a solid cash flowing investment that would be worth around 1.85 million.
I'd have around 18k positive pre tax cash flow a year from rents (but would have to pay capital gains if I rented and sold!) , mortgage paid down about 13k a year, and if it averaged a modest 3% value increase on 1.85 million is 55,500 and a place to run my business out of which if I had to rent would be another 3k a year.
A total of $89,000 a **** year!
Now prices could drop for a prolonged period, maybe prices drop and stay flat for 5 years, interest rates go up and the cash flow evaporates, a tenant starts a fire and the insurance decide somethings up and wont pay out, could get an illness or in an accident... all these kid of uncertainties could happen... then I wouldn't be smiling quite as much.
3. Build the small house out the back, cosmetic fix ups in the main house, see where market is at in spring 2017 and if it looks OK, sell it and maybe walk away with x amount. The only problem with this scenario is that the market is changing, no one knows which way and that 'X' amount could be ???
Since I've been writing about this problem over last few months that house went up about 200k.... it could go down 200k... I might build the small house and find its not worth what it is today without a small house! But then again I might find its gone up even more.
So to recap...
1. Fix up ASAP, sell 750k in pocket and live happily ever after.
2. Build small house and rent it all out as solid investment and weather what may come and also get any gains that may come. Still travel and see the grandkids etc.
3. Build the small house and see where market is at next spring. If OK then sell, if not OK then rent it all out until/ if market picks up.
And then it gets a bit like playing at the casino, is it house buying/selling or roulette that I'm doing. And it takes up so much of my thinking time.