Hey everyone. I've been a reader of the site for a little over a year now, but new to the forum. I've been weighing pros and cons of the situation my wife and I are in right now, and I'm interested to see what other insights and considerations the community has that we overlooked.
I'll be 33 this year and my wife will be 30. Our baby boy is 6 weeks old and we are planning to have 1 or 2 more kids over the next few years. Between my job and her maternity leave EI benefits, our net monthly income is a few bucks over $5,100. While she hopes to get a job next spring when her benefits run out so that she can work a year before we plan for our next child, it's no guarantee. She has the ability to work contract jobs for her old company though which allows for stay at home part time work and possibly saving us on many child care expenses too. Based on the contract work she's done for them earlier this year while on leave, and my job at a bank, it's reasonable for us to expect the same amount of net income.
Now to the fun stuff. We both have TFSAs and RRSPs, and have automatic saving setup for an emergency fund and investing. We are not concerned about investing for our financial independence. We've set it up to always pay ourselves first, and now have included automatic RESP saving for our boy.
But what's the problem here? Well we've typically been renters, but now want to build real assets and buy a home. We hope to buy around October or November-ish and really we have two options.
Option 1 is to buy one of many 2 bedroom, 2 bathroom condos in the city within a few minutes walk of downtown for about $250,000-$300,000. Many condos are listed for less but would need some repairs, so our total dollar figure includes cosmetic improvements. The plan would be to live there for a few years on a 10 year mortgage with our tiny humans with tiny mustaches before buying another primary residence for the family, and keeping the condo, close to if not already mortgage-free, as a rental to generate cash flow.
Option 2 is to buy a house with an income suite in the basement or side for about $550,000-$600,000. This doesn't allow us to do much in terms of immediate repairs or improvements, but enough to make the income suite nice enough to attract quality renters. The plan here is that we get a huge (by our own definition) house with 3-4 bedrooms for our growing family AND have a renter in the suite helping pay off this 20-ish year mortgage. The suite at one such home we are looking at is apparently being rented for $1,300/month which is reasonable and right in line with current market rates for the area.
So I figure why not reach out to the network and see if anyone was in a similar position and what ideas others have. Option 1 lets us ease into things with less debt, but we would still need to buy another property eventually one day to use the condo as income. Option 2 gets us to the end game immediately in terms of having a large house forever for us to live in as log as we want, all the while having income helping pay the longer mortgage and eventually providing cash flow.
We can't tell if this is a win-win situation where there really are no wrong answers and just personal preference, but honestly, the debt and longer mortgage of option 2 scares me.
Any ideas?
