House Evaluation, already on the market but can still pull it

[Mustcho]

I'm still fairly young. This was my first home purchase and was strictly an investment and I'm not sure if I should sell and take the profits. After taxes realtor fees and everything I will have made about 50k in a year.

It's hard to find cash RoI in British Columbia as everywhere seems to be very expensive compared to rent. That's why I was willing to take a home that was net zero. My thought that was in ten years inflation on the rent will have outpaced the mortgage no problem and I will be profiting on a month to month basis.

I could increase my rent from 1500 to 1700 if the tenants move out. Otherwise I can raise the rent this year by about 50 dollars a month (1550).

The house is older and there has only been small issues in the last year amounting to about 2k but there will be some bigger expenses down the road.

I know this is my first post but I've been following MMM for a couple years now and have been loving every minute of it!

Thank you for any input!


Market Value: 340000
Original Purchase price:252000
Original Mortgage Amount: 201000
Interest Rate: 2.69
Mortgage Term: 30
Term remaining: 29
Amount remaining on mortgage: 200600 (I differed some payments due to a wild fire in our town)
Gross Rents: 1350 (1500 but PM takes 150)
Principal and Interest (the P&I of your PITI - should match with the above info): Not sure, I think it's roughly 405 and 405
Taxes and Insurance (the T&I of your PITI): 2700 + 1200
HOA costs: 0
Deferred maintenance notes: It's an older house. 1960's so maintenance is about 1-1.5%

[Mustcho]

You forgot to ask a question or explain the situation.

Oops lol

[Mustcho]

35% increase in home value in one year?  How did you arrive at this valuation?  Did you do a lot of work to the house, or is the market that hot in BC?

Pretty great rate on a 30 year term too.  Why sell - to lock in the gains?  Then what will you do with the cash?  It seems you'll have trouble finding another place to buy - if the reasons for buying in the first place are still valid, I think keep doing what you're doing.  Raise the rent as needed to keep pace with the rental market.   

I've been working with my real estate agent to get the valuation. Looking at recent sales of similar homes and other homes on the market. We went on the lower end of things for the sale price to get rid of it this year. The house isn't in the town I'm living in anymore and I think with the new mortgage rules rolling out in Canada the market is going to drop since it's overinflated.

I made a bit on the purchase of the home as the seller was in a hurry and the military covered her loss, as well as the market is hot in BC right now.

To lock in the gains and do something else, possibly buy a house closer to home and manage it myself. It seems like the upside 5000 a year in equity might not be worth the 200k mortgage.

[Enigma]

Your reason for buying the property in the first place has changed.  It isn't in the town you are living in anymore.

With that being said I would sell myself.  Just being closer to work and where you are living I would say would be reason enough.  Other factors on if the property will go up or down is mostly based on feelings.  Sometimes they are right and sometimes they are wrong.  In the year you have had the property you have paid off $400 in principal.  I would recommend focusing on paying off more in the future.  Also with closing costs on both buying and selling that takes a big dip on owning a property short term.  I am not sure the tax implications for BC.  Good luck!

[Mustcho]

Also with closing costs on both buying and selling that takes a big dip on owning a property short term.  I am not sure the tax implications for BC.  Good luck!

It cost roughly 258k to buy the house. Assuming I get the asking price of 340k that would be 82k up... the realtor will take 15.4k. The lawyer will cost me 1.5k. Which leaves me about 65k. Our capital gains tax is our marginal at 50% of the profit which is unfortunately 42% for me. Leaving me with about 51k profit. Pretty expensive to sell a house using a realtor and no tax advantages :(

And paying off 400 of principle is pretty embarrassing. Our town got hit by a massive forest fire and I didn't know how long I was going to be out of work. So I took that as an opportunity to pocket the rental money rather than dipping into other investments.

Like I mentioned before I'm 25 years old, I think I'm in a bit over head lol. Reading things on the internet and then doing them in real life is a whole other ball game. I realize I got lucky with the appreciation on the property, but do you guys think that it was a good investment to begin with?