Rookie with 50K, become a private lender or purchase a rental?

[Eric Ogunkanmi]

In October my wife and I are going to be buying my parents house in Milton Ontario. The house is worth about 950k but the mtg will be for about 640 as my parents are gifting the difference in equity which will also be used as our down payment.  They will then give my sister an equal amount of cash so she can purchase her first house. We currently have no debt at all as we sold our house which we purchased when we were 24 in 2008. While we lived in it we rented out the basement then moved into my parents house 2 years ago and rented out the entire house. We’ve put aside 50k to invest either as a private lender or if at all possible a brrrr in the Windsor Ontario area as the house prices are more reasonable there.   A single family home can be purchased there for 180k. I was thinking maybe we lend in order to increase the 50k while we pay down our mtg to an amount that would allow us to borrow against the house. Or we could perhaps borrow from a private lender and purchase the rental property in less time.  Any thoughts?

[John Corey]

Being a lender is a different skill than being a borrower. The upside as a lender is the agreed interest rate. The downside can be the complete loss of the capital if things really go badly (normally when there is a catastrophic event or when something toxic is discovered). Rare to completely lose yet a loss of some of the capital has to be factored in.

So, focus on what you really want to do and get on with it. Drifting through various strategies is a great way to waste time while suffering some losses mixed with some small gains.