I need advice on what to do with $35,000

[Dathan Nunn]

Okay! First of all, i don't know if this is the right Forum category to post this, but ill give it a shot. 

First things first, i'm 23 from British Colombia Canada. Very new to the real estate investing game. I Own a house 3 provinces over in Manitoba, which my dad is renting off me. I paid $86,000 for that 2 Bed, 1 Bath unfinished basement and detached garage in a prime location. Its renting for $600/month. 

I have a Truck that i owe $35,000 on and im in the process of trying to sell. About a month ago i took out an unsecured loan to pay of the lien of the vehicle in case i decided to trade or sell for less then it was worth (just to get rid of it because its been nothing but an expensive nightmare). 

I recently got the vehicle back from the shop and its running and driving perfect. So i'm still interested in selling it and i know i could get at LEAST what i owe ($35,000).

With this being on an unsecured loan where i'm not required to pay the lien off immediately, would i be able to use that $35,000 cash (once truck is sold) to put towards an apartment i've had my eye on? Is it a bad idea to use unsecured debt as payment for a rental property? if so, why? Am i better off to just pay off my loan which is being charged at 6% currently, $1000/month payments. Or is it wiser to invest that money into a fairly priced easy rental unit. 

Side note: My main goal for the next 10 years is to work my way up to owning 50 rental units.

The details on this apartment are:

1 bed, 1 bath upper level "condo" 

$49,500 listing price

fully renovated

In a booming coal mining town in southern BC, 45 mins from Alberta border. 

Rent is in super high demand around these parts as its centered between a major ski town and the previously mentioned "Booming" Coal mine towns. 

I have yet to contact the agent. That will be my next step to ask about strata fees, utility costs, what similar units are renting for etc.

Sorry if i made you cringe or shake your head while reading this. Keep in mind im new to this! Any questions just ask.

Thanks :)

[Christian Wathne]

I'd get rid of that unsecured loan and go for a conventional home loan if planning on buying real estate. Unsecured loan like that will probably not be tax deductible and the rate is higher than a normal mortgage.

[Travis Hewlett]

Hey @Dathan Nunn, welcome to BP! 

I would be very leary of buying anything near towns with a large part of their economy in the coal business. The Canadian government is really pushing hard to move to clean energy and is really making it hard for players like Transalta to keep their coal plants in business. I believe Transalta saw the writing on the wall and is converting the majority of their coal burning power plants to natural gas by 2025. Renewable Energy manufacturing has come down substantially and solar and wind are both cheaper than coal and gas /watt. 

That's just my two cents, but I would really look at the town closely and factor in how much it relies on the coal business. You may be better off investing in Fernie which seems to be attracting more and more people. Take a look Oliver or Osoyoos as well. I believe they built a prison and are short on rentals for the staff. A friend purchased multi-family units in both towns and have had lots of success filling them. Good luck!

[Dathan Nunn]

Thanks Travis! great advice, your'e right i should be thinking a little more out of the box. The only thing id say is that the coal mines around this area are 98% steel making coal, so its not used to burn for energy like most people might think. But yes i should be careful about counting on an industry to keep my potential rentals full. 

Oliver or Osoyoos is a great idea as i have family there and visit very often. Ill keep that in mind and take a look around! 

[Leona N.]

Good job looking to the future. As for your specific question if it was me I'd sell the truck, then get a regular mortgage for the condo at the lower rate. Will you not need a vehicle though? And would the condo be for you to live in then rent out in a few years or purchase it as a rental?