Looking for advice from real estate investors

[Gary Turner]

Hello,

Just looking for some advice from the experts on this. We currently own/live in a duplex and own two additional rental properties. The rental properties were initially purchased as primary residences so aren't very profitable from a cash flow perspective, but have had some significant growth which allowed us to tolerate the lack of monthly cash flow.

We're currently considering purchasing a new home which we hope to live in for the next 15+ years while our two children grow up. What we're trying to decide is if it would be crazy to attempt doing this without selling one of our three existing properties and how much we'd be over-leveraging ourselves. Here are the details on the current properties:

Current primary residence (duplex)

Current value: 750k,

Current mortgage: 475k

Potential rental info: $4300/month rent, $500/month profit after expenses

Rental property A

Current value: 550k

Current mortgage: 230k

Rental Info: $1850/month rent, $190/month loss after expenses

Rental property B

Current value: 220k

Current mortgage: 138k

Rental Info: $1450/month rent, breaks even

Our combined annual salary is approximately 220k and we're about 40 years old. The home we'd be looking to purchase would likely be between 700-850k and we live in Ottawa, ON. As far as cash on hand is concerned, we only have about 25k on hand for a down payment, not including potential money we could take from HELOCs, etc.

I suspect the obvious answer is we should be selling one of those rental properties to make this happen, but we're just hoping to get some advice from seasoned real estate investors on whether it's possible to make this happen without doing that. Since we only have 25k cash on hand, we'd obviously need to do some refinancing, etc. in order to come up with a down payment for the new house, but not sure the best route to make that happen yet.

Thanks!

[Hai Loc]

If I were in your position I would sell Property A and use the equity to put 20% on your new home. The remaining funds I would either pay off the balance of Property B or buy another rental property that makes sense.

BUT.. I heard that Ottawa is a hot market so if your properties are appreciating at a good rate then I would use a HELOC to put between 10-20% down on your new home. If the market is hot I wouldn't worry too much on paying the CMHC tax putting less than 20% down.. Your incomes can easily support a $700-800k loan