Investment with 150k CAD in Toronto MSA Area

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Investment with 150k CAD in Toronto MSA Area

Preeti Madan
New to Real Estate · Toronto, Canada · Member since 2018 · 22 posts · 5 votes

i recently got Permanent residency in Canada and my household income is 166k CAD (mine 85k CAD and spouse 81k CAD per annul). Currently i am staying in basement rental(1700 CAD) with my husband. CIBC bank pre-approved 675k CAD loan with 10% down-payment. I searched property last month in Scarborough, Richmond hill, Markham and other GTA area but didn't find any good detach/semi detach house (with separate basement ) within 800k.

Now I have three option:-

1) Move to outer GTA area like Ajax,Pickering, aurora , new market or other part of Toronto MSA. I am planning to stay in basement and rent upper part to get 70% of mortgage payment from tenant.

2) Invest in two pre-construction condo (both value should be under 500k) and stay in rental,

i will show 20% down payment for one condo and 10% for other to meet the mortgage insurance requirement

3) Invest in one pre-construction condo and buy one condo to live. i will show 20% down payment for one condo and 10% for other to meet the mortgage insurance requirement

Please let me know which option i need to choose or if you have some better option then also please let me know.

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  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    6y

    @Preeti Madan

    3)

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  • Ashwin Samtani
    Investor · Toronto, Canada · Member since 2019 · 31 posts · 15 votes
    6y

    Hey Preeti,

    Congrats on getting your PR. It must be a momentous time for you. I remember when I got mine a few years back and very soon after was very fortunate to be able to secure my first home :)

    I, personally, would pick between options 1 and 3.

    Option 1:

    Pros: 
    You'll have a bigger space that you can eventually redeem for yourself if you ever need it, and allows you to ease into investing by house hacking.
    It might be easier to get financing for another place in the future if you already have a lease in place for the current location and can show that rental income already coming in

    Cons: 
    Only the portion that you live in could be looked at by CRA as a primary residence and if you do sell at some point, you'd be liable for the capital gains tax on the part that was being rented out (https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/principal-residence-other-real-estate/changes-use/changing-part-your-principal-residence-a-rental-business-property.html)

    Option 3:

    Pros:
    Allows you to have your own space, and understand the nuances of condo living prior to getting a second condominium property
    Allows you to experience some condo living as well as be able to save up waiting for the pre-construction property to close

    Cons:
    HST on the pre-construction property (Unless you decide to move into it when it's done)

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  • Huong Luu
    Specialist · Vancouver, BC · Member since 2016 · 315 posts · 145 votes
    6y

    If you haven't already looking into it, see if you can get a loan to top up your RRSP, as you could get 40% of your d/p from a bank this way and take advantage of the HBP.  

    Of the 3 options you presented, I would go with option 1. 

    Option 3 doesn't allow you have any cashflow. You will see mortgage paydown on your primary residence condo. But condos are not the best investment due to the maintenance fee. The pre-construction will tie up your cash with out cashflow til it is complete and there is risk associated with pre-construction.  

    Option 2: The pre-construction will tie up your cash with out cashflow til it is complete and there is risk associated with pre-construction.

    Option 1: You get into the market NOW! with cashflow and mortgage paydown. Run the calc to see if having 5% FTHB with CMHC insurance is better than 20% down with no CMHC insurance. Get a HELOC with this mortgage and see if there is sufficient funds in the HELOC to do the pre-construction condo if you are still leaning that way.

    Congrads on your PR. Good luck. If you want more info about the above, just message me. 


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