Buying & Selling vs Holding & Growing

[David Cam]

Hello, I'm a newbie here and just bought my first rental investment property in Ontario. I'm trying to figure out what the more lucrative strategy is to grow my real estate wealth for the future. I'm considering 2 options:

1. Keeping the rental property that I currently purchased, holding it until I've built enough equity & appreciation that I can sell and double my initial investment. Cash out with double my initial investment and then use that cash to buy a property that's worth twice the initial property. The idea would be to build up to a nicer home and then eventually into an apartment complex.

OR

2. Hold on to to the initial investment property and build my portfolio of rental properties that I would be able to qualify for as I build equity in each property. So essentially a portfolio of condo's and mid size rental homes. 

I'm wondering the pro's and cons of each strategy. I would assume that once you sell you have to pay capital gains so that would be a downside, unless there is a strategy to getting around this?

I appreciate any advice that I can get from any of the more seasoned investors on here.

David

[Chris Baxter]

Hi @David Cam... I would recommend that you get your hands on this book to understand tax implications:

https://www.amazon.ca/Accounti...

You will pay capital gains on the increase in value when you sell a property that you don't live in. 

The key to accelerating your growth is to buy properties that you can add value to. In essence, forcing appreciation by increasing rents and decreasing expenses.  Otherwise, you are looking at a slow grind to wait for market appreciation and principal pay down. 

I'd personally skip condos and SF homes and jump right into MF. I'd also look outside of Ontario, which is not friendly to landlords.  Balance these opinions with those of others, and you'll find a strategy that works for you.  Good luck