Buy a condo w/o mortgage or a better one with?

[dbog]

I own a condo in Vancouver (where I’m currently living) but I plan to move to Toronto in the near future. The condo is paid off.

I’ve got about 10k in savings. No debt. Own a paid off 2021 suv. 33M, single, no kids.

My place in Vancouver will likely sell for around 830k.

I’m looking to live in/close to the city

Looking for opinions on whether I should sell, and ONLY buy a condo that costs less (no mortgage)

or

Sell, and pick up a ~100-150k mortgage in order to get something nicer that might have a chance of increasing in value over the next 5-10 years?

With a 750k+ down payment, I figure it might not be the worst to do so.

I’ll be making roughly 85k/yr with opportunity to grow this figure over the years.

I’ve been seeing more and more posts lately on this sub about how the housing market will probably just keep getting more expensive as the years go on. It would be nice to be able to live more comfortably, and save/invest not having to pay a mortgage, but it makes me wonder if purchasing sooner than later is the smarter option.

Appreciate any advice

Edit: I’m 100% sure and committed to the move as it’s for friends, family and job security. Vancouver was always temporary.

Edit2: I would prefer not keeping it as a rental property to rent in Toronto as I’d like to not have to deal with managing tenants from across the country

 

[jjp297]

@dbog You have to decide which works for you. Dollar wise, no mortgage means you don't pay interest..

Do you have any retirement savings?

 

[dbog]

@jjp297 The retirement savings is essentially what I’m trying to start building now outside of the 10k in tfsa and the worth of the condo I own

 

[wvc]

@dbog You should probably be making your housing choice more based on your concrete needs (size, location) than based on and abstract desire to have "more" real estate. If you already have an $850,000 condo with no debt, then you can probably take on some debt to buy a slightly bigger/better place without putting yourself at much financial risk. But the question is whether you really have to. It would be more flexible to build up more savings, probably through a TFSA.

 

[uncleabee]

@dbog Take a close look at the fees and what they include. I’d rather a more expensive condo with lower fees than a cheaper one with higher fees. Lots to consider but don’t overlook this aspect.

 

[dbog]

@uncleabee Great tip. I’ll keep that in mind

 

[beckylynn]

@dbog Put 830k into CASH.TO and it will pay your rent.
No loss of down payment. No condo fees. No interest payments. No taxes, fees, etc.

 

[dbog]

@beckylynn What kind of return am I looking at doing this?

 

[beckylynn]

@dbog you can get GICs paying 5.25% for 1 year. No risk.

What if your tenant decides to skip on rent?

 

[copwife13]

@beckylynn Within a couple years the returns will approach 2% at which point OP will begin regretting not buying into RE

 

[beckylynn]

@copwife13 at which point OP can then throw it all in VFV and let it ride for 20+ years.

 

[purplegirl50]

@dbog To this point, you could use the cash to generate a source of income to cover living expenses. For example, invest the funds at Olympia and lend out to real estate investors at 10-12%. I know several people doing this and I know several people on the borrowing side(myself included). It’s a bit lore active as you are generally lending on a short term basis, 6-12 months, but the returns are worth it.

 

[resjudicata]

@dbog Buy the place that makes sense for your needs.

Nobody can predict the future, least of all this sub lol. The more expensive condo may increase in value more. It may decrease more. Condo means you don’t own the land - land is scarce, buildings are not.

 

[dbog]

@resjudicata Do you think a condo in a newer building with some bells and whistles in the city is a potentially worse investment than purchasing a crappy small old house further out but for the land too?

 

[resjudicata]

@dbog I think they aren’t making more land and they can always build more condos.

 

[lightofredemption]

@dbog I think the financial question is a good one and an argument could be made that upgrading is somewhat financially wise in terms of increasing value and what not. That being said, I think that should be secondary to what you actually want to live in. Do you want a bigger place or a more expensive place or place with more amenities or better located or what not? Start looking at the market or rent for a while as you consider your options and something will speak to you I think

 

[gokotas]

@dbog Why not rent it out, let the investment grow and buy another condo in Toronto? You may want to go back to Vancouver at some point.

 

[beckylynn]

@gokotas He would make more by putting 830k into a GIC.

No tenant drama. No condo fees. No maintenance. No insurance. No taxes.

 

[reubzk]

@beckylynn

No taxes.

No taxes on 830k in a GIC? He is 33 would only have so much TFSA/RRSP room...

 

[beckylynn]

@reubzk Yes taxes in a non-reg.

I was implying no property taxes. No condo fees. Etc etc. It all adds up. Why become a LL anyway?