[Slaveboy]

I bought a house in vancouver a couple of years ago; my payment is ~3K per month but rent covers a good chunk of it, leaving me with a 10K payment. My fear is two fold. 1) I'm eating $10K per year (assuming my tenants stay long term) and 2) if interest rates hit double digits in 3 yrs time (my mtg term expires then), I could be paying close to $20K per year!

But if I sell now I take a 4-7% hit. Should I hold or sell? My job is pretty secure.

 

[purplesnow]

I don't think interest rate will be double digit, but it's just my opinion.

 

[canadianbanks]

I don't think interest rate will be double digit, but it's just my opinion.

Even 6-7% prime rate will kill the entire bubbly Canadian real estate market, and this will happen sooner than most think.

 

[Potato]

Why did you buy a house that costs you money every month that you're not living in in the first place? Are/were you planning on living there eventually? Are you renting below market to your kids? Has that original reason changed? Or was it purchased for speculative purposes from the get-go?

If it was just a speculation, and you think the market's not going to keep rocketing up (and IMHO, I don't think it will) then better to take your licks and get out early.

Unfortunately, it can be quite difficult to sell a money-losing rental: investors can ask the tenants what they pay and see that it's losing money, and starry-eyed homeowners don't want the hassle of waiting to evict a tenant before they can live the dream themselves. You might need to move in yourself first, though discounting by the price of the move might be enough to sell it.

 

[Bullseye]

If it's not even covering your mortgage payment, then it's also not covering property taxes, maintenance/repairs, insurance, and any compensation for your time to manage it all. Plus, unless it's 100% rented all the time, you're also not even getting full rent.

I'd say it's likely costing you far more than $10k per year to keep this.

Hopefully you bought it a while back, and can sell for a profit still. I'd get out now before the market there really starts tanking.

 

[leslie]

I agree with Potatoe. Cut your losses and run. It seems your investment thesis was all about capital gains - ignoring operating returns and negative cash flow. I also do not see future capital gains.

For the future learn about how to measure the returns from real estate. The properties I know about in downtown Vancouver are selling at only about 3 percent return on assets. I will bet your mortgage is at a higher rate, so you are losing profit as well as cash flow.

 

[Rickson9]

Even 6-7% prime rate will kill the entire bubbly Canadian real estate market, and this will happen sooner than most think.

I hope so.