Quote:
Originally Posted by GP_Matt
I would caution against doing nothing for a while. If you suddenly have an extra mortgage payments worth of funds in your account every month you may find yourself getting used to it and that will make it harder to commit later.
As for rental properties, I kept my last house when we moved and have been renting it out for a few years now. I pay a property manager 10% to take care of everything and finished last year with a cash loss of $3500 and a paper gain of $8500. ie I spent more than I took in, but most of that money went to reducing the principle on the mortgage. I should be cash positive at some point, but the mortgage is being paid down so I look at it as a savings account.
One thing to consider that has been mentioned a bit above is that if you don't have significant assets outside your residence and your future rental property then you will have an investment portfolio that isn't diversified at all. It might be more prudent to borrow against your house to invest in dividend paying funds for the tax break or just direct the value of your mortgage payment to an investment account every month if you dislike paying interest.
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So were you happy with the choice of investing in a property? The way I kind of see it, is that you'll end up with an asset at the end of it, whether you paid for the whole thing or a renter contributed to paying the mortgage down. As long as I am comfortable paying the mortgage on a property and bills on a property even if I had no tenant in it, then I don't mind. But I'd like to feel comfortable knowing that I could walk away from it and not suffer a large loss.
We don't have anything huge in terms of investments outside the house. There's probably about $100k in RRSPs, mostly from the wife because her company did the 100% matching and so she always maxed hers out every year.
Without going into all of the huge details here is a bit of a snapshot for my wife and I so feel free to pick away. So as of next year, the mortgage payments will be gone, and one kid will be out of daycare, so that's an additional $900, which will probably go into some after school activities and stuff.
Income before taxes: ~$170,000.
RESP contributions: 2 kids * $210 / month.
RRSP contributions: $1200/month total.
Expenses:
Mortgage: $2000 / month
Childcare: $1800 / month
Bills (phone/internet/tv/enmax): $500 / month
Vehicles (gas): $300 / month.
Assets:
2 vehicles
1 house
RRSPs value ~$100k.
RESPs value ~ $20k.