Quote:
Originally Posted by hulkrogan
The thing is, as it sits, it hasn't done all that well. It's been a relatively short term hold, and one more year of mortgage payments paying down the principle puts it in a decent spot. Before that, and with a huge penalty if it gets sold earlier, it doesn't look so good.
I guess I have to decide if I think the odds are good of the value of the property dropping more than the penalty ($9-$10K) plus the amount of principle that will be paid off ($6K).
The money would go straight into other investments. I've got a crapload of unused RRSP room right now.
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It seems to me that this would be an ideal candidate for doing an "Agreement for Sale" or AFS. Basically, you agree to lease your property to another investor for the next year at an amount that covers your costs, plus take a deposit from them against the future sale price, which you agree on now. It's essentially a combination of a lease (to someone who will keep your current tenant) and a sale that takes a long time to close.
The advantages for you are you get out of paying a penalty and get a year of mortgage paydown. If the buyer can't close you keep their deposit. (I'd aim for 5-10% of the purchase price)
The advantages for the buyer are that they can get into a rental property with 10% down and have another year to save the other 10% needed to qualify for a rental property mortgage.