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Should You Sell or Buy An Income Property in London, Ontario in 2024?

I get asked this question every week.

A knee-jerk reaction to selling is that you can double or triple your initial investment, and for buying, if prices stay the same, rise or lower & interest rates rise, can you enter the market?

Earning income from a house or a condo in London Ontario

Before I go over a few scenarios, I am not an accountant, a financial advisor, a lawyer, or a banker. I have been working with investors for 40 years. Most likely, I have experienced every upside or downside you can think of or never heard of!

I will cover getting professional advice at the bottom of this blog; for now, let’s use some common sense. Common sense is free and personal; that is why 90% of people don’t use common sense; they pay to accept advisors’ noise, clutter, and self-serving opinions!

Sell Now or Buy Now Scenarios:

Scenario #1: Besides their residence, Paul and Louise (names changed to protect the innocent or the guilty) have bought three houses to use as their retirement income over the past eight years.

I helped them sell all three over the past six months, of which, at minimum, they doubled their investment, and two tripled! Their net proceeds were $780,000; I asked them how many years they had to work to net $780,000. There were capital gains and mortgage penalties; they decided they were mortgage-free, could retire ten years earlier than planned, had much more time for themselves, and could travel.

Good decision!

Scenario #2: Carolyn (name changed to protect the innocent or the guilty) had purchased a tri-plex in 1993 and had great tenants; her issue was the tenants were paying 65% of the current rental market (her words: “they are so nice, I just never raised their rent over the years!”). Her employment changed, and she did not want to be a long-distance landlord & the numbers did not add up if she had to hire a property manager & make the necessary improvements to maintain the integrity of the building.

I helped her sell to a qualified investor who saw the potential income the property could generate and was willing to allow inflation & perhaps a vacancy or three to allow the numbers to work. Even after capital gains and the mortgage penalty, Carolyn did very well on the sale and managed to be debt-free and pay cash for her dream condo in ski country!

Scenario #3: Paul & Pratima (name changed to protect the innocent or the guilty) finally had their non-paying, townhouse destroyer tenant vacate their property; it only took 13 months (from the mouth of a legal assistant). They and I agreed that they are not the best to be in the landlord business. I sold their townhouse for a healthy gain, and hopefully, Paul and Pratima will not keep going to those get-rich real estate investor gatherings!

Stop Wasting Money if you do not have a good realtor to help you

Scenario #4: Margaret & Phillipe (name changed to protect the innocent or the guilty) own three income properties now and want to buy at least two more this year. They have refinanced their existing properties, have a respectable down payment, and have a great mortgage provider that will enable them to proceed.

Scenario #5: Eric and Colleen (name changed to protect the innocent or the guilty) want to buy a duplex or larger, live in one apartment, and rent the other out to help reduce their monthly expenses and build equity. Their friends have been buying a single residence to live in; Eric and Colleen, with patience, will quickly increase their net worth before their friends do!

Scenario #6: Song, Chin, and their parents (names changed to protect the innocent or the guilty) come from a family of real estate investors. They feel London, Ontario, is still undervalued and are buying if the numbers meet some minimums they have set.

Well, three to sell now and three to buy now, who’s right? They all are because, as individuals, their risk tolerance, tolerance for the Landlord and Tenant Act policies, and tolerance for the challenges that will occur in the future decide for them.

  • The allowable rent increase in Ontario in 2024 is 2.5%. London taxes are 2.78%; hydro and water, insurance, cleaning supplies, and repairs are your guess and are as good as mine!
  • If the so-called inflation rate is 3.1% as of January 5, 2024 (I guess the guru who came up with that rate has never bought groceries, hired an electrician for a minor fix at home or ate in a restaurant for the last five years), the uninsured five-year fixed rate to borrow is 5.94% at January 3, 2024; how long do you think mortgage rates will take to lower? I have read history repeats itself, but not so; people’s perceptions repeat!
  • With the cost of a starter home for buyers being $450,000 plus or, in some cities, $600,000, tenants will stay put. That’s a good thing for landlords; however, will the Landlord and Tenant Act and the decision-makers lean for the tenant or the landlord? You and I both know where that is going.
who should you listen to?

As Henry Ford said, “If you think you can or you think you can’t, you’re right!” Buying or selling an investment property is no different, but here’s the catch: from whom do you get advice?

If you have a sore throat, do you go to your doctor, Dr. Google, or a Brain Surgeon? Three opinions: which advice do you choose?

Get legal advice from Uncle Sid, a general practice lawyer, a real estate lawyer, a divorce lawyer, or legal aid.

Get financial advice from a financial planner, Aunt Mary, the above legal options, an experienced investor, a licensed accountant, a tax preparer, or no one; you know it all?

I have had clients & non-clients make poor financial decisions from:

A loan officer at a central bank who had been in the position for two months and did not own a house or an income property.

Mom and Dad give mortgage advice to those with a 500 credit score.

A financial advisor whose only source of income is directing her clients into mutual funds or securities.

Thanks for reading this far; I end with three Samuel Clemens quotes:

Mark Twain, real name Samuel Clemons
Mark Twain, real name Samuel Clemons

“Don’t part with your illusions. When they are gone, you may still exist, but you have ceased to live.”

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

“There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.”

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Ty Lacroix

"Not All Realtors Are The Same"! This website and content are for you and are designed and constantly upgraded with the latest real estate trends, how-tos, and what is for sale on MLS. Our primary focus is guiding home buyers and sellers to make good decisions. We believe selling real estate is a process, not an event or knee-jerk reaction; we sleep well at night and ensure our clients do as well! We are not for everybody, nor can we please everybody, nor do we tell people what they want to hear; I know that may be old-fashioned and boring, but we are dealing with hundreds of thousands of your hard-earned money. Would you rather be happy, excited and bored or unhappy, excited and make a poor choice? About Ty I am a Broker with Sutton Group Preferred Realty Inc., Brokerage and the team leader for The Envelope Real Estate Group, that's enough about me! You see, this is about you, you do not want to hear blah blah stuff about awards, designations, or that we walk older adults across the street (I used to help old ladies cross the street, but as I got older I did not want my wife to think I was flirting) the reincarnation of Mother Teresa, walk on water or anything else to impress you. We let the numbers speak for themselves; success leaves clues!

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