Attn: Financial Planners: Selling Vs. Renting Out House In Pakistan
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Hello,
You can call me A.M. I am 45 yrs, have three kids (15, 11, and 5), migrated to Canada 4 years ago to become citizen 1 yr ago, and doing a permanent job.
Any financial planners and all forum members are requested to please advise for making an informed decision about my newly constructed house in Pakistan, which can be either rented at $600 per month or can be sold for $200K. I am totally confused, because of following comparison:
SELLING HOUSE – POSITIVE POINTS:
1. I can pay off credit card loans, line of credit and a part of my mortgage, to save over $1150 per month in interest, also being loan free and reducing mortgage will reduce tension because two years ago I had made a hasty decision of buying a house in Kitchener with 40 yrs term $450K mortgage.
2. No fear that rented house gets occupied by the tenant by fraud.
3. I don’t have to worry about taxes and maintenance expenses of the rented house, also I don’t have to periodically visit Pakistan for house related matters.
SELLING HOUSE – NEGATIVE POINTS:
1. Now a days the housing prices are down at global level, so not a good time.
2. Loosing a permanent rental income of $600 PM plus loosing a chance of future appreciation of rent and housing price.
3. Selling my own property will be an embarrassing situation, because family relatives will feel that I have gone so poor that I needed to sell the house, also chances of going back to Pakistan will be doomed for ever, so jeena/marna will become in Canada.
Best Regards,
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A. Malik
Any logical analysis to help me in making a good decision will be most welcome.
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A. Malik
Location: God's own country
Posted on: 07-02-09 15:19:29
AM,
if you were not in KW area, I would have asked you to sell the house in Pakisthan and then payed down the mortgage in Canada and your high credit cards and LOC.
However, I hope that soon KW will be going to the dogs , just like Oshawa since KW area depends mainly on IT and Automobile parts. Automobile parts is a gone profession and this will make KW to be like a ghost town some 5 or 6 years down the roads.
Is you job in KW safe? Are you in a nice job?
My advise is the following :
1. get a job in the GTA and move there and sell you house in pak. / KW and buy a new house in the GTA (after 1 year).
if this is not possible, please follow point 2 :
2. Sell your house in Pakisthan and pay it to the house in KW and reduce your mortgage payments after you have paid in full all your credit card loans and LOC.
Donot worry, the whole world is going down and you will find that after 3 or 4 years , you can buy back the same house you sold for a lesser price.
On a side note, I am surprised that a house in KW costed $ 450K 2 years ago. It looks like you are in a management position in an IT company to afford those kind of houses in KW. For the information of others, a 450K house in KW is equal to a million dollar home in the GTA.
God bless
Peace by TK
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I am a Gents and not a Ladies.
I was in the same position as you are today & I decided to sell my property in Pakistan and pay against my mortgage in Canada.
So I agree with TK to sell in Pakistan and pay against your house in Canada.
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Raza
Hello,
I really appreciate the feedback by Tamilkuravan and Raza, and am thankful for this. Meanwhile, I will be looking forward to other's views as well.
TK please elaborate "Whole world is going down and you will find that after 3 or 4 years , you can buy back the same house you sold for a lesser price"? Do you mean that prices in Pakistan/India are going to drop further in future?
Regarding sidenote of TK. Yes, I live in Kitchener, and purchased this house in Oct, 2007, which was initially listed at $500K then the seller was in hurry so reduced the listing price to $480K and finally I got the deal by negotiation. Your gusess about my profession was close enough, I am in project/process management field, and work at RIM - BlackBerry manufacturer.
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A. Malik
Location: God's own country
Posted on: 08-02-09 20:03:45
Quote:
Originally posted by PakistaniEngineer
TK please elaborate "Whole world is going down and you will find that after 3 or 4 years , you can buy back the same house you sold for a lesser price"? Do you mean that prices in Pakistan/India are going to drop further in future?
pak Engr.,
It is a big confused process and you can make the best choice.
the realities are as follows :
1. Your house value in KW area might drop to 350K or less in 4 or 5 years.
2. Your house in pak. if you sell for $200K, may be bought at $150-$175 K in 2 or 3 years.
3. NA Interest rate is currently 0.5% to 1 % and may continue in the same range for 1 year atleast and then between 1 to 2% in 2 years from now.
4. Interest rate in Pak. may be 8% or so.
So based on the above, you can make choices. The global recession is taking the whole world down and hence my thinking is that real estate prices will be going down. However, the % of it going down in brampton / GTA will be less than what it is in KW.
Also it will be prudent for you to take avantage of low interest rates here ( in NA) and then invest in Asia (where interest rates are high) and then bring it to NA when the market goes up.
however, in any of the conditions, you should be debt free in canada except for mortgage. Otherwise it makes sense to first get funds to free all your debts in Canada (except mortgage).
I heard that KW area was canada's forth largest % of job loss . you might want to research on that a bit further
Hope this helps.
Peace by TK
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I am a Gents and not a Ladies.
Hi Pakistani engineer,
Pak's future is in dark. It is better to sell everything there and try to make your future elsewhere. If you are a hard core jihadi then only you can think of having real estate in Pakistan.
I was forced to leave Pakistan because I was secular minded. I opposed Talibanisation and refused to a party of Al Qaida.
But a word of advise to you that leave extremist Islamic thinking if you want to prosper in Canada. Many Muslims by their actions brought bad name to the community.
