Posted on: 14-03-10 16:10:54
I m about 2 yrs old in Canada.I make about 70K per year.I support my wife and 2 school going kids.I bought my 1st house sometime back.
I m thinking of buying another house and give it on rent.The rent I will get will be used for paying off mortgage.That way I can build equity without hurting much on my pocket.
I m thinking right?
If yes, I have few questions.Is this the right time to buy?Where should I buy this house?Should I buy a new house or an old one?
ANy kind of advise will be appriciated.
Also, do you think its financially more beneficial to invest in India or Canada?I have my family in India to take care.
Sirji,
Based on your post I'm giving a response based on the following assumptions:
1.You are relatievely young in the age group of 30 to 40 and your gross is 70K while your nett might be around 55K after all investments like RRSP. Your monthly nett cash available is around 4000 to 4500 per month for all expenses.
2.You have not been laid off in Canada YET and have not lost your job without prior warning on a Friday evening and hit a dead end the next Monday morning.
Hence my sifarish:
1.Do not assume your life be a flat line like right now. There is every chance it will go up or can crash the other way without 24 hour notice. Have you ever rear ended some one on a snowy morning in the highway and had your car totalled. You will realize all your calculation going through the roof once this happens when you encounter near death experience.
2.You assume your children will eat dhal, roti, watch Zee TV and play Holi as they grow up. They will want to go to Maple Leaf game or Raptors or Blue Jay game or a Hannah Montana concert. With your two kids each excercise will cost you a cool 300 Bucks. You need to send them for UCMAS-Abacus class which is 100 bucks each, Kumon class which is again 100 bucks each, you need to put them into a good piano class or dance or music class which again will cost them a cool 100 bucks per month per person. Have you factored in these costs into your expense projections.
3.The typical Canadian has a condo for his retirement as he cannot shovel snow due to onset of arthritis in mid 50's; a semidetached home with two car garage and also a cottage on the river/beach for long weekends and vacations.The net cost per month is 1250 per month including mortgage and maintenance.The semi detached home is a cost of 2500 per month without taking into account of the basement rental and sudden renovation expense.The cottage will cost you around 150K with a cost of about 1000 bucks per month.
4.Can you afford to live this typical Canadian dream of a detached home in the suburb and a cottage on the waterfront for long weekends or want a Desi dream of a string of rental properties and rental income. If the second is your dream then you should learn to be a Handy Man as the cost of maintaining these homes are substantial. The real money is made by taking over a junk home and upgrading it yourself and flipping it. The other way of renting and waiting for the home to appreciate is slightly a longer process with the risk of a period of lack of tenants or you losing your job and then the suspense of the finding another equal paying job or a tenant who can afford to pay on the dot every month.
5.With a family to support in India how will you apportion the monies to send to them when you need to save for your family, your rental property,incidentals and accidentals emergencies.That is around 6 months to 12 months of your expense which is around 50K cash as you'll get 20K per annum as EI.
6.I strongly suggest that you should find the exact amount your family needs in India per month adjusted for Inflation and invest your dollars in a good mutual fund with montly payments to support your family first before taking the risk in terms of a second investment property in Canada.
Hence before considering all ifs and buts make a balance sheet of your current state, another with a rental property state and also both should contain your Indian family committment and your emergency savings. It will easily emerge out of this what should be your RISK bearing scenario and make your decision easier.
Hope I've confused you even more !.
-----------------------------------------------------------------
Sunny Leone a true Canadian DESI now back in India !.
I will give a simple answer to a simple question.
If you are looking at capital gains, India is the place. You will have to get the loans approved ( I do not know if they approve all that online ) and maybe visit India to get the documents signed.
However, IMHO, Indian property market shall appreciate in the next few years at a much faster pace then Canada. Be sure you have someone very reliable to care of your property.
Quote:
Originally posted by musicmastimagic
Also, do you think its financially more beneficial to invest in India or Canada?I have my family in India to take care.
Very good post. I may be missing something here but since this is discussion hoping to clear my idea as well.
Lets say investing in a property in India of worth CAD 200K.
1) 4-5 % paid on exchange rate to make payment on loan.
2) Around 12% rate of interest if the loan is taken from a bank in India.
3) Minimum to no income on rent
4) although the income tax that you will have to pay is minimum but ROI in terms of rent is less.
6) If the money is needed in future, again payment of exchange rate of 4-5%
If invested in Canada..
1) No expense related to exhange rates
2) Low mortgage interest rates
3) less payment on earned income from rental as it is an investment property.
4) Borrow more at later date from investment property (Line of credit) and buy a larger primary house hence paying lower interest rate at the same time low tax since interest payment on investment property is more.
The downside: property prices Already at peak and rate of appreciation may not be great as compared to India.
Bottom Line: Investing in India may be benefitial but probably by 5 to 10% compared to investing here in Canada. Whereas in Canada you are in control of your property and at least for now frauds are minimum to none.
No Vandemataram, you have not confused me.Infact those are accounts one must keep in mind before jumping in something (specially for a reletively new person in Canada).
Now...let me be more specific here.
I don't have much backhome responsibities unless something major happens.
I can't say that I m 100% sure about my job but I m quite confident I will be able to generate that much money.
I want to know how much minimum bank balance one should have for emergencies kept aside for emegencies?
What made me think about investing in property.......the house I bought few months has appriciated by minimum $50,000.My friend bought a new house through contractor.He has not even moved to that house and he has got an offer for $60,000 more.He is selling it with such good profit.
This is definatly not the time to buy in Canada.I will wait for prices to go down (if I m convinced to buy).....may be it takes couple of years.....no hurry!
I don't know how is Indian market now a days.I bought a small apartment in India couple of years back...sold at profit.Bought another one and sold again at profit.May be its a good idea to invest again in something like this as the amount is not big hence the risk is also not big.
May be my post is all haphazard....I just wrote whatever came to my mind (all mixed thoughts)
Quote:
Originally posted by Vandematram
Sirji,
Based on your post I'm giving a response based on the following assumptions:
1.You are relatievely young in the age group of 30 to 40 and your gross is 70K while your nett might be around 55K after all investments like RRSP. Your monthly nett cash available is around 4000 to 4500 per month for all expenses.
2.You have not been laid off in Canada YET and have not lost your job without prior warning on a Friday evening and hit a dead end the next Monday morning.
Hence my sifarish:
1.Do not assume your life be a flat line like right now. There is every chance it will go up or can crash the other way without 24 hour notice. Have you ever rear ended some one on a snowy morning in the highway and had your car totalled. You will realize all your calculation going through the roof once this happens when you encounter near death experience.
2.You assume your children will eat dhal, roti, watch Zee TV and play Holi as they grow up. They will want to go to Maple Leaf game or Raptors or Blue Jay game or a Hannah Montana concert. With your two kids each excercise will cost you a cool 300 Bucks. You need to send them for UCMAS-Abacus class which is 100 bucks each, Kumon class which is again 100 bucks each, you need to put them into a good piano class or dance or music class which again will cost them a cool 100 bucks per month per person. Have you factored in these costs into your expense projections.
3.The typical Canadian has a condo for his retirement as he cannot shovel snow due to onset of arthritis in mid 50's; a semidetached home with two car garage and also a cottage on the river/beach for long weekends and vacations.The net cost per month is 1250 per month including mortgage and maintenance.The semi detached home is a cost of 2500 per month without taking into account of the basement rental and sudden renovation expense.The cottage will cost you around 150K with a cost of about 1000 bucks per month.
4.Can you afford to live this typical Canadian dream of a detached home in the suburb and a cottage on the waterfront for long weekends or want a Desi dream of a string of rental properties and rental income. If the second is your dream then you should learn to be a Handy Man as the cost of maintaining these homes are substantial. The real money is made by taking over a junk home and upgrading it yourself and flipping it. The other way of renting and waiting for the home to appreciate is slightly a longer process with the risk of a period of lack of tenants or you losing your job and then the suspense of the finding another equal paying job or a tenant who can afford to pay on the dot every month.
5.With a family to support in India how will you apportion the monies to send to them when you need to save for your family, your rental property,incidentals and accidentals emergencies.That is around 6 months to 12 months of your expense which is around 50K cash as you'll get 20K per annum as EI.
6.I strongly suggest that you should find the exact amount your family needs in India per month adjusted for Inflation and invest your dollars in a good mutual fund with montly payments to support your family first before taking the risk in terms of a second investment property in Canada.
Hence before considering all ifs and buts make a balance sheet of your current state, another with a rental property state and also both should contain your Indian family committment and your emergency savings. It will easily emerge out of this what should be your RISK bearing scenario and make your decision easier.
Hope I've confused you even more !.
Quote:
Originally posted by Iceberg
I will give a simple answer to a simple question.
If you are looking at capital gains, India is the place. You will have to get the loans approved ( I do not know if they approve all that online ) and maybe visit India to get the documents signed.
However, IMHO, Indian property market shall appreciate in the next few years at a much faster pace then Canada. Be sure you have someone very reliable to care of your property.
Thanks Iceberg!
I m not sure too if loans can be approved online.May be on my next visit to India.
