Move Up from a condo townhouse to a freehold home for the same carrying cost
Why not take a step up and move from a condo townhouse to a freehold home! It can be done!
How? By purchasing a property that features a basement apartment or a home that offers the opportunity to create one. Then, you can become a landlord and collect rent that will help cover your mortgage!
The going rate for rent in Toronto these days is sky high, which means you stand to make a handsome profit by investing in this type of real estate. Even though the home itself might be expensive to buy, the rent will easily help to offset this expense. Not only that, you won't be stuck paying those extremely pricey maintenance fees anymore!
You'll be able to take advantage of a bigger house with a similar carrying cost! And if you ever want to take back that basement for your own use, you can simply have the tenant vacate the premises. Or else just keep your tenant and continue collecting passive income!
Let's illustrate how this could work for you.
If you purchased a condo townhouse for $400,000 (a few years back) and put down 15% with a 3% mortgage interest rate, your mortgage payments would be $1,654. With maintenance fees of $450 and property taxes of $185, your total payments to carry this condo would be $2,289. This is what you are probably paying for your townhouse.
"Total payments to carry this condo would be $2,289"
On the other hand, if you buy a home for $800,000 with 20% down (assuming you built up some equity from appreciation and you've been paying down your mortgage) at the same interest rate, your mortgage payments would be $3,308. You'll have no maintenance fees to pay, and instead would be collecting rent. If you rented out your basement for $1,200 per month and factored in property taxes of $250 per month, your total payment would be as $2,258.
"Total payments to carry a house would be $2,258"
That's pretty similar to living in your condo townhouse, but you'll have much more space to enjoy and more freedom when it comes to how you want to use your home. Not only that, you'll also be able to take advantage of the appreciation of your condo and use the equity you've built up to be put towards your new home.
The price for homes in Toronto continues to climb, so now's the time to make the move to a home!
Monthly Carrying Cost
- CONDO TOWNHOUSE
- FREEHOLD HOME
- Purchase Price$400,000
- Purchase Price$800,000
- Monthly Mortgage (3% interest rate w/ 25 years amort)$1,654
- Monthly Mortgage (3% interest rate w/ 25 years amort)$3,308
- Maintenance Fee$450
- No Maintenance Fee$0
- Property Tax$185
- Property Tax$250
- No Rental$0
- Basement Rental$1,300
- MONTHLY CARRYING COST$2,289
- MONTHLY CARRYING COST$2,258