Real Estate

Bought new build, sell house now and rent or wait

  • Last Updated:
  • Sep 3rd, 2020 11:13 am
[OP]
Newbie
Nov 30, 2007
17 posts
2 upvotes
Burlington

Bought new build, sell house now and rent or wait

Durham Region, Ontario.

I bought a new build (Phase 2) that is supposed to be completed in January 2021 (likely to be delayed, they haven't started digging yet).
I am debating if I should sell my townhouse now while the market is hot and rent until my new place is ready.

Some factors:
  • Real Estate agent has investor clients interested in my type of house, and they are willing to rent my current house to me until the new house is ready (Rent cost to be negotiated as part of sale)
  • Wont have to move twice, but will not have opportunity to have multiple bids
  • Houses on my street seem to sell very quickly (townhouses)
  • Current mortgage remaining is ~330k (variable rate @ 1.45%, 3 years remaining on term), more than half my mortgage payments are toward the principal at this point
  • Not sure how mortgage penalty will work, or if I can port current mortgage to new place now even though its not ready yet?

I like the idea of having the safety of getting the required money now while market is good, who knows how the market will be by Q4-2020/Q1-2021. However, it seems like I stand to lose a good chunk of cash by renting instead of putting that money toward mortgage principal while my rate is really good.
6 replies
Member
Jan 29, 2007
273 posts
57 upvotes
Markham
Bumchoda wrote: Durham Region, Ontario.

I bought a new build (Phase 2) that is supposed to be completed in January 2021 (likely to be delayed, they haven't started digging yet).
I am debating if I should sell my townhouse now while the market is hot and rent until my new place is ready.

Some factors:
  • Real Estate agent has investor clients interested in my type of house, and they are willing to rent my current house to me until the new house is ready (Rent cost to be negotiated as part of sale)
  • Wont have to move twice, but will not have opportunity to have multiple bids
  • Houses on my street seem to sell very quickly (townhouses)
  • Current mortgage remaining is ~330k (variable rate @ 1.45%, 3 years remaining on term), more than half my mortgage payments are toward the principal at this point
  • Not sure how mortgage penalty will work, or if I can port current mortgage to new place now even though its not ready yet?

I like the idea of having the safety of getting the required money now while market is good, who knows how the market will be by Q4-2020/Q1-2021. However, it seems like I stand to lose a good chunk of cash by renting instead of putting that money toward mortgage principal while my rate is really good.
I'd do it if you can fish a good price to avoid market volatility. your variable mortgage penalty + rent is a small # in the grand scheme of things. If market works against your favour, you can lose 10k in a jiffy.
Jr. Member
Dec 12, 2011
121 posts
94 upvotes
Toronto
Personally I would wait until I could get a clearer picture of when the new house would be ready. I am of the same mindset in that i wouldnt want to be paying rent to someone else especially when I could've just stayed put. Personally I wouldnt worry about a townhome in Durham depreciating (and if it did it wouldnt be by much) from now and the next 12 months. I would be more concerned if I was thinking about selling a condo in downtown toronto. Best of luck to you.
Deal Addict
Jan 1, 2017
1181 posts
1020 upvotes
If you sell go to market to solicit multiple bids. Selling without the house hitting the market will probably get you a lower price than you get in the open market. Why do you think these investors are coming to you instead of buying something in the market? It’s because they can buy your place at a price lower than the market.
Newbie
Apr 9, 2020
33 posts
31 upvotes
ProductGuy wrote: If you sell go to market to solicit multiple bids. Selling without the house hitting the market will probably get you a lower price than you get in the open market. Why do you think these investors are coming to you instead of buying something in the market? It’s because they can buy your place at a price lower than the market.
unleash your equity and convert your current townhouse to a rental unit. good years for real estate are yet to come :)
Deal Fanatic
User avatar
Oct 16, 2008
7788 posts
2528 upvotes
Maple
I would wait. Nobody knows how long will be delayed or may be cancelled (worst case).
Deal Addict
User avatar
Jan 14, 2007
3379 posts
618 upvotes
GTA
+1 I'd wait and sell when you have a firm closing date on the new house.

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