To keep or sell rental property

mazerbeaner wrote: ↑ If I were you I would refinance at renewal, extend out the amortization which will greatly reduce the mortgage payment. Problem solved you retain an appreciating asset and aren't losing money every month.

That said there is nothing wrong with taking profits. If you want to sell and pay off your house go for it.

No matter what you should increase by the max asap though, no reason not to.

CNeufeld wrote: ↑ As far as your tenant goes, you could talk to them about an "above limit" rent increase, especially if you have a good relationship, haven't raised the rent for awhile, and they know that they're paying "below market value" for their rent. A tenant can agree to a larger increase; you just can't force it on them.
C

mazerbeaner wrote: ↑ If I were you I would refinance at renewal, extend out the amortization which will greatly reduce the mortgage payment. Problem solved you retain an appreciating asset and aren't losing money every month.

thisischris wrote: ↑ Thanks for the replies. Solid advice. We do have a good relationship and I have mentioned earlier this year that I am considering selling. For now I'll see if they are willing to pay above the guidelines. They should go for it as if I sell they will have to pay current market rent anywhere else. I don't want to "back them into a corner" but my choices are limited.

Furcorn wrote: ↑ OP said Brampton.

sha8192 wrote: ↑ You are a good landlord, I wish I had one like you.
My landlord suddenly infromed me they want to sell the place and ask me to move out in 60 days. I told them no you can't kick me out just because you want to sell. They listed the place and I have aceepted all showing appointments. The landlord wants an above market price so the place never got sold after a few weeks on the market. Now they are blaming me for their place can't sell at their wanted price, because I'm messy, that I have plates and cookwares on my countertop. And they are threating to move in and kick me out.
I'm on an acitive search to purchase a place now but it isn't going to be very fast (1st time buyer). I wish landlord told me earily this year that they want to sell so I have plenty time for a house hunting.

CNeufeld wrote: ↑ Keep in mind that while you're out of pocket by $300/month, your tenant's rent payment is still paying down your mortgage by the principal payment amount. You could set up a HELOC on the property if you have enough equity, and draw on that as required. The available balance on the HELOC will go up every month as the mortgage principal goes down. You will pay interest at a slightly higher rate on the HELOC as compared to a mortgage, but you can roll that into a standard mortgage later if you wish.

As far as your tenant goes, you could talk to them about an "above limit" rent increase, especially if you have a good relationship, haven't raised the rent for awhile, and they know that they're paying "below market value" for their rent. A tenant can agree to a larger increase; you just can't force it on them. You could even offer to do some renovation to make their life easier/better (new kitchen or bathroom?) to give them "value" for their rent increase. That would involve a bulk "out of pocket" expense, but could be drawn from the HELOC above. But that might make them happier about accepting an increase to something closer to market value.

On the other hand, if your property is no longer appreciating and you don't anticipate it doing so again in the near future, you may want to dump the property and purchase elsewhere.

C

JayLove06 wrote: ↑ There is a chance that your tenant doesn't give a rat's ass that he/she is paying way below market rent. I tried to increase rent by $20 and my tenant bitched about it. Been living there 4 years paying well under market rent.

sha8192 wrote: ↑ You are a good landlord, I wish I had one like you.
My landlord suddenly infromed me they want to sell the place and ask me to move out in 60 days. I told them no you can't kick me out just because you want to sell. They listed the place and I have aceepted all showing appointments. The landlord wants an above market price so the place never got sold after a few weeks on the market. Now they are blaming me for their place can't sell at their wanted price, because I'm messy, that I have plates and cookwares on my countertop. And they are threating to move in and kick me out.
I'm on an acitive search to purchase a place now but it isn't going to be very fast (1st time buyer). I wish landlord told me earily this year that they want to sell so I have plenty time for a house hunting.

vaportech wrote: ↑ Did you increase it every year to the maximum allowed? Can’t fault a tenant if you’re not doing due diligence as a landlord.

JayLove06 wrote: ↑ There is a chance that your tenant doesn't give a rat's ass that he/she is paying way below market rent. I tried to increase rent by $20 and my tenant bitched about it. Been living there 4 years paying well under market rent.

thisischris wrote: ↑ Of course any tenant would want to pay below market rent. The difference here is that I am prepared to sell. The end result would be them moving and paying current market rent. Even if they payed a few hundred extra (unlikely) it would still be WAY below market rent for the area.

tsingoo wrote: ↑ What were your plans with the place when you got it 4 years ago? I imagine you were still cash flow negative by 300 a month back then (or more if you increased rent per year). Now you're still cash flow negative by 300 but with appreciation on the unit by $250k.
IMO you should question why you got it in the first place. If you would prefer to lock in the appreciation now you could, but it might be even harder in the future to acquire another rental property.