Mortgage question - Buy house. Keep condo as investment property..

TheImp wrote: ↑ Hmm..
Sounds like it might not make sense to do this.
Without being able to deduct mortgage payments.. all income from rent would be considered income (minus condo fees and property taxes, I guess..), and taxed at my marginal rate.. is that right?

In that case I'd probably be better off making a larger down payment on the house or investing the proceeds in the stock market..

dpacto wrote: ↑ where is your condo and how old is it? if it's in the suburbs and its old probably sell it but if its in downtown and you can get a mortgage and keep the condo and rent covers expenses for the condo you should probably keep it as the appreciation would be worth it down the road

regardless of tax benefits

TheImp wrote: ↑ Considering moving out of my condo and buying a house.
Now, the most conventional thing to do would be to sell the condo and use the proceeds as a downpayment on the house.

But what if I wanted to keep the condo as an investment property and rent it out?

If I went that route.. coming up with the 20% down payment would be a challenge.
Would I be able to borrow against the condo (ie. take out a mortgage.. I currently don't have one.. fully paid off!) for this? Or is that making the down payment with borrowed money and a no-no?

Related question.. for tax purposes (ie. rental income).. would it be better to have a mortgage on the condo?

I'm thinking the optimal strategy would be to take out the max mortgage on the condo (offset rental income with mortgage payments to reduce net income..).. I think that'd be 80%.. and take out a mortgage on the house I'll buy for the remainder?

Am I making any sense or am I totally confused?

CdnRealEstateGuy wrote: ↑ Can you get another mortgage while carrying the rental property? You may have no choice but to sell.

Get pre-approved.

rapashoo wrote: ↑ Without knowing your financial status, very hard to chime in on this but I will try anyway based on my situation as I was in your shoes once. I wanted to keep my condo and at the same time put a 20% down payment on my townhouse. Simply put, bank denied my proposal and they made me come up with 20% DP. Their argument was no matter what down payment for the property cannot be borrowed or backed by any credit vehicle. (They were willing to do bigger mortgage but not the 20% down payment. Pretty firm on that one)

So even if you take out max mortgage on your condo and use that money to pay 20% DP, bank will not allow.

I see two options here; one - borrow from family (my case, I borrowed from my parents and then 3 year later I sold the condo, returned the money to them). Or you rent out our condo, go get a room ($400-450 a month) and save up for 5% down payment and look for pre-construction townhouse/detached whatever you desire.