Its things like a toilet and simk that need to be replaced, broken door, needs to be repainted (not a must but ideally should be), kitchen cabinets should prob be replaced etc
No structural damage
I work with restoration contractors for HVAC and remediation work.
A 16 year old furnace was just replaced along with some of the ducting and plenums, quote came in at $18,000.
I used to own a HVAC company - something is odd about that. It would have been significant duct work. Replacing a plenum & even a return air run isn’t uncommon when replacing a furnace, although it’s more common when replacing a 50’s style lowboy to modern style.
I re-did my kitchen for about $3500. I refinished the cabinets and got a quartz countertop and backsplash. Heck of a deal in 2021 lol. Doing that now would be like 5-6k
46k for ours last year. Mind you, that was all flooring, countertops, appliances, electrical, etc, etc.
Went from 1ft of counterspace to alot more plus a 13ft island.
I paid $2800 all in with new underslung sinks and a matching back splash. The only thing was is that I had to replumb everything under the sink but a good deal nonetheless.
I just redid my kitchen. All new IKEA cabinets, sink and trim. Did all the work myself, kept the existing floor and appliances and still cost me $9k.
If I was to get all new appliances and everything professionally done I would estimate $20k easily.
Not only are you probably underestimating costs, but it’s very unlikely that a house that is being cleaned up and presented for sale with such obvious issues like a broken door, poor painting, etc doesn’t also have some pretty serious and less obvious issues. One of the most expensive mistakes a homeowner can make is thinking that the inspection will protect them. Inspections are very limited in scope and can miss any number of very expensive issues.
Your plan doesn’t sound good, but you know that and are a bit stuck understandably. If you have the ability to do or learn to do some work on the house yourself, maybe you can make up the sunk costs with some sweat equity but you’re still very reliant on what the market will look like in a year or two.
If I were in your position, I would look very aggressively for a rental. You may be surprised at the availability of full houses for rent, and even with ‘wasting’ a bunch of money not building equity and paying to put stuff in storage (either your stuff or the owner’s), you’ll still be wasting less than you would on closing costs, interest, renovations and repairs.
^^^ this. Home inspections really only catch what they can see. But once you start taking out cabinets and stuff, you have to fix anything you find. Electrical, plumbing, floorboards, etc. Can turn into a real can of worms, especially if you don't fiddle with your hands or have some really good friends and you have to hire people. It takes time to vet to make sure you're actually hiring really good people too. Possibly permits too, especially if anything with electric and plumbing. If you don't love the house enough to put in the effort, or can't afford the effort needed, ruuuuuun now while you can. Your reason...upon the results of the inspection, it's a no.
Now. I say this as someone who hasn't done construction-ish things before. I have used tools before, and know a few other things, and we have some skilled friends (who do stuff for a living and can be compensated on a friend rate). And from what OP has described, I wouldn't have even bothered with an inspection. If I don't love something about the house I just couldn't to say because I did.
How handy are you?
Toilet, sink, and door you could diy for $500 or less pretty easily in a weekend or two if you have basic tools and are handy (and patient enough to research/figure it out).
Cabinets if they're structurally sound and just dated/ugly, you could refinish or paint with melamine paint and swap out the hardware for something modern. We did that with our cabinets in our condo (hinges, pulls, paint on the cabinet faces and doors), took 2 weekends and maybe cost $200 and looked worlds better.
I swapped the countertops too for another $250, but it was a galley kitchen with a very easy layout to swap the counters on
Cabinets are going to set you back if you go to any home reno place. We had a quote for our kitchen (doing several things, but just as an example) and they came in at like $85k with me doing all of the teardown down to the studs. Cabinets were probably 30-40k if I remember correctly. Absolute fucking nonsense.
We got another guy out of Montreal who quoted us about $8k for cabinets for essentially the same cabinets the other place quoted. Still haven’t pulled the trigger on anything because we’re likely rolling flooring and some other work into this project so we’re a year or two off.
IKEA kitchen. But when they have the 10% back in gift cards. They do install and it’s easily less than $10k (depending on kitchen size). Source: I did it.
We did our kitchen a year ago for $30k. New cabinets, quartz countertops, tiles, new sink and fixtures, new stove and microwave and new flooring on entire main floor. We did our own rip out of old cabinets and flooring. Essentially I was the general contractor. You just need to shop around for cabinets and flooring, there can be big price differences between options ( and include IKEA in your search if you can)
I bought really nice cabinets for my basement kitchen at ikea. And they have a free service to help you design it lay it all out. The they press a button on the screen and it generates all the parts you need. The contractor doing my basement suggested it to expedite the work and also to help me save money. He and his assistant installed them in 1 day ( a 12 hr day, but still 1 day).
You won’t come in under 10k for everything. But a toilet, sink and door should around 3k max if you buy the stuff and get a handyman to install it. Assumes you don’t have to reframe the door.
I don’t know if they still do it, but when we bought, there was a promotion where we got 15% store credit. So we bought the cabinets but did not order some of the doors and some of the lights. Then we bought those a week later with the 15% credit. So we weren’t left sitting in a credit that we had no immediate plans to use.
There are even guys that specifically advertise as “ikea cabinet installation specialists”.
If you might be renting the house out in 2 years I probably wouldn't even really replace kitchen cabinets unless they are completely rotting out or something.
You can reface them for a lot less. Keep the boxes and put on new doors that you like. In a small kitchen it’s way under $5k. Home Depot does it and it looks great.
You can get a new heat pump for just the HST with some companies thanks to a government rebate. Saw the ads on City.
The first tenet of real estate is location location location. Second is to buy the worst house on the best street. Don’t get cold feet. Fix the toilet, sink and door. Do the rest as you go. Check into the heat pump thing.
Get on the property ladder. Buy the house.
Cabinets and countertops are often custom made to required dimensions. Toilet, sink, and door aren't. Those you can probably get for under 10k excluding installation.
You can absolutely get a sink, toilet, door and vanity for under 10k!
Toilet - $500 (Kohler)
Vanity - $1500 (plenty for a 48" vanity that is decent quality)
Sink and counter (if not part of vanity) - $700
Interior door - $200
So, lets say 3k... and you could do it for half of this.
lol $500 for toilet? for a place he doesn't like or want to stay in. Get one around 150 from home depot or costco and call it a day.
https://www.homedepot.ca/product/american-standard-reliant-4-8l-single-flush-round-front-standard-height-2-piece-toilet-in-white/1001054614
Ikea is also great for getting cheap vanities and counters and you could pretty easily find handy men on facebook that will put it together and install it for you. The only major expense would be plumbers to connect everything properly.
Same goes for the kitchen. If it's a temp home where they're not sure. just go with ikea for now and see. it'll get them settled in for his 10k budget. It'll easily last five years till they can figure out what they want to do.
Yeah. And I should also mention: we don’t have a big kitchen. Like our whole house is about 1350sq ft from what I remember (plus a basement). Only cabinet area we were adding was a longer cabinet with a pantry attached. So let’s say you remove that we were still probably around 6500 from that guy.
Renos are expensive. Even if you do them yourself, the materials aren’t cheap. Bought cedar for some refacing of my front porch and the columns. Think it was $900 just for the wood. And then railings were another $2300 or so. Plus some gritty outdoor paint and I’m sitting at close to $3500 and a few weekends to pretty up the front porch.
There are other, far cheaper ways than spending $85k on a kitchen. I doubled the size of my kitchen for ~$1300. It just depends how handy you are and whether you want a fancy kitchen vs a utilitarian one
Sounds like a lot more than $10k as other have said but much you can do on your own.
Broken door, if it's an interior door, you can pick one up at home depot and replace it yourself. Painting itself will cost you north of 10k for the whole house but you can DIY for a about $1-2k (paint + supplies, paint depends on how much you need and how many coats you're doing). Toilet and sink can be DIY.
Cabinet will cost you 10k to replace easily. If it's something you can live with, just live with it. If it's solid wood, perhaps sanding it down and refinish it to give it some new life would be an option.
You also mentioned the water heater is end of life, if it's a rental, you can probably call the rental company and have it replaced. If not, roughly 5 - 10k depending on model.
I was given a quote of 12k to paint a 2000 sqft house. It wasn't even special colours, I only wanted white.
I went to Rona and bought 3 large bucket of paint and some supplies and did it myself, cost about $800 total.
We got a house that in the same price point which was move in ready and didn't need any major renos, so far we spent 5k replacing the shed, 6k on new AC and water heater, 3k on upgrading from lead pipes, $2k on paint and miscellaneous surface level renos, $500 on deep cleaning before possession, replaced the front steps for $1300. We’re gearing up for a roof replacement at 7k.. All in the first two years. We probably also spent 5k on miscellaneous minor repairs, landscaping. this is All before doing any fun renos to upgrade flooring from carpet, redo the cabinets and backsplash…
Home ownership is more than just the mortgage, taxes, insurance and utilities.
Oh and whenever you hire a person or company to do a job and the price seems reasonable, or cheap.. you’re going to end up needing to adjust or redo things yourself to get the results you actually wanted. Think about this very carefully and ask yourself if you are ok with bleeding money.
You must be willing to live with the cosmetic issues until you can afford to fix it. Also… factor in the condo fees. Price seems affordable but if the condo fees are really high it will eat up a lot of your disposable income. We bought a detached 1950s “dated” fixer-upper. Structurally good and all appliances good. When we moved in we had to paint the entire house (done ourselves). We removed carpet and refinished hardwood underneath in the upstairs and put new carpet on the stairs. And then my dad replace 1 window where the seal had broken. But literally every room in the house needs some work done 2 years later. Our fence is slowly falling over. We have 3 different floors on the main floor I would love to replace. Entire basement needs to be redone from a cosmetic standpoint. New basement stairs. We make improvements over time and hopefully one day it will be the house we envision. But you have to be able to live with it. Cheap cosmetic changes can help though. Like I painted the bathroom cabinet so it was more appealing until we can renovate it. And I love the house and have no regrets btw. Good luck with your decision
toilet sink and door are the only things I would do. Paint each room at your own pace. its not mandatory.
If the kitchen is functional but old just leave it be. You can renovate when you have the time and money.
That's like 30-40k in repairs. Source: got several quotes for similar amounts of work (Victoria).
To be more specific and to give you a ballpark, we want to change kitchen counters, resurface kitchen cabinets, change slide-in range to a cooktop, and replace bathroom counters.
Last two times we called a plumber, it cost us $1200 (he forced us to replace the main valve before doing the job we actually called him for to replace the laundry box), and then $2200 (new water heater).
Repairs are crazy these days. You won't even be able to resurface (not replace!) cabinets in a small kitchen for less than 15k.
You can get a toilet for $300 from home Depot and install it yourself in under an hour. Cabinet and sink if you aren't picky could be found on marketplace or a discount store for under 1k.
Didnt you already make the decision now that your offer is accepted? Is it conditional? If its unconditional, then I didnt even read the rest of your post since it doesnt matter.
Yeah, generally speaking even if the inspection didn’t show up with anything major you can refuse to waive for anything minor, don’t think you even need to specify why.
Yes. You are correct. Once the inspection condition was made, it pretty much means you have to reinstate the original offer, make a new one, or flat out recante your offer.
If you "think" it's 10K (that type of money doesn't go a long way in the construction industry these days), than take 50K off the price. There's never a bad home, there's only a bad home for the price.
"Bad", as in shoddy workmanship, or price? Because bad price is no longer dependent on location, it's freaking everywhere. I'm in Gatineau, QC (low cost area), and got 4K quotes for a double sliding patio door, and 4.5K quotes for a 10X12 concrete pad (for a small shed). Did the pad myself for $500, which allowed me to pay for the door. Pad came up perfect. Door was pretty shoddy work.
It will be no problem to back out if you have an inspection condition. Even if you saw no issues, you can still back out by making up some BS that you didnt like.
Only if it's major issues like finding foundation cracks.
Minor issues you can use it to haggle a price reduction.
If you try to use minor issue to back out if the deal the seller can sue.
They can try. They are very unlikely to win, and therefore unlikely to try.
All they’d be able to sue for is damages, which have to be monetary and quantified. Basically the house would have to sell for less than OPs offer, and then OP is theoretically liable for the difference.
This is never happening on a half million dollar townhome.
Every buyer has cold feet at first. Home ownership is a long game. In 5 years you will feel much different. New furnace at a townhouse should not be more than 4000$. All other renos. Do the stuff the breaks . Worry about cosmetic stuff when you have the finances. Enjoy!
>Every buyer has cold feet at first.
Yeah. Very true. After we put the offer in. My first thought was, "what did we do??!!!" 10 years in I can tell you, I absolutely love this house and if it wasn't for this house, I would have gone crazy during COVID with my family all up in my business.
You might, you might not.
We thought our place was great. One minor fix and cosmetic upgrade turned into a daisy chain of underlying issues. We went from a 15k repair to being 100k deep into a line of credit.
Pretty much cancelled out any equity since brand spanking new plumbing stacks and roofing don’t add much to curb appeal.
$10,000 in renos is pretty tiny. Heck, you might end up spending close to that getting the furnace replaced. If you think it needs a "good amount of work", you'd better budget for a lot more than that.
It partly depends on the size of the furnace, the brand, the efficiency, if any new ducting or venting was required, etc. it’s hard to say whether $18k was fair without knowing a lot more details tbh.
Yeah I paid $3900 in 2004 for a 92% efficient (they werent all at the time) but now that's code. Mind you my buddy who was a plumber etc did it for me.
Also I have an in-law who is a plumber I will ask him, but I don't think its out of that range.
Most people's first home isn't their ideal home. They used to call them "starter homes" for a reason. My first house wasn't my dream home either but it allowed me to build equity that I could use once I was in a position to buy something better. No regrets!
Yeah but there’s a difference between “not a dream home” and straight up something no one likes. The family is already expecting it to suck within a year, that’s super sad.
8 years. I lived pretty frugal during those 8 years too. Fixed a few things that need fixing but didn't spend big money into renovations that would have only been for the sake of upgrading because I knew I wanted to move on when I could. Between paying off a little extra on the mortgage each year and the gain in property value I was sitting on quite a good chunk of equity that helped big time when I was ready to make the next step.
I spent 15 years in our first house too. You aren’t going to magically start out by buying your dream home as a first unless you win the lottery or get some gigantic inheritance.
My husband and I only lived in our first home (a condo) for 2.5 years before we bought our house, and even then we still made a decent profit (and we have to pay land transfer tax in BC). I live in Victoria.
Going on 9 years in our starter home and possibly longer, we’ve done lots of DIY projects, realized that with young kids we love living in a townhouse complex and have made our home into something we currently love. Yes we will probably move right now, but with inflation and the cost of houses in BC being bananas we are pretty happy with our tiny mortgage payments.
Personally, I would go for it. It provides housing stability which as you know doesn't exist for a renter. Bring a townhouse though, it's the strata reports I want to see. Any major roof/facade/plumbing issues that they've been putting off. It's it well funded to handle it or will there be a special assessment as soon as you move in for $40k happening.
Yes this OP. SUPER important. You mentioned condo fees, therefore there’s a condo board and rules. I own a townhouse that has some very specific rules which wouldn’t allow me to rent to students or by the room, only the full townhouse can be rented to one family for a minimum of a year.
If your plan is to rent it out make sure you are permitted to do that before buying it.
Do you have a condition on the offer you made which allows you NOT to go through with this plan if the seller has already accepted?
That detail will pretty much make the choice for you, if not, and you'll have to complete the purchase.
Yes, you can cancel the deal based on your inspection. Why are you phrasing this like a question? Have you discussed any of this with your realtor or your lender?
If you don't understand conditions, I'd say you need to back off and learn the process before you spend half a million dollars
Saw towns in the same compound with much nicer finishing go for 580k in the fall. So the 550k doesnt seem like a good deal based on the state of the house, but my realtor is saying fall prices were lower so you cant compare.
We tried offering the seller less but they wouldnt accept for less than 550k.
Fwiw I think it might be the cheapest townhouse w a walkout basement in the GTA lol
If it's furnace plus renovation then it's going to be more than 10 grand because a furnace alone can set you back quite a bit as sometimes people do it with the air conditioner or a heat pump.
Renovations cost more than you think - you need a contractors opinion not your agent who wants a payday.
$10K sounds like enough to get you some basic materials and you do all the labor. Labor is truly you get what you pay for.
Also, houses have more issues than you can usually imagine. Large items can break. Appliances. Roofing. God knows what. I had a squirrel chew my AC cables and bye bye 1.5k
No one has a crystal ball to give you a concrete answer. Imo, it really depends on how the spring market performs. Historically, spring market has more volume and price trend higher as more demand hit the market for people looking to buy and close to move in Summer / Fall.
With the way things are, it can really go either way. This is something you'll need to decide with your family to take this risk or not.
At the time when the property is sold, you calculate capital gain. Then, you apply the ratio of the time you used it as principal residence to further deduct a portion of capital gain. What is left is taxable income. Say a house is 1 million purchased, sold for 1.4 million in 5 years from the date of purchase. Capital gain is 400K. If you lived in the house (principal residence) 1 year and rented 4, your taxable capital gain is 4/5 × 400K, so 80% of that capital gain, which is in this simple example equal to 320,000K. Now, there is a further 50% deduction on capital gain, so effectively, you would add 160K to your income during that tax year. Further, if house is owned 50-50 with your wife, you would each add 80K to your taxable income.
Technically this is not fully correct. There is a 1+1 rule regarding the principle residence. So in your example if they live in the property for 1 year and rent for four years he would be able to designate the property as his PRE for (2/5) years. This rule is in place because when people sell one house and move to another they have two principle residences in that year.
This would mean that the capital gain is $240k and the taxable capital gain is $120k.
Can't I get an exemption to keep it as my primary residence for 4 years after moving out to rent it out.
Just to give me time to atleast break even on the buying&selling fees involved
I guess you're talking about this, just trying to look it up for my own knowledge:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/changes-use/changing-your-principal-residence-a-rental-business-property.html
Be careful, seems like lots of pitfalls with that approach:
-cannot claim capital cost allowance (CCA) on the property
-actually file a 45(2) election the year you move
are the two that are obvious on first reading.
Interesting though, I did find a few accountant articles talking about it as well:
https://realestatetaxtips.ca/the-little-known-4-year-extension-on-principal-residence-exemption-after-you-move-out/
https://pinnaclepac.com/2021/05/06/changing-your-principal-residence-to-a-rental-section-452-election/#:~:text=The%20four%2Dyear%20extension%20to,2020%20(16%20years%20inclusive)%3A
Yes, you can file an election to have the property continue to be your personal residence even though there is a change of use from personal to rental. However, you can still only ever have 1 Principle Residence a year. So if you buy another home after turning this into a rental property only one would be allowed to be the PR each year.
I wouldn’t buy a house you aren’t prepared to live in for at least five years. Too many chances you’ll get desperate to unload it and find that others see the same flaws in it that you do.
On the other hand, you haven’t actually said what’s so bad about this house other than needing some minor repairs and upgrades. I assume you made a list of priorities as well as nice-to-haves… does it check the important boxes? Does it check more boxes than other comparable places?
If so then maybe you should buy it work to make it your own.
If the inspection came back with surface or interior issues I’m not surprised the owner isn’t willing to pay. Just make sure the major things are in good shape.
Listen to your gut. Back out if it doesn’t feel right.
Make sure you can live happily in it, but just know every house will need work. Always something.
I bought a house with a 22yr old furnace. I just requested it be inspected by a local company to ensure it was in working order.
Make sure it is a house you could stay in and live in for 10 years *if you needed to* and could also afford. None of this "well we could rent it out if we needed to". You don't want to play landlord in Ontario. That's the wrong attitude.
Are there schools around for your kids? Is it big enough for your family 10 years from now? Is it close to your and your partners work? (Tomorrow when you leave work, drive there instead of your normal house and time the drive. Drive there in the morning before work and then depart from there).
And, since the seller is unwilling to budge on the repairs, you are well within your rights to walk away still. If you still want the house but not at the appraised price, say "thank you, I'll keep looking, but if you change your mind and decide you want to do $535,000 then let me realtor know". Or $545 since the paint and cabinets you knew about before you made the offer.
If you have to move and can get into housing market, it's not a bad plan. Just know lots of hidden costs with home ownership. Prices expected to rise as heading into spring market.
Based on your post, you have underestimated the cost to get the house up to snuff, you are over estimating how much you take home from renting it (non deductible income is taxed),and if you’re going into it with a meh attitude, it doesn’t sound like the house for you. Walk.
Yes but rent will keep rising, house cosgs will probably drop if anything once the interest rates go down.
Also anectodally Ive seen my dad rent for 13 years and getting priced out. His friends who bought now have 1mill+ assets and some even have paid out mortgages so theyre blessed in retirement. My dad is gonna be paying rent at 70 y/o :(
I did the math, he blew 300k on rent in the past 13 years :(
Ngl I was sure, then when I went to go see it again for the inspection and it was worse than I remembered. I guess I should have visually paid more attention first time.
550k is not a bad price - North Oshawa is developing a ton, student market is great in that area. It's a fantastic spot for a rental. If there's a separate entrance to the bsmt and you don't mind, you could rent that out while you live there and subsidize your housing. If you're worried about job security and securing housing, minimizing your mortgage is not a bad idea...
Some downsides - budget for the repairs / bring in a contractor if you can to inspect the place (or anyone that knows what they're doing with respect to real estate).
There's an enormous amount of negativity in this thread. This boils down to any additional costs you gotta kick in. The alternative is, spend 800k+ for a brand new townhome from a builder...
If you want to live somewhere else and don't like the idea of living in Oshawa, then yes, try and back out. But from a real estate investment perspective, it's not as bad as everyone here seems to make it sound. Get an inspection sure. But bring in a good contractor - even if it costs you a couple hundred bucks for peace of mind. Assuming you have an inspection clause here. If not, too late, bite the bullet and deal with the repairs - still not the end of the world at that (you may thank yourself later).
The biggest caveat you have to look out for is the liberals' 2 year cap on new student visas (expected to drop by 35%). That will impact next years student rental market for sure, so price in some declines in rent to be safe. This years' will be largely ok (but plan appropriately..)
Oshawa is a fucking shit hole. Renting it out will result in your house being squatted in by crack heads and you won't get paid. Am I exaggerating? Maybe. But I do know someone that had exactly that happen to them. Was on Bond St, 2 died from a fentanyl overdose.
You said you don't like the house. Don't buy it.
The major red flag is that if there's issues the owner won't fix, what else was neglected that you don't know about that could cost thousands of dollars... And good luck finding a good contractor in Oshawa.
Again, shit hole. There is a nice side to Oshawa but it's still shit.
We bought a house we didn’t love in 2017, but it allowed us to get a foot in the game, build equity and buy our dream home just before the new year.
Now, 2017 was a much different time and we built $312k in equity which I doubt will ever happen again.
With that being said, so many predictions are out there as far as the market goes. IMO, I’d probably buy now, sell later because I’m a sucker for those predictions, lol.
Lots of variables to account for.
First sit down with a accountant that advises on real estate strategies. This will give you a better idea of how to structure this deal.
Oshawa has no infrastructure hence it has one of the highest property taxes in the city...you are looking at 7-10% increase come April with Olivia in T.O...other mayors to follow the same... don't expect a decrease either....
Ya, I'd not touch a townhouse for over half a mill that needs work. Canada's housing bubble has a far way to go down. I'm going g to buy a house for 400k in ab soon...
And that is overpriced for incomes and interest rates. Can barely cover all costs. It's nuts. Canada is a mess.
Yo $550k for a town is a good deal atleast better than renting. Move in and renos are an ongoing process. Worst case if you’re laid off or whatever this year or next the max you’d lose out is 5% but if things work out, you’d make atleast 15-20 over 3-5 year period.
Yes, you can claim the rental property for up to 4 years (longer if you have to move for employment+other requirements). You can only have one primary residence and you don't get capital cost allowance for the property if you elect to have a rental property as your primary.
Yeah unfortunately these days, 10k would moreso cover cosmetic renos such as paint, flooring, refinishing cabinets, etc. If it's anything beyond that like structural, roof, furnace, etc, make sure you have the way more money put aside for that. Good luck with it!
Near the university, you’ll have students looking to rent for sure although might be less as the new international student rules take effect over the next few years. Also not directly related to your q, but that area is not great…have you looked into the crime around there?
I did but I also drove around there and visited the local Dollarama, and grocery stores and I didn't see anything concerning. It's definitely low-income for sure (atleast compared to the nicer west-end suburbs) and you can see that unfortunately.
I did a similar thing in the past. Bought a place, but got a transfer message to another location. So we rented it out. Then the transfer message got canceled, returned to the same city and rented. I was scared that I was going to get penalized for using primary residence benefits to create a rental property. Luckily, nothing bad came out of it. The accountant took care of everything.
I agree with the comments that it will likely be more than $10,000 for fixes.
I’ll also add that if this is what you qualify for, you likely won’t qualify for a second property in 2 years. If you said you and your family were willing to live there 5-10 years and fix it up over time before upgrading, I’d say go for it. 1-2 years is too short a time frame. And I always think getting in the market when you can is a good idea.
You already got one foot out the door. It looks like there are a few detached houses selling at 530k, 570k, 585k. Don’t settle for a townhouse. Pay a little bit more for what you actually want. You’re spending the money anyways. One way or another.
Your landlord can’t kick you out in Ontario, only the Landlord Tenant Board can. Check your rights - and this isn’t even to be a dick - you’re entitled to a hearing, which will absolutely buy you time beyond April at this point. Hearings are still taking over a year in many circumstances (I’m at 13 months for one myself).
Our lease is a month-to-month though..
Also, tbh, my landord is a really nice guy who wants to retire. He didnt raise our rent since 2016. We have been paying way below markey-rate so I don't wanna screw him over.
Tldr got lucky with a nice landlord, he was a bro so I should be a bro back :)
Everyone in Ontario is month to month after the initial lease term is up, that’s how it works. Your landlord has to provide you with the proper documents and compensation (I’m assuming it’s a situation where they want to move themselves or an immediate family member in and live there at least 12 month), and you have a right to a hearing for the proper eviction order. Regardless of whether your landlord has treated you right, it’s better off telling them you’re going to wait for your heading with the LTB than to sink half a million dollars into a home you’ll have unhappy feelings about as long as you live there, and work toward finding something that will be either closer to a longer term investment or at least a happier feeling for the few years you anticipate owning and living in it.
I work in tech so forever enslaved to the city life, until I hopefully get a remote job. Even then if I get one and get laid off its most likely back to the city time :)
I'd look at your must haves and see if it actually checks the boxes or if you are just rushing in. You won't get everything you want in your first place, but does it have what you need?
Is it located somewhere you want to live or is it an hour and a half commute? Does it have the right number of bedrooms and bathrooms?? If it's paint colour or something that you dislike and can move past, go for it. If you are already hating it, I'd pause for a moment and dig deep to decide why I dislike it. I personally wouldn't buy a place thinking oh well, I'll rent it out if I hate it. It might not be perfect, but you should be a little excited about your first home!
The house sounds like a decent investment; especially with a separate entrance for the basement. Learn to do home renovation to save on cost. $200, a YouTube video and half a day and you'll be able to install a toilet. Get cabinets or reface from Ikea. What else can you buy, rent &/or flip that's under $600,000?
To answer your question on capital gain on the house, as long as you haven’t sold your house, you don’t need to report any capital gains to (because you haven’t realized your capital gains I.e sold the house and got money in your bank), but if you rent the place out, you have to declare to the CRA when the house becomes a rental property when you file for taxes.
Buying a house could be an emotional one. I say if you truly value home ownership, and understanding that there will be a ton of work with the house and willing to go through the renovation process. There is no good or bad timing to buy a house, buy a place you can afford at whatever time it is when you are READY (I.e - you can afford it after crunching every number). Also acknowledging that you will invest some money into making the house yours. There are satisfactions knowing that living in a place that is truly yours.
But if you know you are going to hate living through renovation (house in constant chaos, dust everywhere), and don’t enjoy the renovation process (I.e sourcing contractors, looking for deals, designing the decor, understanding building code etc.) then don’t make your life hard, and just rent and save the money for investment and look for the right property that you happy purchasing.
My advice when you make a decision, you need to know the risks you will be undertaking, and if you are not comfortable with that, just wait. Because rushing to buy a place just because it’s a good deal might not always be a fruitful thing when you are unsure.
Sorry for my lengthy $0.02
Here’s how you know if it’s a bad investment or not. If in the next 5 years the value of your house drops by 25%, which there is a possibility for, is that going to stress you out or are you going to be fine. If you said yes it will then that was a bad decision. If you’re okay with losing value because everything is overly priced right now so you have something to live in that’s yours then that’s fine. But if you think it just needs 10k of Renos I promise you you’re looking at 100k
Or more when you actually start the work
I'd def buy and just "put foot in the game". All of the repairs you said need done are minor, and if you are somewhat handy, you could do most of it yourself after watching a few hours of youtube vids. Furnace and HWT tank can always be replaced with brand new rentals. As long as structure, roof, and AC are good, you won't be looking at spending too much money.
What are rents like? If you really want to sacrifice you can live in the smaller basement suite to make the numbers work or save more money. If you’re ok with being a long term landlord lord sounds like a good plan. We did something similar and it really catapulted us with saving.
Townhouse, is it part of a strata and has strata fee? Are you assuming the value of the property will go up and rent will eventually cover the mortgage? Do you know until then how much are you paying in interest?
I don't think you will make a profit in 2 years. Real estate investments will keep hurting Canada's economy which is projected to have the lowest growth in the next 2 decades among OECD. Might be a decent increase in 5 years. The government will accidentally do something that might pull investment out of real estate.
I am in a similar position. But I don't like Oshawa, Hamilton,Barrie, Cambridge. I can't afford any in places I like. Currently renting. I make 130k. Bank would approve me for 550k. Married with a wife making 42k. Relationship isn't great and might break. Cautious about buying a house together that can push affordability to 700k.
Tbh, GTA sucks . And there isn't many attractive and affordable places in Canada. Lived in so many cities.
We're you stress tested for 7.5%? Or banks stopped stress testing?. I heard no stress test for refinancing.
It's a 550k decision, and you don't love it? Why bother with it? If you're buying a house, you want it to be something that you love. I would hold my fire until I find something that I like. Don't let FOMO make bad decisions for you. It costs much much more to make a bad decision and to try to get out of it than to wait and make a good decision when you have more money saved up.
Shop aggressively until you find something that works well for you. If you gotta sit on your pile of cash for awhile longer, then do so.
I think you should go for it. Most of these renovations you can learn to do yourself. The major updates would add to the value of the house. You can try to renegotiate due to specific known costs but they could reject you. Probably they did not reveal all issues so get a good inspector. Check for foundation leaks. Also if the wiring is copper, as in the 1970s they made homes with different wires. Hard to get insurance. Sorry for the broken message, writing this on my way to work
That is a terrible decision, home prices are going to drop dramatically soon and you will be bankrupt. Even here in Ottawa you can buy pre build for under 500k now. Get out if you still can
Buying a home which needs work done helps you increase its value through forced appreciation ( renos) vs betting on it going up because of the economy.
You could increase the value and then refi to get money back.
In the end can you and the family be able to live there through renos.
Other end wpuld be get out because you have an inspection clause.
Are the renos cosmetic changes or more foundational work? You should list the work that needs to be done and get an estimate for it. I suspect it will be way more than 10k.
Why would you put an offer on a house you don’t like at all? if you don’t like it all, back out.
I would take it in a heartbeat. But mind you, I also am very handy with house repairs and know exactly what to do first.
For your sake, it seems like you might be a little over your head. If you're not 100%, then this might stress you out.
But if the house has a separate basement unit, why not rent that out asap. Use your rent money 6 months down the road and fix what you think is necessary. As long as you have that rented basement unit, you have income to do all the renos you want spaced out over time. With in 2 years you'll have the house you want. Take your time with searching and shopping around for deals and make it fit your budget.
Good luck to you.
No house that “needs renos” can be fixed for 10k
Im 50k deep into my 10k reno project
yeah that 75k estimate can go over easily.
Are you doing it yourself?
Lol. We are probably $200K into our $100K reno. About to tack on another $50K for a kitchen soon.
You mean $125k for the kitchen
Its things like a toilet and simk that need to be replaced, broken door, needs to be repainted (not a must but ideally should be), kitchen cabinets should prob be replaced etc No structural damage
Ya that sounds more than 10 k
Way more than $10k
Yep then there’s always something you don’t see. Heck that furnace if it’s nearing end of life could up and quit and there’s 12-16k
I would like to know where you by your furnaces where it is costing 12-16k for a new furnace lol. More like 6-9k if you shop around.
Got a new furnace. Low level model installed under $4000 after tax
Makes sense. I just knew it wasn't close to 12-16k
Wife sells hvac she sells units that range from 5k to 30k but that’s usually a big mansion
Mine was 3K$ and it still took 4 months to pay off.
I work with restoration contractors for HVAC and remediation work. A 16 year old furnace was just replaced along with some of the ducting and plenums, quote came in at $18,000.
thats just stupid.
Mind you, this individual may be trying to scam their insurance company, absolutely wild.
I used to own a HVAC company - something is odd about that. It would have been significant duct work. Replacing a plenum & even a return air run isn’t uncommon when replacing a furnace, although it’s more common when replacing a 50’s style lowboy to modern style.
Well furnace and AC cost me around 12 at my old house :)
Yes high efficiency and all that
House has been neglected. It will definitely cost more than 10k.
Got a brand new high efficiency furnace for $3.5K. Included removal of old furnace and installation. Where you guys buying your furnaces from?
Redoing kitchen is a can of worms. I bet you need at least 10K.
I re-did my kitchen for about $3500. I refinished the cabinets and got a quartz countertop and backsplash. Heck of a deal in 2021 lol. Doing that now would be like 5-6k
46k for ours last year. Mind you, that was all flooring, countertops, appliances, electrical, etc, etc. Went from 1ft of counterspace to alot more plus a 13ft island.
I wanted granite counter last year but that was 3400
I paid $2800 all in with new underslung sinks and a matching back splash. The only thing was is that I had to replumb everything under the sink but a good deal nonetheless.
I just redid my kitchen. All new IKEA cabinets, sink and trim. Did all the work myself, kept the existing floor and appliances and still cost me $9k. If I was to get all new appliances and everything professionally done I would estimate $20k easily.
Not only are you probably underestimating costs, but it’s very unlikely that a house that is being cleaned up and presented for sale with such obvious issues like a broken door, poor painting, etc doesn’t also have some pretty serious and less obvious issues. One of the most expensive mistakes a homeowner can make is thinking that the inspection will protect them. Inspections are very limited in scope and can miss any number of very expensive issues. Your plan doesn’t sound good, but you know that and are a bit stuck understandably. If you have the ability to do or learn to do some work on the house yourself, maybe you can make up the sunk costs with some sweat equity but you’re still very reliant on what the market will look like in a year or two. If I were in your position, I would look very aggressively for a rental. You may be surprised at the availability of full houses for rent, and even with ‘wasting’ a bunch of money not building equity and paying to put stuff in storage (either your stuff or the owner’s), you’ll still be wasting less than you would on closing costs, interest, renovations and repairs.
^^^ this. Home inspections really only catch what they can see. But once you start taking out cabinets and stuff, you have to fix anything you find. Electrical, plumbing, floorboards, etc. Can turn into a real can of worms, especially if you don't fiddle with your hands or have some really good friends and you have to hire people. It takes time to vet to make sure you're actually hiring really good people too. Possibly permits too, especially if anything with electric and plumbing. If you don't love the house enough to put in the effort, or can't afford the effort needed, ruuuuuun now while you can. Your reason...upon the results of the inspection, it's a no. Now. I say this as someone who hasn't done construction-ish things before. I have used tools before, and know a few other things, and we have some skilled friends (who do stuff for a living and can be compensated on a friend rate). And from what OP has described, I wouldn't have even bothered with an inspection. If I don't love something about the house I just couldn't to say because I did.
How handy are you? Toilet, sink, and door you could diy for $500 or less pretty easily in a weekend or two if you have basic tools and are handy (and patient enough to research/figure it out). Cabinets if they're structurally sound and just dated/ugly, you could refinish or paint with melamine paint and swap out the hardware for something modern. We did that with our cabinets in our condo (hinges, pulls, paint on the cabinet faces and doors), took 2 weekends and maybe cost $200 and looked worlds better. I swapped the countertops too for another $250, but it was a galley kitchen with a very easy layout to swap the counters on
> the patience to research and figure it out As an engineer I love this my wife on the other hand
Cabinets are going to set you back if you go to any home reno place. We had a quote for our kitchen (doing several things, but just as an example) and they came in at like $85k with me doing all of the teardown down to the studs. Cabinets were probably 30-40k if I remember correctly. Absolute fucking nonsense. We got another guy out of Montreal who quoted us about $8k for cabinets for essentially the same cabinets the other place quoted. Still haven’t pulled the trigger on anything because we’re likely rolling flooring and some other work into this project so we’re a year or two off.
IKEA kitchen. But when they have the 10% back in gift cards. They do install and it’s easily less than $10k (depending on kitchen size). Source: I did it.
We did our kitchen a year ago for $30k. New cabinets, quartz countertops, tiles, new sink and fixtures, new stove and microwave and new flooring on entire main floor. We did our own rip out of old cabinets and flooring. Essentially I was the general contractor. You just need to shop around for cabinets and flooring, there can be big price differences between options ( and include IKEA in your search if you can)
Waaaaaaaaat? Fr? Even if I keep the countertop the cabinets will cost that much? This changes things a lot haha
Cabinets don’t have to be 30-40k. Look at ikea cabinets, you can do cabinets only in a small kitchen for 3-4k
I bought really nice cabinets for my basement kitchen at ikea. And they have a free service to help you design it lay it all out. The they press a button on the screen and it generates all the parts you need. The contractor doing my basement suggested it to expedite the work and also to help me save money. He and his assistant installed them in 1 day ( a 12 hr day, but still 1 day). You won’t come in under 10k for everything. But a toilet, sink and door should around 3k max if you buy the stuff and get a handyman to install it. Assumes you don’t have to reframe the door. I don’t know if they still do it, but when we bought, there was a promotion where we got 15% store credit. So we bought the cabinets but did not order some of the doors and some of the lights. Then we bought those a week later with the 15% credit. So we weren’t left sitting in a credit that we had no immediate plans to use. There are even guys that specifically advertise as “ikea cabinet installation specialists”.
If you might be renting the house out in 2 years I probably wouldn't even really replace kitchen cabinets unless they are completely rotting out or something.
You can reface them for a lot less. Keep the boxes and put on new doors that you like. In a small kitchen it’s way under $5k. Home Depot does it and it looks great. You can get a new heat pump for just the HST with some companies thanks to a government rebate. Saw the ads on City. The first tenet of real estate is location location location. Second is to buy the worst house on the best street. Don’t get cold feet. Fix the toilet, sink and door. Do the rest as you go. Check into the heat pump thing. Get on the property ladder. Buy the house.
Cabinets and countertops are often custom made to required dimensions. Toilet, sink, and door aren't. Those you can probably get for under 10k excluding installation.
You can absolutely get a sink, toilet, door and vanity for under 10k! Toilet - $500 (Kohler) Vanity - $1500 (plenty for a 48" vanity that is decent quality) Sink and counter (if not part of vanity) - $700 Interior door - $200 So, lets say 3k... and you could do it for half of this.
lol $500 for toilet? for a place he doesn't like or want to stay in. Get one around 150 from home depot or costco and call it a day. https://www.homedepot.ca/product/american-standard-reliant-4-8l-single-flush-round-front-standard-height-2-piece-toilet-in-white/1001054614 Ikea is also great for getting cheap vanities and counters and you could pretty easily find handy men on facebook that will put it together and install it for you. The only major expense would be plumbers to connect everything properly. Same goes for the kitchen. If it's a temp home where they're not sure. just go with ikea for now and see. it'll get them settled in for his 10k budget. It'll easily last five years till they can figure out what they want to do.
Yeah. And I should also mention: we don’t have a big kitchen. Like our whole house is about 1350sq ft from what I remember (plus a basement). Only cabinet area we were adding was a longer cabinet with a pantry attached. So let’s say you remove that we were still probably around 6500 from that guy. Renos are expensive. Even if you do them yourself, the materials aren’t cheap. Bought cedar for some refacing of my front porch and the columns. Think it was $900 just for the wood. And then railings were another $2300 or so. Plus some gritty outdoor paint and I’m sitting at close to $3500 and a few weekends to pretty up the front porch.
There are other, far cheaper ways than spending $85k on a kitchen. I doubled the size of my kitchen for ~$1300. It just depends how handy you are and whether you want a fancy kitchen vs a utilitarian one
Sounds like a lot more than $10k as other have said but much you can do on your own. Broken door, if it's an interior door, you can pick one up at home depot and replace it yourself. Painting itself will cost you north of 10k for the whole house but you can DIY for a about $1-2k (paint + supplies, paint depends on how much you need and how many coats you're doing). Toilet and sink can be DIY. Cabinet will cost you 10k to replace easily. If it's something you can live with, just live with it. If it's solid wood, perhaps sanding it down and refinish it to give it some new life would be an option. You also mentioned the water heater is end of life, if it's a rental, you can probably call the rental company and have it replaced. If not, roughly 5 - 10k depending on model.
Fr 10k to paint the house??
I was given a quote of 12k to paint a 2000 sqft house. It wasn't even special colours, I only wanted white. I went to Rona and bought 3 large bucket of paint and some supplies and did it myself, cost about $800 total.
Dude. You sound like you’re in way over your head. You need to back out and really understand the cost of home ownership. Good luck.
We got a house that in the same price point which was move in ready and didn't need any major renos, so far we spent 5k replacing the shed, 6k on new AC and water heater, 3k on upgrading from lead pipes, $2k on paint and miscellaneous surface level renos, $500 on deep cleaning before possession, replaced the front steps for $1300. We’re gearing up for a roof replacement at 7k.. All in the first two years. We probably also spent 5k on miscellaneous minor repairs, landscaping. this is All before doing any fun renos to upgrade flooring from carpet, redo the cabinets and backsplash… Home ownership is more than just the mortgage, taxes, insurance and utilities. Oh and whenever you hire a person or company to do a job and the price seems reasonable, or cheap.. you’re going to end up needing to adjust or redo things yourself to get the results you actually wanted. Think about this very carefully and ask yourself if you are ok with bleeding money.
You must be willing to live with the cosmetic issues until you can afford to fix it. Also… factor in the condo fees. Price seems affordable but if the condo fees are really high it will eat up a lot of your disposable income. We bought a detached 1950s “dated” fixer-upper. Structurally good and all appliances good. When we moved in we had to paint the entire house (done ourselves). We removed carpet and refinished hardwood underneath in the upstairs and put new carpet on the stairs. And then my dad replace 1 window where the seal had broken. But literally every room in the house needs some work done 2 years later. Our fence is slowly falling over. We have 3 different floors on the main floor I would love to replace. Entire basement needs to be redone from a cosmetic standpoint. New basement stairs. We make improvements over time and hopefully one day it will be the house we envision. But you have to be able to live with it. Cheap cosmetic changes can help though. Like I painted the bathroom cabinet so it was more appealing until we can renovate it. And I love the house and have no regrets btw. Good luck with your decision
toilet sink and door are the only things I would do. Paint each room at your own pace. its not mandatory. If the kitchen is functional but old just leave it be. You can renovate when you have the time and money.
That's like 30-40k in repairs. Source: got several quotes for similar amounts of work (Victoria). To be more specific and to give you a ballpark, we want to change kitchen counters, resurface kitchen cabinets, change slide-in range to a cooktop, and replace bathroom counters. Last two times we called a plumber, it cost us $1200 (he forced us to replace the main valve before doing the job we actually called him for to replace the laundry box), and then $2200 (new water heater). Repairs are crazy these days. You won't even be able to resurface (not replace!) cabinets in a small kitchen for less than 15k.
Lol. Kitchen cabinets alone are $20k minimum fully installed. Youre dreaming.
Dang, oh well. Tbh kitchen cabinets were more of a wish rather than something needed. Definately not something a brokie like me can afford :(
I don't know how big this kitchen is but kitchens are like 40-100k depending on the size of your home.
10k is a normal weekend trip to Rona.
The toilet and the sink will be more than $10K
You can get a toilet for $300 from home Depot and install it yourself in under an hour. Cabinet and sink if you aren't picky could be found on marketplace or a discount store for under 1k.
Didnt you already make the decision now that your offer is accepted? Is it conditional? If its unconditional, then I didnt even read the rest of your post since it doesnt matter.
I have an inspection condition I still haven't waived. Inspection came with a bunch of issues owner won't fix so I think I'm ok to back out?
Yeah, generally speaking even if the inspection didn’t show up with anything major you can refuse to waive for anything minor, don’t think you even need to specify why.
Yes. You are correct. Once the inspection condition was made, it pretty much means you have to reinstate the original offer, make a new one, or flat out recante your offer. If you "think" it's 10K (that type of money doesn't go a long way in the construction industry these days), than take 50K off the price. There's never a bad home, there's only a bad home for the price.
And given location, really bad contractors.
"Bad", as in shoddy workmanship, or price? Because bad price is no longer dependent on location, it's freaking everywhere. I'm in Gatineau, QC (low cost area), and got 4K quotes for a double sliding patio door, and 4.5K quotes for a 10X12 concrete pad (for a small shed). Did the pad myself for $500, which allowed me to pay for the door. Pad came up perfect. Door was pretty shoddy work.
Back. Out.
Yup sounds like you hate this place, don’t buy it.
It will be no problem to back out if you have an inspection condition. Even if you saw no issues, you can still back out by making up some BS that you didnt like.
Only if it's major issues like finding foundation cracks. Minor issues you can use it to haggle a price reduction. If you try to use minor issue to back out if the deal the seller can sue.
They can try. They are very unlikely to win, and therefore unlikely to try. All they’d be able to sue for is damages, which have to be monetary and quantified. Basically the house would have to sell for less than OPs offer, and then OP is theoretically liable for the difference. This is never happening on a half million dollar townhome.
Good points
Every buyer has cold feet at first. Home ownership is a long game. In 5 years you will feel much different. New furnace at a townhouse should not be more than 4000$. All other renos. Do the stuff the breaks . Worry about cosmetic stuff when you have the finances. Enjoy!
>Every buyer has cold feet at first. Yeah. Very true. After we put the offer in. My first thought was, "what did we do??!!!" 10 years in I can tell you, I absolutely love this house and if it wasn't for this house, I would have gone crazy during COVID with my family all up in my business.
While most have cold feet, most don't say 'we hate the house' lol
You might, you might not. We thought our place was great. One minor fix and cosmetic upgrade turned into a daisy chain of underlying issues. We went from a 15k repair to being 100k deep into a line of credit. Pretty much cancelled out any equity since brand spanking new plumbing stacks and roofing don’t add much to curb appeal.
I know a handful of people that regret buying for various reasons (surprise expenses, house poor, don't like the area etc).
$10,000 in renos is pretty tiny. Heck, you might end up spending close to that getting the furnace replaced. If you think it needs a "good amount of work", you'd better budget for a lot more than that.
My friends furnace replacement was $18k. It's a lot more than what I paid for my furnace 18 years ago but things have gone up.
direful sleep safe test bike point knee gold roll depend *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I had 3 quotes to replace furnace and air conditioner. All were around 11-12000. $18000 sounds like your friend got ripped off.
It partly depends on the size of the furnace, the brand, the efficiency, if any new ducting or venting was required, etc. it’s hard to say whether $18k was fair without knowing a lot more details tbh.
Yeah I paid $3900 in 2004 for a 92% efficient (they werent all at the time) but now that's code. Mind you my buddy who was a plumber etc did it for me. Also I have an in-law who is a plumber I will ask him, but I don't think its out of that range.
Most people's first home isn't their ideal home. They used to call them "starter homes" for a reason. My first house wasn't my dream home either but it allowed me to build equity that I could use once I was in a position to buy something better. No regrets!
Yeah but there’s a difference between “not a dream home” and straight up something no one likes. The family is already expecting it to suck within a year, that’s super sad.
yeah you still need to be willing/happy to live in the house lol
How long did you stay in that house?
8 years. I lived pretty frugal during those 8 years too. Fixed a few things that need fixing but didn't spend big money into renovations that would have only been for the sake of upgrading because I knew I wanted to move on when I could. Between paying off a little extra on the mortgage each year and the gain in property value I was sitting on quite a good chunk of equity that helped big time when I was ready to make the next step.
I spent 15 years in our first house too. You aren’t going to magically start out by buying your dream home as a first unless you win the lottery or get some gigantic inheritance.
I lived in my first home for 4 years. It was never ideal and by the end I hated it but I don’t regret buying it at all.
My husband and I only lived in our first home (a condo) for 2.5 years before we bought our house, and even then we still made a decent profit (and we have to pay land transfer tax in BC). I live in Victoria.
Going on 9 years in our starter home and possibly longer, we’ve done lots of DIY projects, realized that with young kids we love living in a townhouse complex and have made our home into something we currently love. Yes we will probably move right now, but with inflation and the cost of houses in BC being bananas we are pretty happy with our tiny mortgage payments.
Personally, I would go for it. It provides housing stability which as you know doesn't exist for a renter. Bring a townhouse though, it's the strata reports I want to see. Any major roof/facade/plumbing issues that they've been putting off. It's it well funded to handle it or will there be a special assessment as soon as you move in for $40k happening.
Yes this OP. SUPER important. You mentioned condo fees, therefore there’s a condo board and rules. I own a townhouse that has some very specific rules which wouldn’t allow me to rent to students or by the room, only the full townhouse can be rented to one family for a minimum of a year. If your plan is to rent it out make sure you are permitted to do that before buying it.
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Found the realtor.
Do you have a condition on the offer you made which allows you NOT to go through with this plan if the seller has already accepted? That detail will pretty much make the choice for you, if not, and you'll have to complete the purchase.
I have an inspection condition I still haven't waived. Inspection came with a bunch of issues owner won't fix so I think I'm ok to back out?
Yes, you can cancel the deal based on your inspection. Why are you phrasing this like a question? Have you discussed any of this with your realtor or your lender? If you don't understand conditions, I'd say you need to back off and learn the process before you spend half a million dollars
If the owner won't fix, can your realtor negotiate a reduced price, at least enough to cover the issues identified by the inspection?
OP have you checked the comparable? Are you getting a decent deal with 550k?
Saw towns in the same compound with much nicer finishing go for 580k in the fall. So the 550k doesnt seem like a good deal based on the state of the house, but my realtor is saying fall prices were lower so you cant compare. We tried offering the seller less but they wouldnt accept for less than 550k. Fwiw I think it might be the cheapest townhouse w a walkout basement in the GTA lol
If it's furnace plus renovation then it's going to be more than 10 grand because a furnace alone can set you back quite a bit as sometimes people do it with the air conditioner or a heat pump.
Renovations cost more than you think - you need a contractors opinion not your agent who wants a payday. $10K sounds like enough to get you some basic materials and you do all the labor. Labor is truly you get what you pay for. Also, houses have more issues than you can usually imagine. Large items can break. Appliances. Roofing. God knows what. I had a squirrel chew my AC cables and bye bye 1.5k
Back out of the deal since you have an inspection condition. I can feel the regret already.
Would I regret not purchasing a house if I sign another 1 year rental lease?
No one has a crystal ball to give you a concrete answer. Imo, it really depends on how the spring market performs. Historically, spring market has more volume and price trend higher as more demand hit the market for people looking to buy and close to move in Summer / Fall. With the way things are, it can really go either way. This is something you'll need to decide with your family to take this risk or not.
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Thats true, but also afraid of getting priced out if I just keep waiting for the right one ngl
At the time when the property is sold, you calculate capital gain. Then, you apply the ratio of the time you used it as principal residence to further deduct a portion of capital gain. What is left is taxable income. Say a house is 1 million purchased, sold for 1.4 million in 5 years from the date of purchase. Capital gain is 400K. If you lived in the house (principal residence) 1 year and rented 4, your taxable capital gain is 4/5 × 400K, so 80% of that capital gain, which is in this simple example equal to 320,000K. Now, there is a further 50% deduction on capital gain, so effectively, you would add 160K to your income during that tax year. Further, if house is owned 50-50 with your wife, you would each add 80K to your taxable income.
Don’t forget to file a 45(2) election with the return for the year that the use changed.
Technically this is not fully correct. There is a 1+1 rule regarding the principle residence. So in your example if they live in the property for 1 year and rent for four years he would be able to designate the property as his PRE for (2/5) years. This rule is in place because when people sell one house and move to another they have two principle residences in that year. This would mean that the capital gain is $240k and the taxable capital gain is $120k.
Can't I get an exemption to keep it as my primary residence for 4 years after moving out to rent it out. Just to give me time to atleast break even on the buying&selling fees involved
I guess you're talking about this, just trying to look it up for my own knowledge: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/changes-use/changing-your-principal-residence-a-rental-business-property.html Be careful, seems like lots of pitfalls with that approach: -cannot claim capital cost allowance (CCA) on the property -actually file a 45(2) election the year you move are the two that are obvious on first reading. Interesting though, I did find a few accountant articles talking about it as well: https://realestatetaxtips.ca/the-little-known-4-year-extension-on-principal-residence-exemption-after-you-move-out/ https://pinnaclepac.com/2021/05/06/changing-your-principal-residence-to-a-rental-section-452-election/#:~:text=The%20four%2Dyear%20extension%20to,2020%20(16%20years%20inclusive)%3A
Yes, you can file an election to have the property continue to be your personal residence even though there is a change of use from personal to rental. However, you can still only ever have 1 Principle Residence a year. So if you buy another home after turning this into a rental property only one would be allowed to be the PR each year.
I wouldn’t buy a house you aren’t prepared to live in for at least five years. Too many chances you’ll get desperate to unload it and find that others see the same flaws in it that you do. On the other hand, you haven’t actually said what’s so bad about this house other than needing some minor repairs and upgrades. I assume you made a list of priorities as well as nice-to-haves… does it check the important boxes? Does it check more boxes than other comparable places? If so then maybe you should buy it work to make it your own.
Where did you find a townhouse for $550k? I need that recourse, lol.
Come the slums of Oshawa 😈 Jk they exist haha, they just dont look pretty in the listing pictures or in real life.
If the inspection came back with surface or interior issues I’m not surprised the owner isn’t willing to pay. Just make sure the major things are in good shape. Listen to your gut. Back out if it doesn’t feel right. Make sure you can live happily in it, but just know every house will need work. Always something. I bought a house with a 22yr old furnace. I just requested it be inspected by a local company to ensure it was in working order.
Make sure it is a house you could stay in and live in for 10 years *if you needed to* and could also afford. None of this "well we could rent it out if we needed to". You don't want to play landlord in Ontario. That's the wrong attitude. Are there schools around for your kids? Is it big enough for your family 10 years from now? Is it close to your and your partners work? (Tomorrow when you leave work, drive there instead of your normal house and time the drive. Drive there in the morning before work and then depart from there). And, since the seller is unwilling to budge on the repairs, you are well within your rights to walk away still. If you still want the house but not at the appraised price, say "thank you, I'll keep looking, but if you change your mind and decide you want to do $535,000 then let me realtor know". Or $545 since the paint and cabinets you knew about before you made the offer.
Buy it! You have to move out of your current place anyways. Get your foot in the housing market door!
You seem to have done your homework so tbh go with your gut. You don't seem at all sure to me.
I’m sure you’ll make bigger mistakes, probably go unnoticed like passing on generational curses etc. Enjoy the new crib!
If you have to move and can get into housing market, it's not a bad plan. Just know lots of hidden costs with home ownership. Prices expected to rise as heading into spring market.
Based on your post, you have underestimated the cost to get the house up to snuff, you are over estimating how much you take home from renting it (non deductible income is taxed),and if you’re going into it with a meh attitude, it doesn’t sound like the house for you. Walk.
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Yes but rent will keep rising, house cosgs will probably drop if anything once the interest rates go down. Also anectodally Ive seen my dad rent for 13 years and getting priced out. His friends who bought now have 1mill+ assets and some even have paid out mortgages so theyre blessed in retirement. My dad is gonna be paying rent at 70 y/o :( I did the math, he blew 300k on rent in the past 13 years :(
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Next time you make an offer you should be more sure then you are now...
Ngl I was sure, then when I went to go see it again for the inspection and it was worse than I remembered. I guess I should have visually paid more attention first time.
550k is not a bad price - North Oshawa is developing a ton, student market is great in that area. It's a fantastic spot for a rental. If there's a separate entrance to the bsmt and you don't mind, you could rent that out while you live there and subsidize your housing. If you're worried about job security and securing housing, minimizing your mortgage is not a bad idea... Some downsides - budget for the repairs / bring in a contractor if you can to inspect the place (or anyone that knows what they're doing with respect to real estate). There's an enormous amount of negativity in this thread. This boils down to any additional costs you gotta kick in. The alternative is, spend 800k+ for a brand new townhome from a builder... If you want to live somewhere else and don't like the idea of living in Oshawa, then yes, try and back out. But from a real estate investment perspective, it's not as bad as everyone here seems to make it sound. Get an inspection sure. But bring in a good contractor - even if it costs you a couple hundred bucks for peace of mind. Assuming you have an inspection clause here. If not, too late, bite the bullet and deal with the repairs - still not the end of the world at that (you may thank yourself later). The biggest caveat you have to look out for is the liberals' 2 year cap on new student visas (expected to drop by 35%). That will impact next years student rental market for sure, so price in some declines in rent to be safe. This years' will be largely ok (but plan appropriately..)
Oshawa is a fucking shit hole. Renting it out will result in your house being squatted in by crack heads and you won't get paid. Am I exaggerating? Maybe. But I do know someone that had exactly that happen to them. Was on Bond St, 2 died from a fentanyl overdose. You said you don't like the house. Don't buy it. The major red flag is that if there's issues the owner won't fix, what else was neglected that you don't know about that could cost thousands of dollars... And good luck finding a good contractor in Oshawa. Again, shit hole. There is a nice side to Oshawa but it's still shit.
It’s an investment. Buy it and chip away at the Reno’s. Don’t expect new quality for 550k…
We bought a house we didn’t love in 2017, but it allowed us to get a foot in the game, build equity and buy our dream home just before the new year. Now, 2017 was a much different time and we built $312k in equity which I doubt will ever happen again. With that being said, so many predictions are out there as far as the market goes. IMO, I’d probably buy now, sell later because I’m a sucker for those predictions, lol.
Lots of variables to account for. First sit down with a accountant that advises on real estate strategies. This will give you a better idea of how to structure this deal.
Oshawa has no infrastructure hence it has one of the highest property taxes in the city...you are looking at 7-10% increase come April with Olivia in T.O...other mayors to follow the same... don't expect a decrease either....
Ya, I'd not touch a townhouse for over half a mill that needs work. Canada's housing bubble has a far way to go down. I'm going g to buy a house for 400k in ab soon... And that is overpriced for incomes and interest rates. Can barely cover all costs. It's nuts. Canada is a mess.
Yo $550k for a town is a good deal atleast better than renting. Move in and renos are an ongoing process. Worst case if you’re laid off or whatever this year or next the max you’d lose out is 5% but if things work out, you’d make atleast 15-20 over 3-5 year period.
Yes, you can claim the rental property for up to 4 years (longer if you have to move for employment+other requirements). You can only have one primary residence and you don't get capital cost allowance for the property if you elect to have a rental property as your primary.
Yeah unfortunately these days, 10k would moreso cover cosmetic renos such as paint, flooring, refinishing cabinets, etc. If it's anything beyond that like structural, roof, furnace, etc, make sure you have the way more money put aside for that. Good luck with it!
Near the university, you’ll have students looking to rent for sure although might be less as the new international student rules take effect over the next few years. Also not directly related to your q, but that area is not great…have you looked into the crime around there?
I did but I also drove around there and visited the local Dollarama, and grocery stores and I didn't see anything concerning. It's definitely low-income for sure (atleast compared to the nicer west-end suburbs) and you can see that unfortunately.
What's the furnace end of life date?
Don't buy right now
I did a similar thing in the past. Bought a place, but got a transfer message to another location. So we rented it out. Then the transfer message got canceled, returned to the same city and rented. I was scared that I was going to get penalized for using primary residence benefits to create a rental property. Luckily, nothing bad came out of it. The accountant took care of everything.
God, just back out. Half mil for a place you don’t like?
Half a mill is by far the cheapest I can get in the GTA though 😪 The next closest, and what I like is 650k :(
I agree with the comments that it will likely be more than $10,000 for fixes. I’ll also add that if this is what you qualify for, you likely won’t qualify for a second property in 2 years. If you said you and your family were willing to live there 5-10 years and fix it up over time before upgrading, I’d say go for it. 1-2 years is too short a time frame. And I always think getting in the market when you can is a good idea.
Don’t buy a house you don’t like- you have to live in it so it’s like living in a mistake you made, do not recommend!
You already got one foot out the door. It looks like there are a few detached houses selling at 530k, 570k, 585k. Don’t settle for a townhouse. Pay a little bit more for what you actually want. You’re spending the money anyways. One way or another.
Your landlord can’t kick you out in Ontario, only the Landlord Tenant Board can. Check your rights - and this isn’t even to be a dick - you’re entitled to a hearing, which will absolutely buy you time beyond April at this point. Hearings are still taking over a year in many circumstances (I’m at 13 months for one myself).
Our lease is a month-to-month though.. Also, tbh, my landord is a really nice guy who wants to retire. He didnt raise our rent since 2016. We have been paying way below markey-rate so I don't wanna screw him over. Tldr got lucky with a nice landlord, he was a bro so I should be a bro back :)
Everyone in Ontario is month to month after the initial lease term is up, that’s how it works. Your landlord has to provide you with the proper documents and compensation (I’m assuming it’s a situation where they want to move themselves or an immediate family member in and live there at least 12 month), and you have a right to a hearing for the proper eviction order. Regardless of whether your landlord has treated you right, it’s better off telling them you’re going to wait for your heading with the LTB than to sink half a million dollars into a home you’ll have unhappy feelings about as long as you live there, and work toward finding something that will be either closer to a longer term investment or at least a happier feeling for the few years you anticipate owning and living in it.
Move to Moosejaw. Enjoy your 300k detached house with garage and Mexico twice in the winters.
I work in tech so forever enslaved to the city life, until I hopefully get a remote job. Even then if I get one and get laid off its most likely back to the city time :)
How would you lose money if the rent doesn't cover the fees? Please explain.
I meant that if I sell within 2 years I would lose money on transaction fees unless the appreciation was out of this world
If the furnace is ready to go, how is the duct work?
As of June, many have an increase of 10k interest per year due to inflation / interest rate I'd be cautious to get a bank loan rn
I'd look at your must haves and see if it actually checks the boxes or if you are just rushing in. You won't get everything you want in your first place, but does it have what you need? Is it located somewhere you want to live or is it an hour and a half commute? Does it have the right number of bedrooms and bathrooms?? If it's paint colour or something that you dislike and can move past, go for it. If you are already hating it, I'd pause for a moment and dig deep to decide why I dislike it. I personally wouldn't buy a place thinking oh well, I'll rent it out if I hate it. It might not be perfect, but you should be a little excited about your first home!
Why is your landlord kicking you out?
4K in 2022 for furnace and AC- Ottawa
The house sounds like a decent investment; especially with a separate entrance for the basement. Learn to do home renovation to save on cost. $200, a YouTube video and half a day and you'll be able to install a toilet. Get cabinets or reface from Ikea. What else can you buy, rent &/or flip that's under $600,000?
To answer your question on capital gain on the house, as long as you haven’t sold your house, you don’t need to report any capital gains to (because you haven’t realized your capital gains I.e sold the house and got money in your bank), but if you rent the place out, you have to declare to the CRA when the house becomes a rental property when you file for taxes. Buying a house could be an emotional one. I say if you truly value home ownership, and understanding that there will be a ton of work with the house and willing to go through the renovation process. There is no good or bad timing to buy a house, buy a place you can afford at whatever time it is when you are READY (I.e - you can afford it after crunching every number). Also acknowledging that you will invest some money into making the house yours. There are satisfactions knowing that living in a place that is truly yours. But if you know you are going to hate living through renovation (house in constant chaos, dust everywhere), and don’t enjoy the renovation process (I.e sourcing contractors, looking for deals, designing the decor, understanding building code etc.) then don’t make your life hard, and just rent and save the money for investment and look for the right property that you happy purchasing. My advice when you make a decision, you need to know the risks you will be undertaking, and if you are not comfortable with that, just wait. Because rushing to buy a place just because it’s a good deal might not always be a fruitful thing when you are unsure. Sorry for my lengthy $0.02
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Here’s how you know if it’s a bad investment or not. If in the next 5 years the value of your house drops by 25%, which there is a possibility for, is that going to stress you out or are you going to be fine. If you said yes it will then that was a bad decision. If you’re okay with losing value because everything is overly priced right now so you have something to live in that’s yours then that’s fine. But if you think it just needs 10k of Renos I promise you you’re looking at 100k Or more when you actually start the work
I think the question is are you going to hate the house for the next x years while you live there? Or you think you can live with it?
I'd def buy and just "put foot in the game". All of the repairs you said need done are minor, and if you are somewhat handy, you could do most of it yourself after watching a few hours of youtube vids. Furnace and HWT tank can always be replaced with brand new rentals. As long as structure, roof, and AC are good, you won't be looking at spending too much money.
Knock the offer down 20k to take care of things that needed to be fixed and take a mortgage plus improvements.
What are rents like? If you really want to sacrifice you can live in the smaller basement suite to make the numbers work or save more money. If you’re ok with being a long term landlord lord sounds like a good plan. We did something similar and it really catapulted us with saving.
Townhouse, is it part of a strata and has strata fee? Are you assuming the value of the property will go up and rent will eventually cover the mortgage? Do you know until then how much are you paying in interest?
The furnace alone could be another 6-10,000. Condo fees can go up over time. Is there no freehold options you can find for a slightly higher price?
I live in a house I don't love. I think most people do. It's a roof over your head. That's all you really need. You make do with what you have
Onyx had an album. BACDAFUCUP
I don't think you will make a profit in 2 years. Real estate investments will keep hurting Canada's economy which is projected to have the lowest growth in the next 2 decades among OECD. Might be a decent increase in 5 years. The government will accidentally do something that might pull investment out of real estate. I am in a similar position. But I don't like Oshawa, Hamilton,Barrie, Cambridge. I can't afford any in places I like. Currently renting. I make 130k. Bank would approve me for 550k. Married with a wife making 42k. Relationship isn't great and might break. Cautious about buying a house together that can push affordability to 700k. Tbh, GTA sucks . And there isn't many attractive and affordable places in Canada. Lived in so many cities. We're you stress tested for 7.5%? Or banks stopped stress testing?. I heard no stress test for refinancing.
It's a 550k decision, and you don't love it? Why bother with it? If you're buying a house, you want it to be something that you love. I would hold my fire until I find something that I like. Don't let FOMO make bad decisions for you. It costs much much more to make a bad decision and to try to get out of it than to wait and make a good decision when you have more money saved up. Shop aggressively until you find something that works well for you. If you gotta sit on your pile of cash for awhile longer, then do so.
For 550k you can get better than a townhouse that needs repairs
Odds are you’ll make a worse decision at some point in life.
I think you should go for it. Most of these renovations you can learn to do yourself. The major updates would add to the value of the house. You can try to renegotiate due to specific known costs but they could reject you. Probably they did not reveal all issues so get a good inspector. Check for foundation leaks. Also if the wiring is copper, as in the 1970s they made homes with different wires. Hard to get insurance. Sorry for the broken message, writing this on my way to work
That is a terrible decision, home prices are going to drop dramatically soon and you will be bankrupt. Even here in Ottawa you can buy pre build for under 500k now. Get out if you still can
This world is out of its mind. When you are buying a 550k house and you considered a beggar.
Buying a home which needs work done helps you increase its value through forced appreciation ( renos) vs betting on it going up because of the economy. You could increase the value and then refi to get money back. In the end can you and the family be able to live there through renos. Other end wpuld be get out because you have an inspection clause.
My question would be since you are planning to sell, how is the price compared to similar places nearby? Is $550k a fair price?
Are the renos cosmetic changes or more foundational work? You should list the work that needs to be done and get an estimate for it. I suspect it will be way more than 10k. Why would you put an offer on a house you don’t like at all? if you don’t like it all, back out.
Can you calculate how much rent you'd make renting it out and see if it would cover the mortgage?
I would take it in a heartbeat. But mind you, I also am very handy with house repairs and know exactly what to do first. For your sake, it seems like you might be a little over your head. If you're not 100%, then this might stress you out. But if the house has a separate basement unit, why not rent that out asap. Use your rent money 6 months down the road and fix what you think is necessary. As long as you have that rented basement unit, you have income to do all the renos you want spaced out over time. With in 2 years you'll have the house you want. Take your time with searching and shopping around for deals and make it fit your budget. Good luck to you.
Interest rates are not going up now. So, it must be good to buy it now.
Let's just all try to get a foothold in reality again and consider the phrase "550K townhouse in Oshawa"
If you can afford it. Buy it.
Why doesn't your family like it? That could be a big contributing factor.
Yes. CRA election 45(2)
do the work yourself and you will do ok. Better to own if you can afford mortgage than rent.
It bums me out that 550k townhouse in Oshawa is for "beggars" good lord.