Should I get an investment property even though I don't live in my own property yet?


(Toronto)

Hi Tom & Nick!

First of all, want to send a big thanks for all the information you've shared about real estate investing! It has pushed me to pursue this venture and learn more creative ways to approach it.

Having said that, I'm a little lost as to how to get started. I'm currently renting in downtown Toronto and prefer to stay within the city, close to my work. I've managed to save some money for a down payment and I'm looking to purchase my first property.

I want to follow your strategy and grow this venture into a side-income. But I think the first thing I need to figure out is, should I cover my bases and buy a property I can live in (maybe rent out a basement/second unit which maybe farther from downtown) or do you advise I continue renting (to stay in the city) and invest in a more affordable property somewhere else? Do you know of any tax advantages for continuing to rent and having an investment property at the same time?

Thanks and look forward to your response!

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Sep 26, 2013
 RE: Should I get an investment property...
by: Tom Karadza

Thanks for the feedback and the question!

We get this questions often and to us, it's a personal choice. We know investors who rent and own investment properties and others who buy their home first, and then begin investing.

If it was me I would want a family home (even if I was single) so I'd likely look for a property where I could rent out the basement to help me carry the costs. When I saved up enough cash after that I'd then start investing.

The basement apartment gives you experience and generates cash for you at the same time.

As for the tax advantages we'd defer to an accountant. In general, from our understanding, the tax advantages to owning investment properties are the same whether you rent your home or buy it. Remember, any appreciation on your own home in Canada is a tax free gain when you sell, so if you expect continued appreciation that could be a good reason to buy.

You ask a great question and there are a lot of things to consider, I hope this helps a tiny bit.


Tom

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