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Dear Dharma,

Thanks for the column; I really enjoy reading the posts and advice!

I’ve got a rather confusing situation, because the outcome of what choice we make will have lasting ripples, so I thought I’d see what your suggestions are.

My partner and I live in Vancouver in a condo that we own.  I bought it about 5 years ago with money from an inheritance.  My partner and I have been together for a year and a half, and we plan of spending our lives together, so have started to plan accordingly.

We’re starting a business and trying to figure out a timeline for marriage and kids – both of which we want but don’t want to jump into without being financially stable.  We both have some debt, and it can be really stressful having debt and a mortgage (I know, I know – the condo is an investment, but it’s not one I can exactly make a withdrawal from to pay off debt).

So do I keep the property, keep on struggling and slowly pay off the debt, then sell at a better time when we’re ready for a new place, or do I put the condo on the market, try to break even on the investment, pay off the debt and rent for a little while and then try and build the savings up again and buy a new, larger home in a couple years?

We want to get ahead and quit playing catch up, so having that money in the bank would give us a safety net while we build the business.  Of course we’d have to go through trying to sell, finding a place to live, and then paying rent to someone else.  It seems like quite the choice, since it’s not one we get a second chance at.

Then again, perhaps keeping the stability of our home would be a good thing while we build the business – maybe we’ll have too much on our plates with moving etc.  Also, we’ve really only just begun the business, so with a little success we can pay off our debt and start saving again, all without having to go through the expense and headache of selling and moving.  I should also note that we love our home, even if it’s only big enough for the time being.

So what do you think?  Should we stay or should we go now?  If we go there may be trouble…  Or maybe, should we just wait and see how things go for the next 3 – 6 months…

Sincerely,

Owner of a home with debt (much better than a…)

Dear Owner,

Dharma is lucky to have a real estate guru close at hand and the response to this dilemma, with no hesitation, was to keep the condo.

Without knowing all the ins and outs of your finances my first thought is that you would probably be paying close to the same amount in rent each month as you are paying towards your mortgage payment.

Latest stats show greater Vancouver (including North Vancouver) apartment condos have increased 13.8% over the last 3 years.  That’s a pretty good return on investment, non?

If you sell the condo to pay off your debt now – paying good money (your investment) into bad (consumer debt) – you may not be able to save enough to get back into the market, which is predicted to keep escalating over the next few years.  And all the while you’ll be paying someone else’s mortgage instead of your own.

As you say, all you need is a little success with your new business for things to turn around, and not only will you be able to pay off the debt you have, but you will be able to start saving as well – this sounds totally obtainable to me.

And really, if you re-read your dilemma, you should be able to see that you already know this and that you don’t really want to sell and move right now.  “…we’d have to go through trying to sell”, ”perhaps keeping the stability of our home would be a good thing”, “if we go there may be trouble”…

You just needed Dharma (and her real estate guru) to lay it all out for you…  🙂

Dharma

 

 

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4 Comments

  • bankrupt says:

    Keep the condo. Keep it in your name only. Your relationship is only 1.5 years ‘young’. You must ALWAYS keep something for yourself separate. ALWAYS.

    (Signed, 25 years married and wish I had taken this advice 27 years ago!)

  • Mark says:

    I wish someone had given me this advice when I was younger! In the end, real estate is the only investment that you can really hold on to. I pissed away so much money on things that are now long gone and forgotten, if I had put even half of it into land or a home I would be well off and probably retired! Instead I am still working for the man, and I am likely on the “Freedom 85” plan lol!

    Keep the condo, do what it takes to pay down bad debt, and look forward to a better future!

  • sunshine471 says:

    There are probably so many people regretting they are not in the position to get in the market that it must make them crazy to hear you wonder if you should go back to renting.

    Keep the condo. OMG, in this market?? Keep the condo.

Whether you agree with Dharma or think she missed the mark on this one, leave a Comment!

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