Question:
I'm 24 and I work in the Alberta Oil Sands. I rent in North Vancouver right now and I'm a bit lost on what I should do. I have $10,000 in RRSPs, another $15,000 in savings and a $30,000 line of credit at six per cent. I take home $3,500 a week and would like to buy my first condo in downtown Vancouver. What would you recommend I do about the down payment? Should I use the line of credit, my RRSP, my savings, or because I'm making good money right now would you recommend buying a second place for rental?
Answer: Thursday, December 18, 2008
First off, I salute you, that at your age, you have savings and are contemplating buying real estate. I recently spoke to 100 UBC students and I pointed out to them, that if at age 24 or so they would buy a condo somewhere for $80,000 with an $800 rental income per month, put down a minimum down payment, then they would own it by the time they are forty and then have $800 a month for the rest of their lives. You have the same opportunity. For my own place ... I would get a top downtown realtor and look carefully at new condos. Developers are flexible and willing to haggle. Use your RRSP and take out your $10,000 under the Registered Homeownership Plan (borrow it from yourself - non-taxable) and pay it back to the RRSP over 15 years at approximately $80 per month. But do not rush - make offers ... the market is not running away from you. For my investment, I would look carefully at a good small town in B.C. where the ratio of rental income to price makes sense.
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