Tag Archives: flipping real estate

Calling in the pros – Implementing a successful property management

Implementing a successful property management system is vital to the longevity, health and overall profitability of your growing portfolio of investment properties. Property management systems come in all different shapes and sizes, and can be completely tailored to your specific portfolio needs and wants. Rather than examining these different systems, which could take up an entire magazine, I want to explore three ways to increase your ROI by taking advantage of professional property management.

1. Set realistic expectations from day one
In my view, hiring a professional property manager is very similar to hiring an employee. You wouldn’t give a new hire a vague description of their tasks and responsibilities and then let them manage their job any way they want. You would give your employee a clear definition of their role and show them the kind of results you expect.

The same is true when engaging a property manager for the first time. The following are five simple questions to ask your PM – and yourself – as you’re working out the relationship. If everyone can answer every question definitively, you know you’re on the right track:

  • What is needed?
  • Who is doing what?
  • When will it be done?
  • How will it be done?
  • How much will it cost?

This may seem like a lot of work when you’re just getting started, but completing the above exercise will eliminate the roadblocks, misunderstandings and accidents associated with starting a new professional relationship, and will ultimately improve your ROI.

A professional PM will usually have all these roles pre-defined in their contract, but that doesn’t mean they can’t be challenged or negotiated to better suit your needs. Communicate above and beyond to maximize your results.

2. Hire a superintendent
This can be a hot topic depending on who you talk to – some investors dismiss the idea of hiring a super outright, and some absolutely can’t operate without theirs. I believe that if handled correctly, using a superintendent can be an effective management strategy for a medium to large building, especially if done in tandem with professional property management.

The greatest advantage of superintendents is that they live on site. This is extremely convenient when small issues arise that need immediate attention, like a spill in the hallway that needs cleaning or a tenant who needs to give you cash. For small, more regular tasks like mopping hallways and shovelling walkways, a super is usually the most cost-effective and efficient method. In my experience, waiting for your PM to deal with small items can take too long and not be as cost-effective.
I prefer my super to have a smaller role, meaning my PM handles all maintenance calls from tenants, major renovations, rent collection, tenant placement and regular reporting to me. It’s important to ensure the super is not impeding the job of your PM and vice versa. Each have their roles and should be complementary to each other. The PM is in charge, and the super is there to assist when needed, along with tending to a short list of responsibilities.

This PM-plus-super system frees up more time for me to focus on strategy, grow my portfolio and create value in my current assets. My accountant also appreciates the efficient system, as we save a fair amount of money on minor property maintenance with a super in place.

3. View property management as a service, not an expense
This is more of a way of thinking than an operational guideline. This particular piece of advice stems from years of wrestling with the same question over and over with my group of investors: “Paul, I like the property, and the numbers make sense to me, but when you factor in the cost of property management, the cash flow decreases, and the numbers are just average or below par. What do you think?”

There is no way to avoid the cost of property management. Either you are going to engage a professional to do it for you and pay for it out of the property’s cash flow, or you will handle the property management all on your own. You may think this will save you money or make your property more profitable. If you have spare time and energy and want to learn the business, I would encourage you to take on the PM responsibilities. However, if you’re busy with your career, family and lifestyle, like many of us are, by taking on the day-to-day management of your properties, you’re doing yourself a massive disservice.

Whether you pay a professional PM or not, it’s still going to cost you the same or more. By taking on the PM role, you’re going spend your own time, energy and gasoline and take away quality time for other activities you could be pursuing, like spending time with your family, getting some exercise (mowing the lawn doesn’t count), reading a book or sleeping. This may not sound like traditional ROI, but since most investors get into real estate to improve their lives, not just their bank balances, finding a good property manager will provide these other, highly attractive returns.

You cannot avoid the cost of property management. You either pay in dollars or you pay in your own time and energy. Either way, it must be done properly.

Source: Canadian Real Estate Wealth Magazine –  Contributor 14 Nov 2017

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Capital gains explained

Source: MoneySense.ca – by   

 

Capital gains explained

How it’s taxed and how to keep more for yourself

What is it?

You have a capital gain when you sell, or are considered to have sold, what the Canada Revenue Agency deems “capital property” (including securities in the form of shares and stocks as well as real estate) for more than you paid for it (the adjusted cost base) less any legitimate expenses associated with its sale.

How is it taxed?

Contrary to popular belief, capital gains are not taxed at your marginal tax rate. Only half (50%) of the capital gain on any given sale is taxed all at your marginal tax rate (which varies by province). On a capital gain of $50,000 for instance, only half of that, or $25,000, would be taxable. For a Canadian in a 33% tax bracket for example, a $25,000 taxable capital gain would result in $8,250 taxes owing. The remaining $41,750 is the investors’ to keep.

The CRA offers step-by-step instructions on how to calculate capital gains.

How to keep more of it for yourself

There are several ways to legally reduce, and in some cases avoid, capital gains tax. Some of the more common exceptions are detailed here:

  • Capital gains can be offset with capital losses from other investments. In the case you have no taxable capital gains however, a capital loss cannot be claimed against regular income except for some small business corporations.
  • The sale of your principal residence is not subject to capital gains tax. For more information on capital gains as it relates to income properties, vacation homes and other types of real estate, read “Can you avoid capital gains tax?
  • A donation of securities to a registered charity or private foundation does not trigger a capital gain.
  • If you sell an asset for a capital gain but do not expect to receive the money right away, you may be able to claim a reserve or defer the capital gain until a later time.

If you are a farmer or a newcomer to Canada, they are special capital gains rules for you. The specifics can be found at the CRA website.

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Court orders developer to reveal condo-flipper info

THE CANADIAN PRESS

A Federal Court judge has approved at least one court order that will require a British Columbia developer to turn over information to tax officials about people who bought and flipped condo units before or during construction.

And several similar applications are under way, reflecting the federal government’s efforts to crack down on potential tax cheating in the presale market.

A July 25 Federal Court order requires the developers of the Residences at West, a Vancouver condo project at 1738 Manitoba St., to provide the Canada Revenue Agency (CRA) with documents related to presale flips, also known as assignments, in the building, including proof of payments and correspondence between the developers and people who buy the assignments.

That order followed a June 29 application from the federal government.

In September, the Minister of National Revenue applied for court orders related to One Pacific, a Concord Pacific project, and Telus Gardens, a downtown project developed by Westbank Corp.

Both developers said they would comply with the request for documents.

“Customer information is protected by privacy laws and is not at the developer’s liberty to disclose unless ordered by the Court,” Matt Meehan, senior vice-president of planning at Concord Pacific Developments Inc., said in an e-mail.

“To protect our customers’ information and ensure any release will be compliant with the law, we have asked CRA to obtain a court order, which we will adhere to.”

In an e-mailed statement, Westbank said it would comply with the minister’s application.

The CRA is investigating potential tax cheating in the presale market.

Developers presell units in projects to obtain bank financing. Those sales agreements can be “assigned,” or flipped, to somebody else before the building is finished.

A unit may be flipped several times before a project is completed. But only the transfer of legal title from the developer to the final purchaser is registered with the B.C. land title office.

That means the CRA does not know the identities of any buyer but the final one, and has no way to check whether the others have paid applicable taxes on those transactions.

The provincial government last May announced new regulations designed to limit assigning: Sellers have to consent to the transfer of the contracts, and any resulting profit must go to the original seller. But those new rules apply to single-family homes, not condo presales.

As the CRA heads to court to obtain data on presale buyers and sellers, some observers say the provincial government could cool speculation in the presale market – and support federal tax-enforcement efforts – by changing reporting requirements.

Presale purchasers may include people who are not Canadian residents and whose profit from flipping a presale contract would be subject to a federal withholding tax, said Richard Kurland, a Vancouver immigration lawyer.

He used the example of a person from Iran who buys a presale contract for $100,000 and sells it for $125,000 a month later. Under the Income Tax Act, that profit – because it went to someone who is not a tax resident of Canada – would likely be subject to a 25 per cent withholding tax, he said.

“If nobody knows that you’re from Iran and not a tax resident, and nobody withholds the money, you just walked off with $6,000 tax-free,” he said.

If information on buyers’ identities were routinely provided, the agency could more readily check to determine if, for example, anyone was claiming the principal-residence exemption on more than one property, Mr. Kurland said.

Asked if the CRA would like the province to make changes such as requiring routine disclosure of the identities of presale buyers, agency spokesman Bradley Alvarez said in an e-mail that, “any additional information, including that obtained from other governments and third parties, enhances the CRA’s ability to detect non-compliance.”

The CRA has found some flips are reported incorrectly or not at all and “the CRA welcomes any endeavours to obtain any information that can assist the Agency in detecting non-compliance.”

Developers support the CRA’s goals, but have to take privacy regulations into account, said Anne McMullin, president of the Urban Development Institute.

“It’s not the developers not wanting to hand over information, it’s, ‘Let’s do this safely,’ because of privacy laws,” Ms. McMullin said.

The NDP, which came to power after the May election, had said while in opposition that the Liberals were not doing enough to curb speculation in B.C. real estate.

In its election campaign platform, the NDP promised to set up a multi-agency task force to fight tax fraud and money laundering in the B.C. real estate marketplace.

Finance Minister Carole James was not available for an interview.

In a statement, her office said the province is monitoring the federal government’s court action, and tax fraud is “something that is taken very seriously.”

The B.C. government is working on a comprehensive housing strategy, and any policy or legislative changes will be made public once that strategy is developed, the statement added.

 

Source: The Globe and Mail –  AND 

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Pay less tax on rental properties

Q: I have five rental properties in my name. Should I switch them to a numbered company?

–Travis

A: Hi, Travis. Incorporating a holding company to own rental properties has some advantages and disadvantages depending on the objectives you have in mind in both the short and long term. However, you should first speak with a tax accountant about any tax ramifications both personally and corporately to ensure as perfect an integration of the two systems as possible. Then speak with a legal advisor to draft up the appropriate corporate structure before making the transfer.

From a tax point of view, there are two things to consider. While the transfer of real property held personally should qualify for a Section 85 election to rollover the properties at their cost base, you will want to be sure the CRA will not consider your properties to be held as “inventory”; that is property, held primarily for resale rather than rental. If so, they will not qualify for a tax-free rollover or capital gains treatment. Therefore, the transfer could trigger unexpected tax consequences. Your history of receiving rental income from the property will help you avoid this.

Second, you’ll also want to understand the difference in taxation rates both inside and outside of the corporation. Recent tax changes may have made it less desirable to own passive investments inside a corporation, depending on where you live in Canada.

Some advantages of incorporation include limited liability and creditor protection. However, if you are holding mortgages, most financial institutions will still require personal guarantees. Corporate directors and officers can also be held liable on default, so proper insurance protections for these instances is critical.

From a retirement planning point of view, incorporation may provide more flexibility as to when income is taken as dividends. It could help you to avoid personal taxes or spikes into the next tax bracket, and benefit from the recovery of refundable taxes in the corporation.

Consider also that there will be costs for setting up and annual reporting of the holding company. Transferring the properties from the taxpayer to a holding company may have tax consequences, other than income taxes. If your province has a land transfer tax (or equivalent), you may have to pay the land transfer tax when the properties are transferred.

The bottom line is this: you’ll want to be thoughtful about the transfer, and you’ll want to match your investment objectives and desired tax outcomes as closely as possible.

Source – MoneySense.ca – Evelyn Jacks is a tax expert, author, and founder and of Knowledge Bureau in Winnipeg

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Still thinking of home ownership as an investment? Here’s proof you’re wrong

 

Source: The Globe and Mail

Take some advice from rookie home owner Desirae Odjick about houses as an investment.

As a personal finance blogger, she ran the numbers on the cost of owning a home and concluded that breaking even would be a good outcome when it comes time, many years down the road, to sell. “A house is not a long-term investment,” she said in an interview. “It’s not a miracle financial product. It’s where you live.”

The idea that owning a house is an investment is so ingrained that a recent survey found one-third of homeowners expect rising prices to provide for them in retirement. But rising prices do not necessarily mean houses are a great investment.

Ms. Odjick lives in a suburb of Ottawa, where the real estate market’s recent strength still leaves it way behind price gains seen in the Toronto and Vancouver areas. But her point is relevant to all markets where prices aren’t soaring, and probably to hot markets as well if you’re just now buying a first home and understand that continuous massive price gains are unlikely.

In terms of home upkeep costs, Ms. Odjick and her partner have had an easy time of it since they bought in the spring. But they’ve still had expenses that surprised them. “You can use all the calculators you want and you can plan as much as you want, but until you’re in it you really don’t know what the costs are going to be.”

One example is the $3,000 spent at IKEA to equip the house with furnishings as mundane as bathmats. Another was the cost of term life insurance, which, incidentally, is a smart purchase. Term life answers the question of how the mortgage gets paid if one partner in a home-owning couple dies.

Estimates of the cost of upkeep and maintenance on a home range between 1 and 3 per cent of the market value. Her house cost $425,000, which means that upkeep costs conservatively estimated at 1 per cent would come out to an average of $4,250 per year and a total $106,250 over 25 years. Ms. Odjick is too recent an owner to have much sense of these costs, but the housing inspector she used before buying warned her to expect to need a new roof in two or three years.

She and her partner don’t have grandiose plans to fix their place up right now, but she did mention that they are looking at having children. There will almost certainly be expenses associated with getting the baby’s room ready.

In her own analysis of housing costs, Ms. Odjick estimated the cost of property taxes at 1 per cent of a home’s value. That’s another $4,250 per year. This cost would add up to $106,250 over 25 years, and that’s without annual increases factored in.

The biggest cost homeowners face is mortgage payments. Ms. Odjick and her partner made a down payment of 10 per cent on their home and chose a two-year fixed-rate mortgage at 2.71 per cent. Assuming rates stay level and no prepayments are made, this would theoretically work out to a total of $542,122 in principal and interest over the 25-year amortization period.

But rates have crept higher since mid-summer and could increase further in the months ahead. In a post on home ownership on her Half Banked blog, Ms. Odjick said the idea of rates staying level “is bananas and will not happen.”

Let’s add up the costs of home ownership as likely to be experienced by Ms. Odjick over 25 years. There’s the $42,500 she and her partner put down to buy the house, the $106,250 cost for each of property taxes and upkeep/maintenance and $542,122 in mortgage principal and interest. Total: $797,122.

Now, let’s imagine the $425,000 house appreciates at 2.5 per cent annually for 25 years. That’s in line with reasonable expectations for inflation. The future price in this case would be $787,926, which means Ms. Odjick and her partner would have paid a bit more in costs than they get for selling their house in the end.

Houses can be sold tax-free if they’re a principal residence, so there is something to the house-as-an-investment argument. But the numbers comparing what you put in and what you take out over the long term don’t exactly scream “financial home run.”

Ms. Odjick’s fine with that, because buying her home was a lifestyle decision. “If we’ve lived here for 25 years, even if it does end up costing money, then it will have been a great place to live.”

Are you a Canadian family that has made a financial decision to remain lifelong renters? If you would like to share your story, please send us an email

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GO PUBLIC ‘My heart was in my stomach’: Homeowner learns too late she bought a former grow-op

Claudette Charron bought her fixer-upper bungalow as an investment, but she didn't know there had been a grow-op in the basement. Cleanup costs have totalled $30,000 to date.

Claudette Charron thought she bought her perfect house — a fixer-upper in need of a little TLC, at a good price in a small community — until she discovered there used to be a marijuana grow-op in the basement and the house needed tens of thousands of dollars of work to make it safe to live in.

“It was a foreclosure, so you know it was at a decent price because I couldn’t afford very much,” says Charron, who is a carpenter.

Claudette Charron's home in Limoges, Ontario

The real estate listing for the bungalow in Limoges, Ont., said ‘with a little bit of love this home can shine bright!’ (CBC)

“But it was a nice fixer-upper … with some work and with my skills, I was going to fix it and resell it in two years. It was an investment.”

Charron, her boyfriend and her 16-year-old son moved into their new home in Limoges, Ont., at the end of June 2016, one year after there had been a drug bust at the house.

A day after moving into the community just east of Ottawa, she talked to a neighbour who asked about damage to the basement.

Ethel Manns, neighbour of Claudette Charron in Limoges, Ontario

Claudette Charron’s neighbour, Ethel Manns, is the one who told Charron her newly purchased house had formerly contained a grow-op. (CBC)

“I said, what do you mean how bad is the basement? She’s like ‘What? They didn’t tell you that there was a big drug bust here and that they took 148 [pot] plants out of the basement,'” Charron says.

“It was disbelief. My heart was in my stomach and I was sick.”

Go Public found there is a long list of failed attempts to implement grow-op registries that would publicly identify the locations of drug houses.

Instead, many provinces are left with a mishmash of rules and guidelines around who’s responsible for identifying and disclosing former drug houses in real estate transactions.

Experts say the lack of a workable tracking system and clear rules can leave homebuyers facing health risks, diminished home value and huge cleanup costs.

$30,000+ in cleanup costs

The home inspector Charron hired before buying recorded no evidence of a grow-op, even though home inspectors in Ontario are obligated to look for signs.

After learning of the home’s history, Charron got another inspection done.

Charron's taped basement windows

Charron’s environmental home inspection noted several sign of grow-op activity, including this taped-off basement window. (Paul Battle)

A report from Enviro Pure First Response says there were “telltale signs” of a former grow-op, including marijuana leaf debris under the stairs and evidence of windows in the basement “being taped off with staples still in place and foil tape.”

Mould growth on the wall of Claudette Charron's home

The environmental home inspector held a flashlight beam parallel to the walls to reveal mould growth. (Paul Battle)

The company also tested for mould and moisture in the air and behind the walls. “The counts in this house were probably in the top five or six per cent of anything that we have encountered for an indoor spore count directly in the vicinity of the grow operation,” says Richard Sticklee, who works for Enviro Pure First Response.

Marijuana leaves on Claudette Charron's floor

The environmental home inspection found marijuana leaf debris on the basement floor. (Paul Battle) (Paul Battle)

He estimated the cost to clean up Charron’s home would range from $25,000 to $100,000, depending on what has to be done.

Charron has spent more than $30,000 so far on the house she paid $265,000 for.

Richard Sticklee, remediation expert with Enviro Pure First Response

Richard Sticklee, a remediation expert who worked on Charron’s house, says the first thing he noticed was the mould odour, then he saw live mould growing on the walls. (CBC)

Sticklee says the system should work like this:

  • Police notify the city of the location of a grow-op.
  • The city tags the home.
  • The homeowner takes specific remediation steps.
  • The city oversees the cleanup to ensure it’s done safely and properly.
  • The house can be sold, but the seller needs to disclose its history.

Seller denies knowledge of grow-op

In Charron’s case, Street Capital Bank of Canada was the seller. It took possession of the house after the people who had the grow-op declared bankruptcy.

Office building of Street Capital Bank of Canada, Toronto

Street Capital Bank of Canada (Toronto office pictured) sold the house to Claudette Charron in June 2016. She has filed a lawsuit against the company. (CBC)

Charron is now suing Street Capital, its realtor, and the original home inspector she used.

In its statement of defence, Street Capital “denies having knowledge that the property was used as a grow-op” and denies it “was aware and/or failed to disclose any latent defects.”

The mortgage company did not answer Go Public’s questions, but in an email from its lawyer, David Ward, it says circumstances like this are rare and “we always work towards resolving issues amicably which we are working on doing in this case as well.”

The case is now heading toward mediation and Street Capital says it’s “hopeful that all matters can be fairly resolved.”

Tracking systems failing

Go Public found tracking systems that should alert potential buyers of a home’s drug history are either failing or nonexistent.

Ottawa police do list dismantled illegal grow-ops online, but only five locations have been listed over the past five years.

In Ontario, there is a provincial guideline that says police should notify municipalities, in writing, of grow-ops so the municipality can oversee the remediation and ensure it’s done safely and properly.  That didn’t happen in Charron’s case.

In some other provinces, like B.C., that’s the rule, not just a guideline.

On a national scale, the RCMP tried to launch a website in 2010 that was supposed to list addresses of homes across Canada where marijuana grow operations and illegal drug labs were found and dismantled. That too went bust.

Go Public also found no provinces require sellers to disclose a home’s history as a former drug house. The closest to it is in B.C. where it’s “strongly recommended” sellers disclose a house’s drug history.

In most provinces, sellers don’t have to mention a marijuana grow-op specifically, as long as it didn’t do damage. If it did, it is considered a material latent defect, which does have to be disclosed.

Buyer beware

Barry Lebow has been a real estate broker and agent and now works as an adviser for brokerages and the public.

“I think that a registry makes sense. I really do. I think that withholding information from the public isn’t a good thing and it would make it so much easier,” he says.

Barry Lebow, real estate expert

Real estate expert Barry Lebow advises prospective home owners to talk to neighbours before buying. (CBC)

Lebow notes that realtors in a lot of provinces are responsible for making their “best efforts” to find out the history of a house.

He says marijuana grow-ops are more common than most people realize, saying buyers need to use different search engines to look up the address and owner’s names of a property they are interested in buying and searching news archives for reports on grow-ops.

He also suggests talking to neighbours. Go Public canvassed Charron’s neighbourhood after she contacted us, asking if anyone, real estate agents or the mortgage company, had come by to ask about the home’s history before or after the sale.

“Nobody. The only person that came over was the new owner,” says Ethel Manns, the neighbour who told Charron about the drug history of her new home.

“I’d be really upset,” she says. “It’s somebody’s fault. It had to be reported. You can’t have a grow-op and not tell anybody.”

Submit your story ideas

Go Public is an investigative news segment on CBC-TV, radio and the web.

We tell your stories and hold the powers that be accountable.

We want to hear from people across the country with stories they want to make public.

Submit your story ideas at Go Public.

Follow @CBCGoPublic on Twitter.

Source: Rosa Marchitelli, CBC News 

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The real estate math mistake we all make

real estate math

Most financial choices boil down to simple math. Add up the gains, subtract the costs, and you should get a number that helps you draw a conclusion. Those numbers are particularly useful when trying to make a major life decision, such as whether or not to sell the family home.

Given how hot big city markets like Toronto are these days, the math would certainly make a compelling case to sell. Yet according to the April sales data from the Toronto Real Estate Board, listings are down 27% year-over-year in the GTA. Despite brisk sales and skyrocketing prices, most homeowners living in semi-detached and detached homes are choosing to stay put. (A similar lack of inventory is plaguing Vancouver, Halifax, Ottawa and nearly every large city in Canada.)

TREB’s rationale for the dearth of listings? A widespread aversion to the high cost of land transfer. Other people have surmised that the scarcity is a symptom of our fear of paying a premium on the next property. After all, while you may sell high, you’re also forced to buy high—a proposition that leaves some feeling like prisoners to the status quo. But I think there’s another reason people aren’t selling as many homes these days, and it’s buried deep inside our brains. More precisely it has to do with how we process gains and losses.

According to Nobel-prize winning professor Daniel Kahneman, we’re hardwired to overvalue a loss and undervalue a gain. “The aggravation that one experiences in losing a sum of money appears to be greater than the pleasure associated with gaining the same amount,” is how he puts it.

To appreciate what Kahneman means, consider the case of Larry and Laura. Retired for three years, the Toronto couple have a comfortable debt-free life, funded by modest pensions, savings and government income programs. Thing is, they could have more money in the bank if they sold their home—let’s say they bought it 15 years ago for $250,000. But Larry and Laura can’t wrap their heads around selling and downsizing in such a crazy market, even though they could probably sell it for $750,000 or more.

The math says they’d be ahead by as much as half a million. But that calculation isn’t entirely accurate, at least not from an economist’s point of view. To understand how they’re undervaluing their gains, you have to consider the difference between sunk costs and opportunity costs. Sunk costs are anything spent that cannot be recovered. For Larry and Laura, that would mean the money they paid into the mortgage, the time and money it took to maintain their home and the emotional and mental energy they invested in raising a family in the house.

The opportunity cost, on the other hand, is what’s incurred from not taking the next best alternative. This is a fancy way of referring to all the ways Larry and Laura could be spending their time and money if it weren’t tied up in their family home.

Pretty straightforward, right? Only Larry and Laura aren’t as rational as they think. The idea of dismissing all the money, time and energy they poured into their family home feels like the emotional equivalent of losing their investment, a perceived loss that prompts them to overvalue their sunk costs. Economists would say this is irrational. They would explain our refusal to dismiss these irretrievable expenses as a “behavioural error” or an action that doesn’t conform to rational choice theory (a principle that assumes we always make the prudent and logical decision that provides us with the greatest benefit).

If Larry and Laura were truly rational, their real gain for selling their debt-free family home would be closer to $750,000 (the sale price minus transactional costs). Even if they chose to repurchase in the same market, it would likely be something smaller and less expensive; they’d still have money left in the bank to spend on travel, explore new hobbies or give to their kids and grandkids. So does that mean Larry and Laura should sell? Yeah, maybe. Since each person values a future gain slightly differently, it’s important to ask yourself the following questions:

1. What are the intangible and tangible sunk costs so far?

2. Am I willing to accept that these sunk costs will never be returned to me?

3. If so, can I see what I may be missing if I overweight costs that are irretrievable?

4. Finally, what would I actually gain if I were to sell and move now?

It’s totally understandable if you answer these questions and still choose to pass up the opportunity for a large financial gain. Sometimes the math used to determine a home’s value ignores the intangibles—factors that can outweigh even the most compelling balance sheet surplus. But going through an exercise like this will help anyone make a more informed, more rational decision. It’s better than feeling trapped in the status quo, a prisoner in a surprisingly expensive home.

 

Source: MoneySense.ca – by  

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