Smart Real Estate investment strategy for West

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QUESTION:
We need help evaluating whether this is a smart investment strategy.
We own a house in West Vancouver. We have about $380K equity in it and it
could sell for about $830K.
We think there might be a better way to maximize our investment, reduce
monthly cash flow and earn rental income if we sold this house (which has
appreciated from $668K 15 months ago) and purchased one condo for us to live
in and three rentals.
We are considering buying in lower Lonsdale in North Van in hopes of better
appreciation and strong demand for rentals. We are both self-employed and my
husband wants to start a PhD in September and I am doing a part time MBA so
we need to lower our cash flow needs for awhile.
Do you think we could grow our nest egg as well or better with this strategy
or will the appreciation factor be lower? We are willing and able to do some
renovating to buy low and sell high. What do you think about our location
choice? We just sold our house in Whistler last year and thought maybe we
should get one condo there but... what do you think?
Thank you!
Lorraine Rieger
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david ingram replies:
I spent two hours in thelounge at teh Salmon House discussing this very topic tonight before I read your question.
I did not get any further there either.  
It is a smoke and mirrors question because there are too many factors.
1.    The rental cash flow return will be better with four condos than with one single family house of equal value.
2.    It is easier to evict from a condo and it is usually less expensive to repair if you have a bad tenant.
3.    A good condo, well located and close to water, can appreciate more than a single family house but historically, they have not done so in Grater Vncouver.
Therefore, it is (in my opinion) more likely that the house will appreciate in value more "TAX FREE" than the four condos of equal value.
However, it is a certainty, that your cash flow and ease of living would be demonstrably better with the sale of the house and purchase of three extra condos to rent.
Right now you are paying at least $2,100 a month in after tax dollars to pay the mortgage on your existing house.  This means that you and your husband have to earn at least $3,500 a month and pay $1,400 a month tax to have $2,100 left to pay the mortgage.  The house is costing you $42,000 a year in earnings.
If you sold the house and bought four condos, yours would be paid for and have no payments except for aobut $200 a month inmaintenace and property taxes which is also 1/4 to 1/3 of what you are paying for heat and taxes and maintenance on your house.
At the same time, you would be receiving about $3,000 a month rent and even if still paying out $2,100 a month in interest, would likely be revenue neutral by the time you had paid the taxes and maintenance as well on the rentals.
In other words, your only expenses to live while you continued with your education would be food and a car and tuition.
Life would be soooo much simpler.
At the same time, you would have kept an equivalent value in Real estate and even though 50% of gains would be taxable, you would not have to be earning $42,000 a year to keep a roof over your head.  
My conclusion:  You should likely do it.  
Incidently, even though well known for income tax and immigration, my only truly professional qualification is a diploma from UBC in Urban Land Economics.  I have bought and sold some 3,000 rental condominiums over the years with my former partners in Arizona, Ontario, alberta and BC.
.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
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