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Wrong Decision SELLING House for Condo? 3 Lessons Learned!

One Saturday in April, I was at the Union City presentation centre in Markham signing agreements with my clients.


The centre was closed for walk-in because they didn’t need any more buyers.


I was walking by the reception, then suddenly someone pointed at me “I know him, he’s CondoWong, I watch his videos”.


The receptionist looked at me, “they said they know you, do you know them?”.


“What’s your name?”


“Ok, they know my name and now I know theirs, we don’t have any reason not to let them in.”


That was how the story began.


The nice couple used to live in a $2 million dollar house in Markham.


They are about to retire and the husband started having knee joint problems.


So they figured that it’s about time to downsize to a condo to avoid the stairs and reduce the amount of housework.


By the way, if you are suffering from knee pain, try reverse pedaling on the elliptical, just 20 minutes a day, you will see results in just a couple weeks.


I'm living proof of that, it really works.


Back to the story, the couple sold their house a year ago for around $2 million.


The plan is to move into a pre-construction condo that they bought a few years ago at Sugar Wharf.


Sugar Wharf was an extremely popular pre-construction project back in 2018. It is in downtown Toronto, by the waterfront, very close to Union Station.


Occupancy started a couple months ago and some of you may have rented out your unit already.


As for the couple, they will be getting their unit in the summer.


But they sold their house a year ago.


So throughout this past year, they have been hopping around different airbnb units.


You can imagine how hectic that is.


Worst yet, they got a chance to check out the 1+Den unit they bought at Sugar Wharf.


Coming from their big house, they were shocked to find out what 600 square feet really means.


Right away, they wanted to look for a bigger place.


And that’s why they came to Union City, they wanted to buy a bigger unit, in a neighbourhood that they are familiar with.


I told them right off the bat “No, Union City is not for you.”


They were quite surprised I said that right in the sales office.


What would you do if you were the couple?


There are 3 lessons I want to share with you from this story and the 3rd one is a common mistake that a lot of people make.


If you like me to share more real life stories like this one, comment below, subscribe and hit the bell for more.


Lesson #1 Time is the most precious thing you have


The only thing that is fair in life is we all have 24 hours a day, 365 days in a year.


You cannot ask for more, or less.


It’s all about how you make use of your time that separates you from others.


Let’s go back to the couple.


They have this small condo that they really don’t like.


And they want to fix that by buying a bigger condo at pre-construction.


That’s jumping from one mistake to an even bigger mistake!


Buying a pre-construction means that they are going to be stuck at a place that they don’t like for 5 precious years while waiting for the new place to be built.


When you’re at your retirement age, personal enjoyment should be the number one priority.


What they need to do is to look for a place that they like on the resale market, something that they can enjoy immediately.


Lesson #2 Make money with your money


With the house sold, the couple has a $2 million retirement fund.


That’s great, but if they just put that into a bank account, they are just going to watch the money shrink.


Even with the high interest rate today, the interest income just barely covers inflation.


And as they spend the money year by year, the lump sum keeps getting smaller and the interest income will also become smaller.


$2 million is a good amount of money, but after all, it’s a good idea to make sure that’s enough to support all the living expenses over the next 30 to 40 years.


What if you put the $2 million into an income generating machine?


Let’s just say you take $1 million out and buy a condo unit in downtown Toronto.


The rent you can collect today is around $4,000.


There will be no mortgage payment, so $1,500 will be more than enough to cover all the expenses, condo fee, property tax, rental management fee.


That means you will be receiving $2,500 income in your pocket every single month.


And the most important thing is, you still have your original $1 million even if the condo price stays flat.


What are the chances of condo prices staying flat in Toronto for the next 30 years?


You see, if you don’t want to just sit and watch your money shrink, you have to make more money with your money.


Lesson #3 Don’t confuse an investment with self-use


This one is a common mistake.


I want to purchase a unit for investment for now, maybe for self-use later.


I hear that all the time.


You see, investment and self-use have contradicting requirements and it does not make sense to try to satisfy both at the same time.


For an investment unit, you want to pick something that’s popular for rental.


Something small, at a very convenient location, catching that target audience who are starting out and not ready to buy yet.


For a self-use unit, you want something that satisfies your own requirements.


Chances are the unit you like is very different from a popular rental unit.


Because you are more established, you have extra money to invest, of course your requirements will naturally be more demanding.


So if you want to hedge the housing market with your extra money, then focus on an investment unit and forget about self-use.


When you are ready for self-use, sell the investment unit and use the money to buy something you like.


You have to be very clear about what your goal is.


If you want to know how to make the best decision in your particular situation, you can schedule a call with me at the link below.


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