Should You Keep Your First Home as a Rental When You Move Up?

Keep your first home when the rent covers what it costs to own it and you'd be glad to own it for a long time. Sell it when its equity is what makes your next home possible, or when topping up the rent every month would stretch your family.

Do Bae (eXp Realty) made this call himself. When Do, his wife and their dog outgrew their first home, he kept it as a rental and bought their  next place.

What numbers should you run first?

• The rent the home would bring, next to what it costs to own: the mortgage payment, property tax, insurance, strata fees if any, and upkeep.
• What selling would leave you after commission, legal fees and any mortgage penalty, and whether your next home works without that money.

Do runs both sides for your home, so you compare two real numbers before you decide.

What is the forever rule?

Do's rule for every purchase is to buy a home worth owning forever, whether you live in it or rent it out. A first home bought that way is usually easier to keep, because it's the kind of home people want to rent.

Who confirms the tax and mortgage side?

• Your accountant confirms the tax side: what changes when a home you lived in becomes a rental, and what that means when you sell it later.
• Your lender confirms whether you qualify for the next mortgage, and how much of the rent they will count.

If the home is a strata unit, the strata documents show the rules on renting it out, and Do reads them with you.

When is selling the better call?

• The equity from your first home is what makes the next one affordable.
• The rent wouldn't cover the costs, and the monthly top-up would stretch your family.

Who can run the numbers with you?

Do Bae is a Realtor with eXp Realty in Vancouver and Burnaby who helps families move up from their first home. Book a call and Do will run the keep-or-sell numbers on your home next to your plans for the next one. If you're still deciding the order of your move, start here: Should You Sell First or Buy First When Moving Up in Vancouver or Burnaby? Service in English and Korean.