Why We Sold Our Home to Rent
The math behind the decision to sell our house and invest it all.
“You’re doing it in the wrong order,” my mom told me.
I had the phone pressed to my ear as I scanned the last few items at the self checkouts at Walmart.
“You pay off your house and THEN you invest.”
“No mom, we got it. The spreadsheets don’t lie. I love you, but we got this,” I told her.
Everyone thought we were crazy to sell our townhome.
It was a beautiful, brand new, 2 floor townhome in a quickly developing and desirable neighbourhood. It was going up in value fast. It seemed insane to sell it.
But we did. We listed our home for $769,000 and sold it for $775,000 after just 5 days on the market.
When we got the $465,394.52 deposited into our bank account, we knew exactly what to do with that money.
Here’s how we spent it:
$9,401.59 - Emergency fund top up
$4,000.00 - Added to our monthly bill paying account
$12,000.00 - Consumer spending (we bought a couch and a few other pieces of furniture)
$31,233.42 - Loan repayment to my parents
$408,759.51 - Added to our Questrade investment account
Yup. We invested 88% of our net profit.
But were we crazy?
The Wall We Ran Up Against
Before we sold our house in 2021, we were living in a two bedroom with Flynn, myself and our one year old baby.
My office was in the kitchen and everyone had to leave the house or stay upstairs when I did my calls for my coaching business. Not practical.
We also wanted another baby, which meant another bedroom.
So we started looking at houses in the suburb of Langley, another 30m away from our family and community.
We could get a nice, 3-4 bedroom house for $900,000…
…but we would be house rich and very cash poor.
Our budget would be stretched so thin.
At the time, Flynn hadn’t quit his job as a mechanic yet and it left absolutely NO space for him to consider quitting.
We would have been trapped.
It was a problem that had no solution…
…unless we sold our home and rented instead.
The Math Doesn’t Lie
It seems like a drastic choice, right?
Why sell your home and lose an appreciating “asset” to take such a crazy risk and invest it all?
But was it crazy?
The spreadsheet math didn’t lie. There was no way it wouldn’t work.
Before we sold our house:
Our monthly housing expenses, including mortgage, strata (similar to HOA), property taxes and other related housing costs, came to ~$2,300/month.
At the time, our monthly living expenses cost an additional $3,000/month on average.
Between Flynn and I, we were netting $6,576/month after taxes.
INCOME: ~$6,576/month
MINUS EXPENSES: ~$2,300/month in housing + ~$3,000 living expenses = ~$5,300/month
= ~$1,276.00/month left over for saving and investing.
If we got a bigger house and a bigger mortgage, we would have been strangled financially.
But if we SOLD our house:
We budgeted up to $3200/month to rent a 3-4 bedroom house in our same neighbourhood.
Our net income was the same, ~$6,576/month, as was our cost of living, ~$3000/month.
BUT - if we invested the $408,000 at about 9.7% rate of return (which we had been consistently earning after testing our strategy for 4 months), we could increase our MONTHLY income & cashflow by $3,300/month.
So now:
WORK INCOME: ~$6,576/month
+ INVESTMENT INCOME: ~$3,300/month
MINUS EXPENSES: ~$3000/month + $3200/month in rent = $6,200/month
= ~$3,576 remaining every month.
Woah.
We’d net an extra $2,300/month MORE and be able to upgrade to a 3-4 bedroom home to grow our family in.
We’d actually MAKE money every month to sell our house.
Logic Beats Emotion
In my head, I pictured keeping that townhouse and renting it out for years to come.
It was the first home I had purchased on my own.
I brought my first baby home there. Married my husband while living in that home.
It was emotionally tough.
But my brother-in-law, Thomas Ungerer, who was also our realtor, asked me ONE question that my math oriented, spreadsheet loving brain couldn’t deny.
He said, “Tanessa, would you PAY an extra $27,600 per year to KEEP your townhouse?”
The answer was HELL no.
So we sold.
3 Years Later…
…it was still the best decision for our family.
The math didn’t lie.
In fact, investing and compounding our initial $408k on top of our existing $80k portfolio PLUS an extra $27k per year added up fast.
As we head out on this adventure where we are releasing home base in just 4 weeks, we’ve compounded our monthly earnings all the way to $7,232/month.
Plus, Flynn quit his job just over 2 years ago because the numbers make sense.
Sometimes it’s not more, more, more you need, but a change in strategy.
This one worked really well for us.
Final Thoughts
Now, don’t take this as advice to sell your house. I’m not a financial advisor, so do your own research on this.
Having said that, questioning my attachment to owning a home and the status quo of success being tied to owning real estate was a HUGE unlock for us.
It started us on a path to financial freedom.
It jumped us forward YEARS.
And it still just feels like we’re getting started.
So we rely on math to make decisions.
It either works or it doesn’t.
There are no emotions involved.
Get clear on what you want.
Find the simplest way to get there.
Go all in.
Hope you’ve enjoyed the peak behind the curtains of our decision to sell our home.
Keep chasing freedom.
Tanessa