Q&A: Using RRSP money for rental property
Question: I am in my early 50s and have about $70,000 invested in mutual funds.
I have been thinking about taking $10,000 out of my RRSP and using the money
for a down payment on buying a house in another city and renting it out for
a few years until we are ready to retire. Is this a good idea or are we getting
too old to do this? If this doesn’t work out, the house can always be sold.
Gordon Pape answers: I’m dubious, perhaps because I
did exactly this when our children were in college. We never made any money
on the property and it was a huge relief when we sold it and recovered our principal.
You don’t say whether you have ever been a landlady. If not, it’s
probably something you should not undertake. The headaches and frustrations
aren’t worth it. Having the property situated in another city would make
it even more difficult. At least if it is located nearby you can keep an eye
on the place and make sure the renters aren’t trashing it. I suggest you
think this through very carefully.