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Have you thought about an investment property? Some things to keep in mind:
Nov 10, 2014
With low interest rates and some money in the bank you may be considering purchasing an investment property. Researching the property and the market will assist you in making your investment a good one.
Find out how much rent is normally generated in the neighbourhood and if there is a low vacancy rate.
Lack of transit, jobs or good schools could make it difficult to find or keep tenants.
Investment properties as per CMHC require a 20% down payment and lenders will only count a percentage of the rent as income.
Add up all the expenses – mortgage payments, property taxes,utilities and maintenance fees. Will the rent cover all these expenses and be cash positive?
Ensure you have some money put aside in case you have an interim vacancy.
Rental income is subject to taxation. When you sell any increase in value from the time of purchase is subject to capital gains?
If you live in the house and rent part of it then this becomes your primary residence you avoid paying capital gains but still must declare the income.
Don’t forget that being a landlord is a huge responsibility. If you do not have a property manager then it is up to you to shovel snow, deal with maintenance work and tenant emergencies.
Finally, it is not easy to evict a tenant once they are ensconced so do screen for new tenants diligently. Bring someone who’s instincts you trust with you if necessary.
Article courtesy of Focus News update written by Anita Bostok with Sutton Group