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Investing in rental properties
By Riki Unrau
Investing in real estate isn’t just for wealthy tycoons. The average investor is of median income and looking to diversify their portfolio with hard assets that aren’t as risky as putting your money in the stock market.
What better way to do that then by purchasing income properties? Not only is it a great investment but it provides a steady stream of income for years to come.
To start with, income properties require a minimum 20% down payment if you are purchasing a non-owner occupied property. This rule went into effect in 2010 to counteract the irresponsible lending policies that lead to the financial crisis of 2008. If you are purchasing a property with multiple units, one of which you will live in, then we can get away with a five to 10% down payment depending on how many units it consists of. This down payment must be from your own resources and may include RRSPs, proceeds from the sale of an existing property and/or existing home equity.
In regards to income, we typically need a two-year history of proven income. We can also use a portion of the income that you will generate on the new property and all existing properties you hold. This must be proven via lease agreements or a market rent estimate that may be obtained from an approved property appraiser.
In terms of financial gains, the Cranbrook rental market is hot right now. On a standard three bedroom detached home you can expect to collect anywhere from $1,500 – $2,500 in rent. Your mortgage on the property will more than likely be drastically lower. For example, on a $250,000 house your mortgage payment would be under $1,000 depending on the amortization period you choose. That is quite the profit margin every single month.
This article only scratches the surface of property investment. If you have any questions about venturing into this avenue of real estate then be sure to contact your Mortgage Broker for a personalized assessment.
– Riki Unrau is a Mortgage Broker with Invis Williams and Associates, located at 828C Baker Street, Cranbrook, BC V1C 1A2 – 250-919-6402. For more try: com ting
