Back to basics
Sometimes it’s good to remind yourself of investment basics. So if you’re looking to purchase an investment property, ask yourself a few key questions and make sure you do your research.
- How will I finance the property?
- How much income can it generate?
- How much will it cost to maintain?
Keep in mind that an investment property requires at least 20% down payment. Compare this to 5% when purchasing your primary residence. Luckily however, mortgage rates are on your side right now and will stay that way until March 28. Read this post
for more information.
Things to know:
- The local real estate market: Prices and growth rates fluctuate
- The local rental market: Rents and vacancy rates vary
- The costs: Factor in signing costs, ongoing costs, and put an emergency fund aside
- A landlord’s rights and responsibilities: Ask your real estate agent for more information
- Your future tenants: Avoid hassle by pre-screening applicants
Don’t forget your vacancy rates:
As a general rule, prepare yourself for vacancies by factoring in a 5% vacancy rate. According to the Canada Mortgage and Housing Corporation, vacancy rates vary across across Canada. For example, the average vacancy rate in was 2.5% in Canada’s top 35 major centres, in 2011. Do your research to find out more accurate numbers in your targeted area. — GetSmarterAboutMoney.ca