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Getting Started with an Income Property

Man Installing Glass Door

Purchasing an income property can be a great investment alternative if you’re able and willing to put in the work required to make a profit on it. Before taking the leap, here are some things to keep in mind.

Have a 20% Down Payment

If you’re purchasing an income property, you’ll need to have at least a 20% down payment. Here at Cambrian, we offer our residential mortgage rates on investment properties, for up to 10 units.

Figure out Costs

As an income property owner, you will have regular costs associated with your property. Budget 1% of the property’s value annually for maintenance, and have a plan in place. If you’re handy, you may wish to take on some of the repair projects yourself in order to save some money. Managing tenants yourself can lower your operating expenses, but you may decide that paying for a property management company is worthwhile as finding and managing tenants can be a challenge.

You’ll also want to know how much your property taxes are annually. In general, expect that 50% of your rent will be spent on operating expenses.

Pick your Neighbourhood

When you’re deciding where to buy, consider what type of family you’re looking to attract. If you’re purchasing a condo, you’re more likely to attract a couple without children, or a single person. A detached home is more likely to attract a family. With this in mind, ensure the neighbourhood is suitable for the type of family you’re looking to attract.

A detached house should be near a good school, and there should be green space in the neighbourhood for playing. A condo should be near amenities such as restaurants and grocery stores, and it may be a good idea to determine whether there are numerous public transit routes nearby.

Research Rent

Before making the purchase, research rents in your preferred neighbourhood to know roughly how much you will be able to charge. Use this information and look at the costs you determined to ensure you will be able to turn a profit with your income property.

 

Learn more about getting a Cambrian Residential Rental Mortgage