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Turn Your Starter Home Into a Rental
Posted on Mon, 20 Mar 2017, 02:45:00 PM  in Home selling tips
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Owning a home is a fantastic way to build wealth in a diversified portfolio. However, many Canadians find themselves buying real estate, but never keeping any of it unless it is where they are living.

This blog post will discuss how average homeowners can add rental property to their portfolio by buying wisely, and then the benefits of the investment will be discussed.

 Turn Your Starter Home Into a Rental

How to Buy a Future Rental Property

Forget the idea of buying a home that will then be rented out. Start off by purchasing a home for yourself to live in.

The key when making the purchase is to search for properties that don't "have it all." This will permit you to save money upfront because of the modest purchase.

Additionally, don't forget that this is not the home you will love to live in; it's the home you will love to rent out. That means that in the time you live there you should enjoy it, but hold off on getting the finest appliances. Instead, paint the walls in neutral colors to save money later. And make sure that you can afford the payment even in a lean month.

 

Why Buy as a Home First?

Investment property purchases have harder guidelines to meet when purchasing. Also, the interest rates tend to be a little higher since there is more risk associated with the loan.

On top of that if you find yourself wanting to sell the home instead of rent it in a few years there are opportunities to save on taxes since the home was a primary residence.

Between borrowing on the frontend and the potential savings on the backend there is more money in it for you if this future investment property is one you live in first. However, let's not discount the long-term potential on income and asset growth.

 

Rental Income & a Growing Asset

Canada has a rising population. That means a thriving economic future as well as rising demand for homes. Owning this property will not only mean that you will have an income producing asset, but that the income will go up while the value of the property does, too.

The home you purchase today with a payment of $900 may bring in monthly rent of $950, which is great. But in 30 years the mortgage payment will be $0.00 while the rent could very easily be $1,900.

In addition to having the substantial monthly income, the asset that had once cost $115,000 may bring over $200,000 if sold.

This is not just theory. Many Canadians have done this over the past few decades, and we have a real case study.

 

Marc & Emma Tremblay

The Tremblays are an average couple. Marc works as a banker. Emma was a stay-at-home mom who now works at the local public school.

When the Tremblays were first married they purchased a very modest 2-bedroom home in a nice neighborhood. It was very easy for them to afford, but they found when they were ready to move up in house that they could rent the home more easily than sell it. Loving the idea of having a renter pay their mortgage they took a chance.

32 years later they are glad they did. The home they purchased for $165,000 is now worth $388,000. On top of that they have only had five tenants in the past 32 years, which they attribute to buying a home in a very desirable school district.

Owning rental property is something anyone can do, especially if you start out living in the property.


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Everything You Need to Know About Renting Your Home
Posted on Wed, 10 Feb 2016, 10:15:00 AM  in Marketing strategies,  My services
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When you can no longer live in your current home but aren't sure you can find a buyer quickly, you might consider renting your home instead of selling it. Renting a home often has some key benefits over putting the property on the market. A dependable real estate agent can help you list your home online and through other sources. You can also work with a property management company that will find qualified tenants, collect rent for you and even take care of maintenance. Before meeting with a professional, make sure you know everything you need to know about renting your home.

Getting Your Home Ready
Those small problems that you had with your house are things you can let the buyers take care of later. When you rent your home though, you're responsible for taking care of those issues ahead of time. No one wants to rent a house that has a leaky roof, cracks in the ceiling, missing tiles in the bathroom or even tons of weeds outside. It may take you a few months or more to take care of all those necessary repairs before renting your home.

Claiming the Income
While renting your home helps you make some extra income, that money isn't free and clear. You are responsible for claiming the rentingincome that you make on your home to the government. The amount you make may actually move you into a higher tax bracket, which means that the government can legally take a higher amount of the taxes you earn within that new bracket. On the upside, you can often deduct the money that you spend to get the home ready for renters and any money you spend on routine maintenance too.

Meeting All Regulations and Standards
Even if you live in a house that is practically brand new, you must ensure that it meets all safety regulations and building codes in your city. There is always a risk that your tenants may contact the safety department and file a complaint against you for problems they had in the house. You must make sure that the plumbing and electrical systems work well and that the home is safe for anyone living there. If you do not meet the standards and regulations, you may receive some high fines and/or other penalties. 

Finding Tenants
One of the hardest parts of renting your home is that you must find qualified tenants to rent that property. Most landlords today do thorough background checks that investigate applicants for any criminal charges and any credit problems. Someone who filed bankruptcy in the past and has a long history of defaulting on credit cards isn't someone you want living in your home. There are websites that let you pay a set fee to do a civil and criminal background check on an individual. You may prefer to hire a professional to do the background check for you instead.

Taking Care of the Home
There is a big difference between being a landlord and being a home owner. As the owner of a home, you can put off making smaller or larger repairs until you have more cash available. You might ignore those missing shingles on your roof for a few months until you can hire a roofer. As a landlord, you must make those repairs quickly and as soon as the tenants contact you. Failure to maintain the property and take care of the home can result in some large fines. Make sure you understand more about the rental process before renting your home.

 


How May I Contact You?

Please ask me your question by filling out this form. You will receive an answer to your question at the first opportunity I have to reply. I appreciate the time you have taken.

 

 


Thank you for taking the time to complete this questionnaire.
I will be in touch with you.

       comment on this
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