Canadians love income property.
One in twenty Canadians now owns an investment property, according to research from the Financial Industry Research Monitor and the Altus Group. For those with an average income of $100,000 or greater, ten percent own investment properties. The average rental property owner is age fifty or younger. Income property ownership is coming at an all-time high, just like real estate prices.
6 Tips for moving to a home that generates income:
With this increase in income property ownership also comes all-time highs of home ownership. Recent studies show that 69% of Canadians own a home. Many of these homes are being used as rental properties, in particular basement suites and rearyard infill housing. Income producing real estate should offer positive features that positively add to your bottom line. Here are several factors to consider before owning and moving into an income property in Canada:
- Location is king. Before you move into an income property make sure it is desirable location for potential tenants. Universities are rife with rental units, but also turnover as school years end and summers begin. Historical neighborhoods are often desirable for young families looking for longer-term stability. Local amenities, such as restaurants, shops, and grocery stores should also play a role.
- Schools matter. If your income property is large enough for a young family, the local schools will play an important role in desirability. If a family opts into a school for their young children, they may want to stay in the property longer than your average renter does. The property will also be more desirable when it comes time to sell if it is located in a popular school area.
- Safety is paramount. Before moving into your income property check on the local crime rates and raise a red flag on any potential property if police activity and crime is up. Look at car thefts, vandalism, petty crime, and more serious offences when looking at the data.
- Permitting is important. Before moving, check with the local building and permitting codes if the property needs work prior to renting. Additionally, check to see if permits have been issued for other properties or new developments have been zoned for the area. Losing parks to apartments or parking to high-rise condominiums could hurt your property, although a new coffee shop or grocery store could increase the value of the home.
- Potential rental income. Check out comparable income properties in the area to determine what the going rate is for the neighborhood before you move. Your cash flow needs to stay out of the red, which means your rent needs to justify the price of your property purchase and help cover your mortgage, taxes, and home maintenance expenses. This is an income property, after all.
- Vacancy rates. Are there many rental properties on the market in the neighborhood? It may be a sign that it is a tough rental market for that particular area, due to seasonal variations or perhaps the neighborhood itself. Consider that your home may not be occupied every single month of the year if there is a lot of turnover.
If you are considering moving into a property that you can rent a portion of, do your homework first. With this short and handy checklist you can be on your way to moving into an income generating home. For fast and free moving company quotes – contact Canadian Easy Moving.