Buying Your First Investment Property

Are you thinking of buying an investment property? There are many things to consider when buying income-producing properties, and it’s important to do your homework!

Here are some things to keep in mind before you begin your search.

Finances

Did you know that qualifying for an investment property mortgage isn’t the same as qualifying for the mortgage you would borrow for your primary residence? Unlike the minimum down payment you have to make on a home that serves as your primary residence (5%), the minimum down payment you will have to make on an investment property is 20%. In addition, the “20% rule” for CMHC insurance does not apply to investment property mortgages, which means you have to purchase CMHC insurance whether you put 20% down or not. [Learn More] 

Understand the Residential Tenancies Act of Ontario (RTA)

With great power comes great responsibility! As a landlord, you’re going to have extra responsibilities, and you must become acquainted with, understand, & respect the Residential Tenancies Act of Ontario (RTA).

Enjoy Being a “Handyman”

When you become a landlord, you are responsible for making repairs. It’s important to have enough savings on hand to handle any unexpected repairs and expenses. This means you may have to deal with late night phone calls when there’s a plumbing disaster!

If you don’t feel as if you can deal with these problems on your own, you can hire a property manager/management company to take care of everything – keep in mind that this can eat up around 10% of the monthly rent.

Income Variance

Unfortunately, there’s no pause button on bill payments. Tenants will come and go, and it may take a while to rent out a newly vacated unit – especially if it needs substantial repairs or refurbishing, reducing your income. You will still have to pay all bills, including the mortgage, property taxes and insurance.

Start Small

Purchasing an investment property can be overwhelming, but it can also be a fantastic way to invest your money and generate income when you’re ready for this big step.

Larger properties can present bigger challenges. Consider starting small – purchase a single apartment, condo, or duplex for example. This can help you get grounded in the idea of investing in real estate and decide whether it’s the right step for you!

As an experienced REALTOR®, I can help guide you through every step of this exciting and enjoyable process! Contact me today!

References:

The Ottawa Citizen: http://ottawacitizen.com/life/homes/advice-from-a-realtor-buying-investment-property-do-your-homework

RateHub: https://www.ratehub.ca/blog/what-potential-buyers-need-to-know-about-investment-property-mortgages/

Canada Mortgage Company: https://www.canadianmortgageco.com/8-things-will-need-to-qualify-investment-property-financing-ontario/

US News: https://money.usnews.com/investing/articles/2016-03-10/8-things-to-consider-when-buying-investment-property

Forbes: https://www.forbes.com/sites/forbesrealestatecouncil/2017/09/11/seven-things-to-consider-when-buying-an-investment-rental-property/#39caa4426dad

How to Downsize in Retirement Without Losing the Comforts of Home

Retirement is the perfect time for people to unclutter their lives, to shed some of their responsibilities and pursue the hobbies, passions and pastimes that they never had time for during their working life. For many, the burden of owning and maintaining a large home is more trouble than it's worth. Downsizing to a smaller home or an independent living community is a great way to free up time and money to live life to the fullest in retirement. Here are three benefits of downsizing to consider.

Debt Free Living 

Retirees generally live on a fixed income and have to budget to make sure the money lasts. For those who still owe money on their home, a monthly mortgage payment can take a sizeable chunk out of that budget. Even if the house is fully paid off, chances are there are credit card debts, auto loans, and other monthly payments to make. Selling the house can help bring a retiree's debt to zero, giving them a clean slate to start the next chapter.

Little to No Maintenance

Cleaning a multi-bedroom home by oneself, or even with a partner, can be a time-consuming chore. Add in garden and lawn care, and it can start to feel like a full-time job. Downsizing to a smaller home can make maintenance and upkeep a lot easier. Many independent living communities have an in-house cleaning staff, reducing the need for retirees to spend time on chores altogether.

Lifestyle Benefits

When working people or young families look for a home, they weigh a number of factors that retirees don't have to consider. For retirees, there's no commute to worry about and no young children in need of a good school district. When buying a home in retirement, people are free to let their lifestyle choose their location, rather than the other way around. They're free to find a place near outdoor amenities, museums, markets or anything else they desire.

Terry Hope-Watson is a designated Senior Real Estate Specialist® who has years of experience helping senior citizens sell their home. She can help you explore new housing options in the Belleville area that best fit your needs so that you can experience the benefits of downsizing in retirement. Reach out to Terry today to get started.