The idea of generating passive income is appealing to a lot of people, and having a few rental properties in your real estate portfolio can be a great way to start building your investments. Rental properties in London, Ontario are especially popular, with a healthy rental pool (students are only the beginning), increasing rental rates and low vacancy rates. In fact, a recent CMHC Report predicts that "[i]n 2016, the vacancy rate will continue to decrease to 2.5 per cent."
Having a rental property can be a solid investment, but you want to make sure that you're going to be in a position where you are generating positive cash flow, not just a headache. In addition to the financial side of things, you also want to be very honest with yourself when it comes to managing the property. Are you handy when it comes to maintaining properties? (We're not just talking about changing a lightbulb. Think more along the lines of minor plumbing repairs and patching holes in the walls). If you are having to hire a property management company to handle every little thing that comes up, you're going to have to factor this cost into your budget. Remember! The amount you get in rent isn't solid profit. You'll need to think about utilities and maintenance, as well as account for a certain percentage of vacancies, etc.
If you are interested in learning about how to get approved for a rental property, we recommend setting up an appointment with us in order to go over all the details and to help you decide what makes the most financial sense.
It's also a good idea to meet with a real estate agent to view properties in different neighbourhoods, in order to get a sense of the types of properties you might qualify for. But first, it's wise to get pre-approved before you go shopping so you have a clear idea of how much you qualify for. Simply put: there's no sense in looking at a 10-unit building if you only financially qualify for something in the duplex range.
Working with a real estate agent who is experienced in rental properties will give you the inside scoop on the best rental areas, which areas have the lowest vacancy rates and what you can expect for average rents. These are important elements to know prior to making your purchase, as they all factor into the financing side of things. (We have a strong network of professionals, including real estate agents, if you are ever looking for a solid recommendation of someone experienced in rental properties in London, Ontario.)
As mortgage brokers in London, Ontario, we have a lot of experience with clients wishing to add a few investment properties to their portfolios. Having a rental property or two can be a great investment, and we would be happy to sit down and get you on the path to adding "landlord" to your list of titles. Call or email us to set up an appointment either over the phone or in person.
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Your London, Ontario mortgage brokers