By: Melissa Kuczepa
Whether you own a home or rent and want to buy an investment property, you have options! Owning an investment property can be a solid financial choice to build your wealth and increase your passive income. Often, the goal with an investment property is to rent it out to tenants at a cost that not only covers the monthly mortgage payment and property taxes, but also any expenses related to maintenance. While the property remains rented, the mortgage is paid off, eventually leaving you with a steady stream of income on a mortgage free property! This is a fantastic plan for those that will retire without a pension plan or have very little in the way of savings for retirement. While there are options for flips, buy and holds and student rentals, the easiest to finance through mortgage financing is the long-term rental. When carefully planned and calculated, a long-term rental can provide a steady stream of passive income while paying down the mortgage. The most important factors are to ensure you are purchasing a property in a location that is in high-demand and can be easily rented. You also want to ensure that the fair market rent will be sufficient to cover your mortgage payment, property taxes and any expenses that pop up for maintenance. This will ensure you are not paying the mortgage or expenses out of pocket, which could be costly. Buying a long-term rental is beneficial because it allows you to build wealth, increase passive income, the mortgage is paid by the tenants and over time, the property value increases as does the equity. When purchasing an investment property, be prepared to provide the lender with a letter of employment, pay stub, Notice of Assessment, proof of additional income (Canada Child Benefit, spousal support etc.), bank statements proving pension income (if applicable), a lease agreement stating the rental income, current mortgage statement (if you are refinancing your current property to use your equity as down payment and closing costs), your current property tax statement, and proof of down payment. Investing in real estate is very rarely a poor decision; but you need to ensure you are working with a knowledgeable realtor that can guide you through purchasing the right property, in the right location at the right time. It is also in your best interest to work with a Mortgage Broker to be sure you are receiving the right mortgage product for your needs. If you are interested in investing in real estate, reach out! I would be happy to discuss your options in detail and formulate a plan that makes sense for YOU! I also work with many fantastic realtors that I could recommend ensuring you have the best experience possible!