Always looking out for your best interest
Always looking out for your best interest
Investing in income properties is a proven and time tested method of creating multiple income streams with a relatively small initial outlay.
Why Rental Income Properties Make A Sound Investment ?
INVESTOR MAKES MONEY BY LEVERAGING AND USING OPM
By using other people’s money means using bank’s money ( via a mortgage loan) to purchase the property, and via tenant’s rent money for making mortgage payments and other property bills. For most rental properties in good locations the rental payments are normally more than enough to cover all expenses including mortgage payments, property taxes, insurance etc.
TIME TESTED AND PROVEN LONG TERM STABLE INVESTMENT:
Because there is a large demand for properties, the value of real estate if selected at the right location almost always appreciates. Over the last few decades’ real estate in most Canadian cities have provided solid returns on investments. In some neighbourhoods’ real estate appreciation rates has ranged well over 10-20% per annum.
INVESTOR MAKES MONEY BY LEVERAGING AND USING OPM
The other big advantage of investing in Rental Income properties is that most of the rental income is offset by making allowable tax deductions including the interest paid on mortgage payments, property taxes, insurance, advertising, utilities expenses, maintenance, and other expenses.
How It Makes Money ?
- Monthly profit: In most rental properties monthly cash flow starts right from the day it is purchased. This means the cash flow left after paying mortgage payments, property taxes, insurance, and all other carrying expenses from the rental incomes.
- Equity Growth: The Tenant pays off your mortgage – a mortgage payment typically comprises of a principal portion and an interest portion. Over time as mortgage payments are made from rents paid by tenant, more and more of the principal portion is paid off and your equity share keeps growing.
- Appreciation: : A Good property in a good location always appreciates over time. As the property appreciates, its market value goes up, and so does your equity in the property.
- The Multiplier Affect – with time as the investor’s equity grows the property can be refinanced and proceeds of refinance from the first rental income property can be used to purchase another property.
Timing of purchase
The secret is to pickup properties at the right times in stable or falling real estate markets. Buying at a time when the real estate prices are at the peak is certainly not a good idea.
Location
Property located in a ‘High Appreciation’ neighborhood with easy access to all amenities including public transport, will likely stay leased for longer durations, attract good quality tenants, and attract higher rents.
Age and Condition of the property
Older properties generally require more yearly maintenance and therefore erode the profits. It is important to evaluate the condition of high expense items including roof, windows, furnace, air conditioning, appliances, electrical systems, plumbing, leakages in the basement etc. while making an offer for the property.
Not every property for sale in the market is OK for purchase as an ‘investment property’, and not ‘everyone’ in the market is adequately trained to identify a ‘good’ investment from a ‘bad’ investment. One wrong decision can make or break your investment dreams!!
Selection of a good ‘income property’ requires a lot of experience, judgment, research, up to date knowledge of local areas and latest growth trends. Our team members are fully trained professionals with up to date knowledge of the current prices and trends of the real estate market including what comparable properties are selling for or renting for, and we know what the market demand is; when we arrive at fair market values, we aren’t just guessing, we know it exactly.