For those thinking of investing in a rental property, you may be making the right choice. Rental properties are bought or developed to allow you to earn income by renting them out to tenants. These properties are often known as non-owner occupied housing and can be viewed as a risk for some lenders. However, that doesn’t mean you shouldn’t take a chance on purchasing a rental property.
There are many benefits to owning a rental property that lead to monetary gain for the homeowner.
- The property can become your lone source of income
Depending on the number of tenants you have, this kind of property can quickly morph into great earnings. Yes, there are responsibilities that come with being the owner of a property like this, but being a landlord will allow you to be your own boss while creating the best living quarters for your tenants.
- As the property appreciates, so does your asset
If you already own your own home, you know all too well that it is one of your best assets. The more you upkeep and update it, the higher its value becomes. Your home can become a great source of equity and there’s no exception when it comes to your income property. Take care of your rental property and it will take care of you.
- Your tenants pay your mortgage
Now, they’re not directly paying your mortgage, but their rent is. When they pay you; you can put their rent towards the property’s mortgage. Whatever’s left over is your income to keep. Keep in mind that charging exorbitant rent just to make extra cash is generally seen as bad form, and Ontario has rules about what you can charge. Don’t go overboard and make your monthly rent fair for your tenants.
Much like most good things, there are some drawbacks to owning an income property:
- You will have to deal with tenants
If you’re a people person, this should be no problem. If you don’t like dealing with the public, you may want to consider scrapping the idea of a rental property.
- You’re the boss
Previously, we said that you get to be your own boss once your rental property starts providing you with ample income. This may not appeal to certain people because this means you are in charge of everything that goes on in each rental unit. When something breaks, it’s your responsibility to fix it.
Rental properties can be huge moneymakers. If you’re unsure as to whether this is the right path for you, contact Northwood Mortgage™. Our experts will be able to help you understand mortgages for rental properties and will guide you in making a strategic decision.