Investing in an income property

If you are planning to invest in an income property, it is important to be informed about your future obligations. Here are a few tips to help you be prepared to invest in real estate.

The benefits of investing in an income property

First of all, if you decide to go ahead with this project, you may see a return on your real estate investment fairly quickly, even within the first year. If your monthly rents exceed your expenses and payments, the investment will be very beneficial.

Second, your real estate investment will likely increase in value over time. According to a recent study of the real estate market in Canada by the Institute for Research and Socio-Economic Information, a conservative estimate of the return on real estate investments purchased in the early 2000s now shows an average increase in profitability of between 24% and 30%, depending on the geographic region.

How to finance the purchase of an income property?

The process for buying an income property is the same as for buying a home. For example, in the case of an income property with 4 units or less, if all the units are rented, the minimum down payment is 20% of the purchase price.

It is also possible to refinance one property to finance the purchase of another. If you have already paid off a significant portion of the mortgage on your primary residence, you can use this asset to borrow at a lower rate than a personal loan.

Ask your real estate broker or mortgage specialist for advice on the benefits of investing in real estate.

*Source: BNC

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