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Rental Properties 2.0

 

This post will go into further detail on the benefits and factors to consider when investing in Real Estate. If you haven’t already, please read our previous post Rental Properties 101 before reading this article. Topics that will be covered included taxation of investment properties, government rent controls, local market strength and vacancy rates, and property management companies.

Local Rental Market 

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Despite the recent boom in affordable housing construction like the townhouses and condominiums on Winkler’s North end, the local rental market remains healthy. The strength of the rental market is based on vacancy rates (# of empty units divided by total # of rental properties). Based on recent statistics from CMHC (Canadian Mortgage and Housing Corporation), Winkler has the lowest vacancy rate in all of Manitoba at 1.5% for multi-family structures. Even on a national scale, Winkler’s rental market is strong in comparison Canada wide. With property values on the rise combined with all the fees associated with purchasing a home, more people than ever are opting to rent longer before buying their first home.

Rent Controls

When first purchasing a rental property, the owner can decide what to charge for rent as long as the property isn’t currently being rented. If the property is rented and falls into certain criteria, the new owner can only adjust rent according to current government rent controls. Generally, properties 15 years or older are subject to rent controls meaning the landlord can only increase rent at a regulated rate – (1.1%  in 2016). That said, landlords can apply to the Residential Tenancy Branch for increases above the guidelines for special cases. Click here for more information on rent increase regulations. 

Taxes on Growth

Another benefit of investment properties is the tax benefits. Your Real Estate investment value can grow tax deferred and all expenses associated with the rental can be claimed as a deduction. Even the interest paid on your mortgage! The government also offers the option to depreciate your property value to defer taxes on any income you generate through positive cash flow. Taxes are complicated. But just like your personal income tax, if you ensure you’re taking advantage of all the ins and outs that are available to you; substantial savings can be had.

Interested in learning more? Here is a great article about the tax implications and benefits regarding investment properties: http://business.financialpost.com/personal-finance/a-secret-tax-shelter

Property Management

Property Management companies offer services to make investing in Real Estate as stress free as possible. They will find and screen tenants, collect rent, pay bills, make repairs, and handle just about everything to do with your rental property. Property managers get paid a small percentage of the rent that they collect on your property so if it’s vacant, they’re just as motivated to find a tenant as you are. If you’re interested in learning more about what a property management company can do for you, visit: http://onpointproperties.ca/owners/

Want to keep reading? Here is another great article about using Real Estate as an investment:

3 Reasons You Should Consider Putting Your Money in Real Estate – Biggerpockets.com

All of the Choice Realty agents are educated on this topic and would be happy to go into further detail with you regarding investment properties. Please don’t hesitate to contact us to learn more about utilizing this investment strategy.